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A "monster stock" might be one that frightens you by free-falling. Or it might alarm you with characteristics such as plummeting sales, shrinking profit margins, or surging debt. We'll use a different definition for this article.
We'll consider monster stocks to be ones that have actually performed very well and/or are likely to continue doing so. They'll be stocks with attractive qualities, such as market dominance, healthy balance sheets, and/or promising growth prospects -- ones you could aim to hold for a decade or more.
Got it? Great -- here, then, are five such "monster stocks" to consider for berths in your long-term portfolio.
Image source: Getty Inages.
The Trade Desk (NASDAQ: TTD) has been quite a market darling in the past. Its 15-year average annual return is close to 16%. It's been volatile, too -- over the past 12 months, its stock was recently down 44%. That kind of drop has made the stock attractive to long-term growth-oriented investors. For example, its recent forward-looking price-to-earnings (P/E) ratio of 43.8 is well below its five-year average of 88.5.
With a recent market value of $24 billion, The Trade Desk is a digital advertising giant, helping its customers program effective advertising campaigns online. As long as businesses want to advertise online, The Trade Desk is likely to do a lot of business. However, should we end up in a recession, that's when many companies cut back on their advertising. This would hurt The Trade Desk -- at least for a while.
Palo Alto Networks (NASDAQ: PANW) is a titan in the cybersecurity realm, with a recent market value of $111 billion. It's been a monster stock, averaging annual gains of more than 21% over the past decade -- and more than 40% over the past five years. Year to date, though, the stock was recently down 6.6%. Its forward P/E was recently 46.3, a bit below the five-year average of 52.5.
Is it worth buying? For risk-tolerant long-term investors, it's certainly worth a closer look. Anyone with a connected digital device should be concerned about security, and the need for cybersecurity services doesn't look like it's going away anytime soon. It has been transitioning customers to a simplified set of platforms recently, and that has been going well.
It's also incorporating artificial intelligence (AI) into its offerings and making its services cloud-based and subscription-based. Savvy investors love to see subscription services, as they provide more dependable recurring revenue.
Amazon.com (NASDAQ: AMZN) is clearly a monster stock, having grown to a recent market value of nearly $2 trillion. There's a lot to love about Amazon beyond its massive online marketplace, such as its dominant Amazon Web Services (AWS), a cloud computing platform. It's true that the marketplace generates the most revenue, but that's relatively low-margin revenue. Its AWS and digital advertising operations, to name a few, are higher-margin enterprises.
If you're fearing a recession, it's true that that could hurt Amazon's retailing business -- as could tariffs. But Amazon is often viewed as a relatively low-cost seller, so its business might be more resilient than that of other retailers. Meanwhile, with a recent forward P/E ratio of 28 (well below its five-year average of 50), the stock seems attractively valued.
Coupang (NYSE: CPNG) is not a household word in the U.S., but the company is a major and growing Amazon-like enterprise. Based in South Korea, it encompasses an online marketplace, restaurant delivery, video streaming, fintech (financial technology) offerings, and more.
Coupang has a strong balance sheet, and its gross profit has been growing by double digits -- by 29%, actually, year over year in its fourth quarter of 2024. Coupang has expanded into Taiwan, and revenue there grew by 23% quarter over quarter. Coupang's recent forward P/E ratio was only 16.2, which is compelling for a company growing as quickly as Coupang is growing.
CRISPR Therapeutics AG (NASDAQ: CRSP) is the fifth stock to consider, and arguably the most speculative of the bunch. It's a leader in gene editing technology, but gene editing is still in its early days. Meanwhile, biotechnology offerings take a lot of time to develop and bring to market -- if they ever make it that far. That said, CRISPR has a promising pipeline of treatments in development, and a partnership with Vertex Pharmaceuticals.
If you're intrigued, take a closer look at CRISPR -- and any other of these companies that interest you.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Selena Maranjian has positions in Amazon, CRISPR Therapeutics, Palo Alto Networks, The Trade Desk, and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends Amazon, CRISPR Therapeutics, The Trade Desk, and Vertex Pharmaceuticals. The Motley Fool recommends Coupang and Palo Alto Networks. The Motley Fool has a disclosure policy.
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