In this article, we discuss 10 best young stocks to buy and hold for the next 20 years. If you want to read about some more young stocks, go directly to 5 Best Young Stocks to Buy and Hold For Next 20 Years.
Even though growth stocks have taken a beating in the past few months as recession fears mount due to an aggressive Federal Reserve looking to bring inflation under control, investors continue to view the growth-laden tech sector as one of the major long-term catalysts for the stock market. This is evident from the flurry of hedge fund activity seen in IPO firms like Coupang, Inc. (NYSE:CPNG), Qualtrics International Inc. (NASDAQ:XM), and Affirm Holdings, Inc. (NASDAQ:AFRM) over the past few months.
Although IPO activity has declined dramatically in 2022 compared to the record numbers of 2021, registering a 44% year-over-year decline in global IPOs with proceeds down by 57%, the firms that have debuted on the market are trading at bargain valuations compared to their growth potential. As uncertainties subside and normalcy returns, the improved returns of these young stocks are likely to attract even more investors. Some of the sectors that are already seeing these trends, with the highest volume of IPOs, are the technology and energy industries.
Our Methodology
These companies that recently debuted on the stock market and have long-term growth catalysts were selected for the list. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also discussed. A database of around 900 elite hedge funds tracked by Insider Monkey in the second quarter of 2022 was used to quantify the popularity of each stock in the hedge fund universe.
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Best Young Stocks to Buy and Hold For Next 20 Years
10. Aurora Cannabis Inc. (NASDAQ:ACB)
Number of Hedge Fund Holders: 10
Aurora Cannabis Inc. (NASDAQ:ACB) produces, distributes, and sells cannabis and cannabis-derivative products in Canada and internationally. It is one of the best IPO stocks to invest in. On October 7, Aurora Cannabis said it has repurchased $23 million principal amount of its convertible senior notes at a 5.45% discount to par value at a total cost, including its accrued interest, of C$29.8 million in cash.
On September 19, investment advisory Piper Sandler maintained a Neutral rating on Aurora Cannabis (NVN:ACB) stock and lowered the price target to $3 from $4. Analyst Michael Lavery issued the ratings update.
At the end of the second quarter of 2022, 10 hedge funds in the database of Insider Monkey held stakes worth $45.7 million in Aurora Cannabis Inc. (NASDAQ:ACB), compared to 9 in the preceding quarter worth $40.8 million.
Just like Coupang, Inc. (NYSE:CPNG), Qualtrics International Inc. (NASDAQ:XM), and Affirm Holdings, Inc. (NASDAQ:AFRM), Aurora Cannabis Inc. (NASDAQ:ACB) is one of the best young stocks to buy now according to hedge funds.
9. Petco Health and Wellness Company, Inc. (NASDAQ:WOOF)
Number of Hedge Fund Holders: 21
Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) is a health and wellness company that focuses on enhancing the lives of pets, pet owners, and its Petco partners. It is one of the top IPO stocks to invest in. On October 3, Petco Health and Wellness unwrapped its One Stop Holiday Shop to include pets and their owners in holiday gifting with the new More and Merrier collection. The company is also offering more convenient ways to shop and announced its holiday live social commerce event.
On September 6, RBC Capital analyst Steven Shemesh initiated coverage of Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) stock with an Outperform rating and a $17 price target, noting that the company is well positioned to capture a larger portion of the already fast-growing US pet sector in the long run.
At the end of the second quarter of 2022, 21 hedge funds in the database of Insider Monkey held stakes worth $111 million in Petco Health and Wellness Company, Inc. (NASDAQ:WOOF), compared to 23 the preceding quarter worth $213.7 million.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Petco Health and Wellness Company, Inc. (NASDAQ:WOOF) was one of them. Here is what the fund said:
“While we continue to have a favourable opinion of the online pet products retailer, we decided to consolidate our exposure to the pet industry within our existing holding Petco Health & Wellness (NASDAQ:WOOF), which is transforming its stores into omnichannel locations offering services such as grooming, short-term pet boarding and veterinary clinics in addition to traditional retail products such as pet toys and food. We used the proceeds from the sale to add to positions we believe offer greater upside potential.”
8. Nextdoor Holdings, Inc. (NYSE:KIND)
Number of Hedge Fund Holders: 21
Nextdoor Holdings, Inc. (NYSE:KIND) operates as a neighborhood network that connects neighbors, businesses, and public services in the United States and internationally. It is one of the elite IPO stocks to invest in. On September 28, through a joint research study with Kindness.org, Nextdoor celebrated National Neighbor Day with Verizon, one of the largest communication technology companies in the world, with a release of new insights that shed light on the most impactful acts of kindness to neighbors.
On August 10, Citi analyst Ronald Josey maintained a Neutral rating on Nextdoor Holdings, Inc. (NYSE:KIND) stock and lowered the price target to $3.75 from $4.50, appreciating the second quarter earnings results of the firm.
At the end of the second quarter of 2022, 21 hedge funds in the database of Insider Monkey held stakes worth $57 million in Nextdoor Holdings, Inc. (NYSE:KIND), compared to 23 in the previous quarter worth $116 million.
7. SoFi Technologies, Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 22
SoFi Technologies, Inc. (NASDAQ:SOFI) provides digital financial services. It is one of the major IPO stocks to invest in. On September 7, SoFi Technologies said that it has signed Justin Herbert, the Los Angeles Chargers quarterback, for a three year partnership which will see Herbert appear in television spots and he will feature in Sofi’s Break Up With Bad Banking campaign during the 2022 football season.
On September 14, Bank of America analyst Mihir Bhatia upgraded SoFi Technologies (NASDAQ:SOFI) stock to Buy from Neutral with a price target of $9, up from $8, noting that the company has a potential growth path over the next few quarters through high profile national football league marketing.
At the end of the second quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $337.6 million in SoFi Technologies, Inc. (NASDAQ:SOFI), compared to 22 in the preceding quarter worth $475 million.
In its Q4 2021 investor letter, Altron Capital Management, an asset management firm, highlighted a few stocks and SoFi Technologies, Inc. (NASDAQ:SOFI) was one of them. Here is what the fund said:
“We have been building our position in SoFi Technologies, Inc. (NASDAQ:SOFI) over the last two quarters but have not yet written about our thesis until now. SoFi is an online financial technology company that started off refinancing student loans. This segment remains a big part of the company’s business, but they have more recently expanded their products to offer an entire suite of financial services including personal banking, investing, and credit. While their collection of products is still evolving and not yet complete, we believe the company is in the early stages of its inflection. The company nearly doubled its member count over the past year and is growing 50%+ despite its loan refinancing business taking a hit due to the COVID-related loan moratorium. Furthermore, the company is close to obtaining a bank charter through its acquisition of Golden Pacific Bancorp, a community bank based in Sacramento. A bank charter would allow SoFi to take in its own customer deposits, lowering its cost of capital and expanding the company’s breadth of financial offerings.
While SoFi is not the only online banking platform out there, we believe it could take a decent share of the financial services market. Banking is a notoriously sticky business, as the inconvenience and hassle of switching banks prevent consumers from jumping to competitors regardless of cost. This is one of the reasons that traditional banks are one of the few businesses to have truly been disrupted by technology. We think SoFi is well on its way to changing that and creating a new paradigm for the future of consumer banking and financial services (read more)
6. Bumble Inc. (NASDAQ:BMBL)
Number of Hedge Fund Holders: 23
Bumble Inc. (NASDAQ:BMBL) provides online dating and social networking platforms in North America, Europe, internationally. It is one of the prominent IPO stocks to invest in. On October 13, Bumble said it has partnered with Apple TV’s hit show Ted Lasso to bring the fictional dating app Bantr to reality for its users, where users cannot see each other’s photos. On October 13, Bumble launched its weekly Banter Live which allows users to blind date via chat.
On October 4, JPMorgan analyst Cory Carpenter maintained an Overweight rating on Bumble Inc. (NASDAQ:BMBL) stock and lowered the price target to $35 from $39, highlighting that lowered estimates reflected currency moves.
At the end of the second quarter of 2022, 23 hedge funds in the database of Insider Monkey held stakes worth $156 million in Bumble Inc. (NASDAQ:BMBL), compared to 17 the preceding quarter worth $233.8 million.
In addition to Coupang, Inc. (NYSE:CPNG), Qualtrics International Inc. (NASDAQ:XM), and Affirm Holdings, Inc. (NASDAQ:AFRM), Bumble Inc. (NASDAQ:BMBL) is one of the best young stocks to buy now according to hedge funds.
In its Q2 2022 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Bumble Inc. (NASDAQ:BMBL) was one of them. Here is what the fund said:
“Online dating company Bumble Inc. (NASDAQ:BMBL) has been successfully executing its core strategic priorities focused on driving scale and engagement, monetization, and profitability. We are excited about the market potential for online dating and believe Bumble can take share and leverage its brand in adjacent categories. This is a category we believe should be resilient no matter what happens with the economy.”
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Disclosure. None. 10 Best Young Stocks to Buy and Hold For Next 20 Years is originally published on Insider Monkey.