Buying and holding shares of growing companies can lead to massive wealth creation over the long term. Some of the best companies to invest for the long term are those that provide popular services for the masses. You can do very well by simply investing in the services you already know.
To give you a few ideas, here are two surging stocks to consider holding for the next 10 years.
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1. Spotify Technology
Shares of Spotify Technology (SPOT 1.59%) have soared over the past few years, up more than 700% since bottoming out in 2022 with the broader market. While it can be difficult to buy a stock after such a monster run, it’s all about what lies ahead, and Spotify has a clear opportunity to grow revenue and earnings over the next 10 years.
Wall Street is catching on to the fact that Spotify has untapped pricing power. At $11.99 per month, a premium subscription to Spotify costs less than the $17.99 per month for the standard plan on Netflix. This is despite the incredible growth that Spotify has experienced in its premium service, with paying subscribers totaling 268 million last quarter, up from 210 million a few years ago.
Having access to virtually unlimited music for $12 a month is cheap by historical standards. People are spending less on music today than they were during the 1990s, when CD sales were at their peak. In 1999, the inflation-adjusted recorded music revenue per capita was $81, according to J.P. Morgan Research, and that spending stood at $37 in 2020. This shows there is a lot of room for Spotify to better monetize its platform over the long term.
Most of Spotify’s revenue comes from premium subscription plans, which grew 16% year over year to reach $3.7 billion in Q1. Revenue from ad-supported plans grew 8% year over year. However, Spotify just released automated tools that make it easier for marketers to buy ads, and this could set up stronger ad revenue growth.
It’s also investing in growing its podcast business, which hauls in advertising revenue, by expanding the Spotify Partner Program to new markets. This program will help financially support podcast creators, further bolstering Spotify’s ability to expand this format for listeners and generate more ad impressions over time.
The downside for Spotify is that it is dependent on record labels for music streaming rights, whereas video services like Netflix have original content. Still, Spotify’s 678 million monthly users give it a lot of power in the music industry. Record companies that want maximum exposure for their artists need to support Spotify, which should allow the company to generate healthy financials to support shareholder returns.
Spotify is already seeing significant growth in free cash flow and operating margin. Strong growth in advertising and higher subscription prices bode well for its long-term profitability. Analysts expect Spotify’s free cash flow to grow at an annualized rate of 22% through 2029. With those assumptions, investors should expect market-beating returns.
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2. Robinhood Markets
Robinhood Markets‘ (HOOD 2.79%) free-trading and mobile-first strategy allowed it to expand rapidly during the pandemic. After a downturn in 2022, Robinhood is on the offensive, and it’s going after a multitrillion-dollar opportunity.
While big brokers are currently dominating the industry with their brand recognition and large suite of products that cater to high-net-worth individuals, Robinhood is gaining customers with an easy-to-use mobile experience and finding ways to win customer loyalty.
One initiative that has benefited Robinhood is its IRA match offer, where customers receive a 1% match on deposits in their account. It’s 3% for Robinhood Gold subscribers. Even some high-net-worth individuals have transferred assets into Robinhood to take advantage of this offer, and it’s proven to be profitable for the company. Despite giving customers what is basically free money, Robinhood’s revenue grew 50% year over year in Q1, while earnings doubled.
Customers had $78 million with Robinhood in Q1 2023. But growth in net deposits and the recent acquisition of TradePMR has increased Robinhood’s platform assets to $221 billion as of Q1 2025, and it could grow into the trillions in the coming decades.
There’s an estimated $84 trillion of wealth that will be transferred to the next generation by 2045, according to Cerulli Associates. Most of this will be inherited from baby boomers. Because Robinhood has already become a popular platform for the next generation to start investing, the company stands to capture a share of those assets.
It’s clearly positioning for this opportunity. Earlier this year, it announced new wealth management services, like Robinhood Strategies, and the upcoming launch of its premium banking service, Robinhood Banking, which will offer high-yield savings, estate planning, professional tax advice, and luxury perks like the opportunity to buy tickets to the Masters and Met Gala.
Robinhood will eventually offer every trading product and service that a large broker offers, but like its IRA match offer, it will go the extra mile. Robinhood is being forced by necessity to think of ways to offer more value to customers to compete with big brokers. If it continues to execute and expand its service offering, it could attract trillions in assets over time, and that points to tremendous growth potential.
For example, if it grows its platform assets to $1 trillion and converts 2% of that into revenue, which is roughly the percentage it has converted assets to revenue historically, it could generate $20 billion in annual revenue compared to the $3 billion of revenue it reported in 2024.
After a sharp climb this year, investors should expect the stock to pull back in the near term. But Robinhood’s current market cap of about $90 billion seems cheap to me compared to the amount of assets up for grabs in the next 20 years.
Great Job newsfeedback@fool.com (John Ballard) & the Team @ The Motley Fool Source link for sharing this story.
