Most financial experts advise investors to enter the equity markets with a long-term view allowing them to benefit from compounded gains over time. In the short term, the equity market is always volatile, but this asset class has created massive wealth for investors over the last few decades.
Therefore, it makes sense to buy and hold stocks that are part of rapidly expanding addressable markets, allowing companies to grow their revenue and profit margins at a fast clip. Here, we’ll look at two growth stocks, Nuvei (TSX: NVEI)(NASDAQ: NVEI) and Bakkt Holdings (NYSE: BKKT), that you can buy and hold forever.
The bull case for Nuvei
Shares of Nuvei went public in the second half of 2020 and have since returned 180% to investors. Despite these stellar gains, Nuvei stock is down 35% from all-time highs, allowing investors to buy the dip.
Nuvei is a company that provides payment technology solutions to merchants and partners all over the world. Its suite of payment solutions aims to support the transaction lifecycle across multiple devices and channels.
Valued at a market cap of $18 billion, Nuvei has increased its revenue from just $124 million in 2017 to $375 million in 2020. Bay Street analysts forecast sales to more than double to $919 million in 2021 and rise by another 32% to $1.22 billion next year. Comparatively, its adjusted earnings are forecast to expand at an annual rate of 55% in the next five years.
We can see that Nuvei stock is valued at a forward price-to-earnings ratio of 14.8 and a price-to-sales earnings multiple of 43, which is quite reasonable given its growth estimates.
Analysts tracking Nuvei stock expect it to touch $166 in the next 12 months, which is 30% above its current trading price.
The bull case for Bakkt Holdings
If you expect the cryptocurrency segment to keep expanding in the future, you need to take a closer look at Bakkt Holdings. The cumulative market of cryptocurrencies recently touched a record high of US$3 trillion, and this figure should move higher given the widespread adoption of these digital assets.
Bakkt offers a regulated platform where users can trade and transfer digital assets in a secure way. Enterprises can also utilize the Bakkt platform to increase customer engagement by expanding payment offerings.
Bakkt expects to onboard nine million users on its platform by the end of the year, and this number is forecast to grow to 31 million by the end of 2025. It also expects sales to increase to US$6.6 billion by 2025, making the stock an extremely lucrative bet given its market cap of $755 million. Comparatively, its EBITDA is forecast to touch US$285 million in 2025 compared to an estimated loss of US$169 million in 2021.
Bakkt went public via a reverse merger earlier this year and touched a record high of US$50.80 per share. BKKT stock is currently trading at US$14 allowing investors to buy the dip as Wall Street expects shares to touch $28 over the next 12 months.
