It's usually not difficult to find a compelling growth stock to step into. Choosing a growth stock you're confident holding onto for a decade or more, however, is a different story. Some story stocks just don't have enough proven potential for investors to make a long-term commitment to them.
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Still, investments that fit that bill are out there. If you can stomach the risk, these three stocks have the potential to be monster winners for investors who buy and hold for at least 10 years.
Iovance Biotherapeutics
Investing in drug companies can be a tricky business. If you dive in too early, you may learn the hard way that the potential miracle drug in development is actually a bust. If you wait too long, you could miss out on the bulk of a stock's gains.
With that in mind, risk-tolerant investors should look at Iovance Biotherapeutics(NASDAQ: IOVA) while shares are still down more than 80% from their early 2021 peak.
Such pullbacks aren't particularly unusual for the biopharma industry's younger names. Iovance soared when its flagship drug first started showing promise in clinical trials back in 2019 and 2020. Investors got a bit ahead of themselves though. The first regulatory approval of its cancer-fighting Amtagvi didn't materialize until February of this year. While the market rewarded the company for that accomplishment with a bounce in the share price, most of the bullish euphoria had already worn off by then. And most of the gains the stock booked earlier this year have since evaporated.
But you can use the stock's current weakness to your advantage.
While Amtagvi's FDA-approved uses may be relatively narrow in scope right now -- it is approved only for the treatment of certain types of solid tumors -- this T-cell therapy is a potential treatment for a much wider range of cancers. The drug is being tested in 12 other clinical trials at this time, and a handful of them are promising late-stage trials.
But even without any future approvals, Iovance is already doing pretty well with Amtagvi. Last quarter's $58.6 million in revenue was a marked improvement on what was effectively inaugural revenue of $31.1 million in Q2, putting the company en route to a full-year top line of roughly $160 million. Sales next year are expected to rise to between $450 million and $475 million. That's just the beginning though. The analyst community is predicting revenue of more than $700 million in 2026, while research outfit GlobalData believes annual sales of Amtagvi could eclipse $1 billion by 2030.
There are risks for investors to keep in mind, though. Chief among them is the massive amount of money Iovance is still losing despite strong initial demand for its flagship T-cell therapy. Although there's nothing unusual about early losses within the biopharma industry, there's no clear picture as to when the company will work its way out of the red and into the black. Even analysts don't anticipate an actual profit until 2027 at the earliest. Much can happen between now and then, so you want to carefully consider the size of any position in this stock.
Amtagvi needs time to reach its proverbial cruising speed, so the challenge for investors will be having the patience to allow Iovance to make the most of the opportunity.
Palo Alto Networks
As long as there are internet-connected computers and networks, there will be criminals looking to digitally exploit them. Indeed, cybersecurity outfit Check Point Software reports that weekly cyberattacks surged a record-breaking 75% year over year during the third quarter, up from Q2's 30% increase.
This problem isn't going away anytime soon, but Palo Alto Networks(NASDAQ: PANW) stands ready to answer the call.
In simplest terms, Palo Alto helps enterprises of all shapes and sizes protect themselves from cybercrime and other types of digital disruption. From threat detection to malware defense to phishing protection to remote employee logins (and more), this company can meet almost any cybersecurity need. And it can do so with easy-to-use turnkey solutions that allow for a minimal number of user interfaces.
That's one of the reasons why, in 2024, Palo Alto was once again ranked by technology market research outfit Gartner as a leader in the endpoint protection platform market. Moreover, for the eleventh year in a row, Gartner rated Palo Alto as a leader in the network firewall market. The company is good at what it does.
This is evident in its fiscal results too. Not only has its revenue grown in every quarter for more than a decade, but its operating income and EBITDA (earnings before interest, taxes, depreciation, and amortization) have grown almost as reliably.
Then, there's the detail about this progress that isn't readily apparent: Palo Alto Networks' profit margins are expanding too. Whether its software is sold to 100 customers or 1,000, the cost of coding and deploying it is about the same. That's the power of scale. The recurring revenue it books from subscription-based access to its tools doesn't hurt either.
Palo Alto is positioned to capitalize on growth across the cybersecurity industry as analysts expect the company to deliver 14% top-line growth in its fiscal 2025 before accelerating to nearly 16% the following year.
Wolfspeed
Finally, add Wolfspeed(NYSE: WOLF) to your list of potential monster stocks that you may want to hold onto for the next 10 years.
Unless you're an electrical engineer, the term "silicon carbide" probably won't mean much to you. It will in the foreseeable future, though, and Wolfspeed will have its time in the spotlight as a result.
The layman's explanation: Nearly all electrically powered devices require the use of at least some silicon-based components. In the past, ordinary silicon was entirely good enough to meet the needs of the technology of the times. Things are changing, though. Thanks to dramatic improvements in other technologies, the silicon of yesteryear is no longer power-efficient enough, nor capable of efficiently handling the higher voltages needed by heavy-duty equipment like electric vehicles or data center power platforms.
Enter Wolfspeed, which has mastered (and patented) the art and science of adding carbon to silicon to make the material more efficient as well as capable of handling higher electrical loads.
While its potential uses are vast, silicon carbide's most practical application today is on the heavy machinery and industrial front. Wolfspeed's technology is increasingly found in electric vehicles as part of their powertrains as well as within their charging apparatuses, leading to 80% less power loss than most commonly used battery/inversion/motor combinations currently suffer. You'll also find its tech inside a growing number of construction vehicles, agricultural machinery, and even locomotives.
At the other end of the size scale, you'll find its silicon carbide inside the chips and components attached to circuit boards in HVAC equipment and data center power supplies, where its offerings can achieve up to 99% energy efficiency at half the size of ordinary silicon.
Although the benefits of silicon carbide are clear, not every would-be customer is consistently on board with Wolfspeed's products. After its revenue rose by 24% in fiscal 2023 (ended June 2023) growth came to a near-halt in fiscal 2024, extending a pattern of top-line inconsistency that's been frustrating investors for over a decade. Wolfspeed is reporting steep losses as a result. The analyst community doesn't see net profitability returning until fiscal 2027 when the next generation of EVs hits the roads and when the company finally puts several restructuring charges and significant capital expenditures in the rearview mirror. All this strategic maneuvering and spending is a big reason shareholders have experienced a wild roller coaster ride.
If you can stomach the continued volatility, however, this stock is worth it. Analysts expect Wolfspeed to report 44% sales growth in fiscal 2026, which the company itself believes will be enough to produce breakeven operating cash flow. And management believes the company can swing back to EBITDA profitability during the second half of this year, en route to the return to profitability in fiscal 2027.
And longer term, Global Market Insights believes the world's silicon carbide market is likely to grow at a compound annual rate of more than 30% through 2032. But most of this growth is only set to materialize in the latter half of this timeframe when the technology becomes industry-standard.
Owning this high potential stock means living with above-average near-term risk. Investors have to remain focused on how well this silicon carbide leader can navigate the industry's long-term potential. The market should start rewarding Wolfspeed's progress toward profitability in the meantime.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Iovance Biotherapeutics and Wolfspeed. The Motley Fool recommends Gartner and Palo Alto Networks. The Motley Fool has a disclosure policy.
