There are several ways to gain exposure to the stock market. You can either passively invest in an index fund or pick individual stocks that have the potential to outpace the broader markets. Further, you can invest in dividend stocks, value stocks, or growth stocks.
While most of your equity portfolio should be geared toward index and mutual funds, you should allocate a small portion of your savings to buy quality growth stocks.
Typically, growth stocks can deliver outsized gains in a bull market and help you build wealth over time. Here are three such stocks to buy and hold for the next decade.
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Snowflake stock
A data warehousing company, Snowflake (NYSE: SNOW) is valued at a market cap of US$55 billion. Its enterprise-facing platform allows customers to easily integrate and analyze cloud data from multiple services, resulting in higher customer growth and retention rates.
Snowflake has successfully increased customer spending on its platform. Between fiscal 2021 and 2023 (ended in January), the number of customers spending at least US$1 million each year on Snowflake increased from 80 to 331. Moreover, 10 customers spend US$10 million on Snowflake each year, up from just one in fiscal 2022.
Snowflake expects its total addressable market to more than double to US$290 billion by 2027, providing it with enough room to expand its top line, given it is forecast to end fiscal 2024 with sales of US$2.76 billion.
Due to its high operating leverage, Snowflake is on track to increase adjusted earnings from US$0.25 per share in 2023 to US$0.96 per share in 2025.
Docebo stock
Docebo (TSX: DCBO) offers a cloud-based e-learning platform for enterprises. Companies around the world are looking to upskill their workforce, which leads to higher productivity. Docebo’s artificial intelligence-powered platform offers a wide range of training and development modules that are tailored to the requirements of each employee.
Similar to several other tech stocks, Docebo continues to reinvest in growth and spent 18% of sales in the first quarter on research and development. In comparison, its sales and marketing expenses accounted for 40% of revenue.
Docebo’s adjusted earnings are forecast to expand from $0.28 per share in 2022 to $0.66 per share in 2024. Down 60% from all-time highs, DCBO stock is priced at a discount of 40% to consensus price target estimates.
Well Health stock
A company part of the health-tech space, Well Health (TSX: WELL) has already returned 4,200% to shareholders since its initial public offering in 2016. Despite its monstrous gains, WELL stock is trading 53% below all-time highs, allowing you to buy a quality stock at a discount.
In the first quarter of 2023, Well Health increased sales by 34% year over year to $169.4 million. Its organic growth accelerated to 21%, allowing the company to post record revenue for the 17th consecutive quarter.
Additionally, Well Health reported a free cash flow of $10.8 million and expects the top line to range between $690 million and $710 million in 2023.
Priced at 1.4 times forward sales, Well Health is among the cheapest growth stocks on the TSX. It trades at a discount of 90%, given consensus price target estimates.
