Nothing lasts forever, but a few elite stocks should beat the market over the next 10 years. I'm talking about companies poised for long-term success, making their stocks rock-solid buys in the early days.
There are plenty of breakout growth stocks with fantastic business prospects in the market today, but let's talk about two of my personal favorites. If Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) and Duolingo (NASDAQ: DUOL) don't hang on to their market-leading growth story status in 2034, I'll buy a lightly salted hat just so I can eat it.
The secret behind Alphabet's enduring success
Let's start with the big name. As the parent company of Google, Alphabet has been crushing the stock market and dominating the online search and advertising industries for two decades.
Its two classes of stock represent a $2 trillion total market value and have delivered returns with a compound annual growth rate (CAGR) of roughly 19% in the last decade. Alphabet's sales and free cash flows have grown at a similar pace throughout the same 10-year period, which suggests the massive market footprint is motivated by stellar business growth.
That's all in the past, though. How can Alphabet stay relevant and successful for at least another decade? Resting on its legendary laurels won't be enough!
Luckily, this company was built to last. The Alphabet umbrella organization replaced the monolithic Google structure nine years ago for exactly that purpose.
In the long run, web-based search and advertising probably won't be the cash machine it is today (or was in 2015), so why not plan for an enduring future with radically different business ideas? And in the transitional period between the thriving Google empire and whatever comes next, consumers and corporations might find it confusing if the Google brand is attached to medical research, self-driving cars, or smoke alarms. So, here's the Alphabet organization instead, free to explore some very different business plans without confounding anybody.
The diversification process is already well underway. Most of Alphabet's success stories are technically managed under the Google division but with unique and valuable brands of their own. YouTube is the only video-streaming service with more viewing activity than market veteran Netflix. The Android mobile devices platform is locked in a long-term battle with Apple iPhone for market supremacy on a global level.
I don't know which alternative products and services Alphabet might rely on five or 10 years from now, but I do know the company has many options and ideas. It is also an innovator of high caliber. Its budget for research and development (R&D) is second to none, and that's the very lifeblood of a tech company with long-lasting ambitions:
So, I'm confident in Alphabet's ability to stay focused and healthy in the long run. It's a thrilling growth story today, paired with a massive market footprint. Those qualities aren't likely to change any time soon.
Duolingo's growth is just getting started
Duolingo is a different story. The online and mobile education specialist is younger and smaller than Alphabet and much earlier in its plans for long-term growth.
As a far smaller business with slimmer revenue streams, Duolingo can't compete with Alphabet's sheer scale. But the company shares a passion for future-proofing technology, pulling every available lever to build a better and more user-friendly learning platform. Duolingo spent 38% of its incoming revenues on R&D in the recently reported second quarter. Alphabet's R&D commitment stopped at 14% in the same period, and Apple stayed all the way down at 9%.
It's hard to compete with this all-in attitude to research and innovation. What else do you expect from a company founded and led by a MacArthur Genius Grant honoree like Duolingo CEO Luis von Ahn?
The company is growing like wild bamboo, with 41% year-over-year revenue growth and a 59% jump in daily active users in the second-quarter report. Duolingo has made most of its money in North America so far but is exploring overseas expansion and broadening its language-learning portfolio to include other topics.
Music and math are its first non-language classes, and it may take a few years before Duolingo goes any further, but its learning model could be adapted to any field of study where daily repetition in a fun, game-like app results in effective learning. History? Sure. Social studies? Absolutely. Chemistry and physics? Maybe, but replacing hands-on lab action with app-based simulations is hard.
So, maybe Duolingo won't dominate every possible branch of online education in the long run, but the company has barely scratched the surface of a massive global opportunity so far. And its growth prospects benefit from a robust financial platform with skyrocketing revenues and generous profits.
Duolingo is a more exciting option than Alphabet, exposed more to both execution risks and shareholder rewards in the long run. If I end up with a salty hat in 10 years, I'll probably blame the green owl. At the same time, this stock should deliver even stronger returns than the Google parent's if all goes well.
Should you invest $1,000 in Alphabet right now?
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Anders Bylund has positions in Alphabet, Duolingo, and Netflix. The Motley Fool has positions in and recommends Alphabet, Apple, Duolingo, Meta Platforms, Microsoft, and Netflix. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
2 Breakout Growth Stocks You Can Buy and Hold for the Next Decade was originally published by The Motley Fool