On January 29, Martín Escobari, the co-president and head of global growth equity at General Atlantic, joined CNBC’s ‘Fast Money’ to discuss the dealmaking and IPO outlook for 2025. He stated that they have been without an IPO market for three and a half years, the longest drought this century. The second longest was 18 months starting in March 2000 after the dotcom bubble. Martín Escobari mentioned that about 3000 companies are waiting to go public, which will create opportunities for growth equity due to pricing for private companies ready to go public but unable to access capital. Historically, he noted that three things are needed for the IPO market to open: at least 18 months of positive market performance, two years remaining, a low and relatively stable VIX, and a handful of IPOs to pop. He said that they bet that it will happen and the IPO market will be back roaring in 2025.
Regarding investor appetite, he expressed excitement about recent AI news and its impact. He noted that all of General Atlantic’s portfolio companies are using AI to cut costs and drive productivity, with a visible ROI. He believes that the next generation of AI is the application layer, with companies creating new services using AI models, proprietary data, and better software after five years of venture bets. He said that General Atlantic just made three major investments in AI and anticipates the next 2 or 3 years to be very exciting on the application layer. When asked about key metrics for companies going public, Escobari emphasized profitability as a key metric. He stated that they want companies going after vast markets, that are profitable, and whose profitability is defensible with a true competitive advantage, not just temporary profits from being a first mover. He believes investors want large markets and the defensibility of profits in addition to profits.
In this context, we’re here with a list of the 12 best young stocks to buy and hold for 10 years.
Methodology
We first used the Finviz stock screener to compile a list of the top stocks that went public in the last 3 years and had a 3-year compound annual growth rate of over 15%. We then selected the 12 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q3 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
12 Best Young Stocks To Buy and Hold For 10 Years
12. Life360 (NASDAQ:LIF)
3-Year CAGR as of February 11: 51.24%
Number of Hedge Fund Holders: 10
Life360 (NASDAQ:LIF) operates a technology platform for locating people, pets, and things. Its services, offered through the Life360 mobile app and platform, include location coordination, safety features, and emergency assistance. It also provides Tile tracking devices and Jiobit wearable locators.
In mid-January, the company’s stock jumped 7% after UBS upgraded it to Buy from Neutral. UBS is bullish on Life360’s (NASDAQ:LIF) ad revenue growth potential and predicts that it will exceed market forecasts. A few reasons behind this stance include the company’s ad technology, its user data, and accelerating MAU (Monthly Active Users) growth. UBS also increased its price target from $52 to $55. The company delivered a 623% return to shareholders over the past five years. This is likely linked to strong revenue growth of 38% per year over the same five-year period.
The company achieved record Q3 2024 results driven by subscription and advertising growth. MAUs increased 32% year-over-year to 76.9 million, and Paying Circles grew 35% with an additional 159,000. Subscription revenue rose 27% to $71.8 million. Its advertising business, including its Uber partnership, showed promise, which indicated that advertising, with the help of Life360’s (NASDAQ:LIF) contextual data, could become a significant revenue source alongside subscriptions.
11. SoundHound AI Inc. (NASDAQ:SOUN)
3-Year CAGR as of February 11: 49.21%
Number of Hedge Fund Holders: 11
SoundHound AI Inc. (NASDAQ:SOUN) develops independent voice AI solutions and enables businesses to create conversational experiences. Its offerings include the Houndify platform for building voice assistants, SoundHound Chat AI for integrating real-time data, and SoundHound Smart Answering for customer service. It also provides various AI technologies like speech recognition, natural language understanding, and custom domains.
Fueled by surging enterprise AI demand, revenue for the company grew 89% year-over-year in Q3 2024, exceeding $25 million. The company’s AI-powered customer service solutions, which are integrated into hundreds of enterprise brands, now handle an annualized run rate of over 6 billion queries. This is more than double compared to the previous year. Additionally, as February began, SoundHound AI Inc. (NASDAQ:SOUN) introduced Brand Personalities for its in-car voice assistant. This allows automakers to customize the assistant’s persona to match their brand. This feature lets OEMs create seasonal personalities for different models or sub-brands.
Earlier in mid-December 2024, Wedbush analyst Dan Ives had reiterated his Outperform rating on the company and raised the price target to $22. This came from his optimism about the company’s growth prospects due to its position to capitalize on the increasing enterprise AI demand and its success in capturing market share.
10. Atlas Energy Solutions Inc. (NYSE:AESI)
3-Year CAGR as of February 11: 85.14%
Number of Hedge Fund Holders: 11
Atlas Energy Solutions Inc. (NYSE:AESI) produces and sells mesh and sand proppant for well completion in the Permian Basin. It also provides related services, which include transportation, logistics, storage, and contract labor, primarily to oil and natural gas exploration and production companies.
The company’s core business is providing proppant (frac sand) and related logistics services, primarily in the Permian Basin. In Q3 2024, it sold 6 million tons of frac sand, which generated $145.3 million in revenue. The average selling price was $24.34 per ton. The logistics and delivery services brought in another $159.1 million. A major catalyst for the company’s future growth is the Dune Express. This innovative conveyor belt system is almost finished and will improve how sand is transported to well sites, reducing truck traffic and emissions.
For 2025, Atlas Energy Solutions Inc. (NYSE:AESI) has already secured contracts for over 60% of the Dune Express’s capacity, with a portion destined for the Delaware Basin. Its combination of high-quality sand reserves and advanced logistics, including the Dune Express, gives it a competitive edge in a market facing headwinds like lower rig counts and tighter spending by oil and gas companies.
ClearBridge Small Cap Value Strategy sees Atlas Energy Solutions Inc. (NYSE:AESI) as a well-positioned, low-cost proppant producer that benefits from rising energy prices. It stated the following regarding Atlas Energy Solutions Inc. (NYSE:AESI) in its first quarter 2024 investor letter:
“Rising energy prices helped to support the performance of exploration and production (E&P) companies Magnolia Oil and Gas and Matador Resources and increased demand for energy equipment services, lifting companies like Atlas Energy Solutions Inc. (NYSE:AESI). We continue to have high conviction in Magnolia and Matador due to their strong and demonstrated ability to generate incremental returns on investment capital. Meanwhile Atlas continues to benefit from being the premier lowest-cost producer of materials needed by E&Ps in the Permian Basin. Building on its already strong distribution network and proprietary technology, Atlas’s recent announcement of its intention to acquire competitor Hi-Crush will make it the largest producer in the country of proppant, a material mixed with fracturing fluid for shale production, and solidify its position as a premier industry logistics provider. Expanding its product volume while maintaining its current fixed cost structure should support long-term returns.”
9. Atour Lifestyle Holdings Ltd. (NASDAQ:ATAT)
3-Year CAGR as of February 11: 47.41%
Number of Hedge Fund Holders: 15
Atour Lifestyle Holdings Ltd. (NASDAQ:ATAT) develops lifestyle brands centered around hotel offerings in China. It provides hotel management services, sells hotel supplies and other products, and offers various other services. These include retail management, investment management, and software and technology services.
Its main source of revenue remains its hotels, especially the ones that operate under a franchise model. In Q3 2024, these franchised hotels generated RMB 1,179 million in revenue. That’s a huge jump of 51% year-over-year and a 14.8% increase sequentially. Atour Lifestyle Holdings Ltd. (NASDAQ:ATAT) is rapidly expanding its network of franchised hotels. The total number of these hotels has grown by 39.3% compared to a year-ago period, reaching 1,504. The company is also improving its RevPAR, which is the Revenue Per Available Room. This metric increased to RMB 376 in Q3, up from RMB 355 in Q2.
Atour Lifestyle Holdings Ltd. (NASDAQ:ATAT) is also focusing on different hotel brands, like Atour, Atour Light, and the newly launched SAVHE brand, in order to cater to different segments of the market. This diversification supports the growth of its hotel business.
8. Arcadium Lithium (NYSE:ALTM)
3-Year CAGR as of February 11: 33.36%
Number of Hedge Fund Holders: 17
Arcadium Lithium (NYSE:ALTM) produces lithium chemical products, which include lithium hydroxide, lithium carbonate, and lithium metal, for various applications such as EVs, electronics, and industrial uses. It operates globally and has interests in properties in Argentina, Canada, and Western Australia.
Its lithium products business has three categories. The biggest one pertains to Lithium Hydroxide and Lithium Carbonate, showing the focus on the mainstream lithium chemical market. These are core lithium chemicals used in batteries and other applications. In Q3 2024, the company sold about 8,750 tons of these products, which generated $141.6 million in revenue. The average selling price was $16,200 per ton. In the first nine months of 2024, the company sold roughly 28,850 tons, which brought in $517.8 million in revenue at an average price of $18,000 per ton.
The company also sells Butyllithium and Other Lithium Specialties. These are more specialized lithium products. Q3 revenue for this segment was $39.4 million from about 480 tons (measured in Lithium Carbonate Equivalent). The average price was much higher, at $82,100 per ton (LCE). For the first nine months, this segment generated $130.2 million from ~1,390 tons (LCE) at an average price of $93,700 per LCE.
Despite short-term headwinds from volatile lithium prices, FPA Queens Road Small Cap Value Fund holds a small position in the company due to its low-cost assets, strong long-term outlook, and pending acquisition by Rio Tinto. It stated the following in its Q3 2024 investor letter:
“Arcadium Lithium plc (NYSE:ALTM) is an integrated, low-cost, well-managed lithium producer formed by the merger of Livent, which the Fund owned, and Allkem in Australia. The merger was completed at the beginning of this year and we received, and decided to hold, shares of Arcadium.25 The share price has declined because of volatile lithium prices that collapsed from bubbly levels at the beginning of 2023.26 Estimates for electric vehicle production are slowing and capacity got ahead of demand; the industry is now waiting for a supply response. On October 03, 2024, post quarter end, Arcadium announced that they are getting bought by Rio Tinto for $5.85 per share.
Arcadium is an unusual investment for us. We normally avoid the commodity and materials sectors, and have kept our position in Arcadium small. But we believe Arcadium has a unique position in an industry with a strong long-term outlook. The company has low-cost production assets, is virtually debt-free, and has considerable capacity additions planned near-term.”
7. Joint Stock Company Kaspi.kz (NASDAQ:KSPI)
3-Year CAGR as of February 11: 46.51%
Number of Hedge Fund Holders: 26
Joint Stock Company Kaspi.kz (NASDAQ:KSPI) provides payments, marketplace, and fintech solutions in Kazakhstan. Through its three platforms, it facilitates transactions between consumers and merchants, connects online and offline sellers with buyers, and offers financial products. These products include BNPL and merchant financing. Its services are accessible through its super app and include features like mobile commerce, travel booking, and various financial tools.
The company’s Fintech segment showed strong Q3 2024 performance, with revenue up 24% and net income increasing 15% year-over-year. This was driven by lower interest rates and the growing influence of AI. AI-powered risk assessment and credit scoring models are boosting loan origination while keeping the cost of risk stable. The loan portfolio grew 39% year-over-year. With continued AI advancements and lower funding costs, profitability is expected to improve.
Joint Stock Company Kaspi.kz (NASDAQ:KSPI) acquired 40,000,000 Class A and 173,246,220 Class B shares (65.41% of total outstanding shares) of Hepsiburada for about $1,127 million as January ended. Hepsiburada is a leading e-commerce platform in Turkey. Both companies will maintain separate brands and operations.
6. Brightspring Health Services Inc. (NASDAQ:BTSG)
3-Year CAGR as of February 11: 18.48%
Number of Hedge Fund Holders: 29
Brightspring Health Services Inc. (NASDAQ:BTSG) provides home and community-based healthcare services in the US. Its platform delivers pharmacy and provider services, which include clinical and supportive care, to Medicare, Medicaid, and insured populations.
In Q3 2024, the company’s Pharmacy Solutions segment made $2.3 billion in revenue. This was a 35% jump compared to the same period in 2023. This growth comes from strong prescription volumes. The Infusion and Specialty business, within Pharmacy Solutions, saw revenue explode by 42% year-over-year. The home and community pharmacy business also performed well, with a 19% revenue increase. Overall, the Pharmacy Solutions segment processed 10.9 million prescriptions in Q3. This was a 15% increase year-over-year. Specialty prescriptions also saw a particularly large increase of 36%.
This performance was delivered by the company’s operational efficiency, effective sales and marketing, successful launches of new Limited Drug Distribution (LDD) therapies, and strategic acquisitions. Its LDD portfolio has grown to 123 therapies recently.
5. Nextracker Inc. (NASDAQ:NXT)
3-Year CAGR as of February 11: 27.96%
Number of Hedge Fund Holders: 32
Nextracker Inc. (NASDAQ:NXT) provides solar tracker and software solutions for utility-scale and distributed generation solar projects globally. Its offerings include the NX Horizon and NX Horizon-XTR tracking solutions, the TrueCapture control system for optimizing energy production, and the NX Navigator platform for monitoring and controlling solar projects.
Its core business is providing tracker systems for large solar power plants. These systems help solar panels track the sun and maximize energy production. In FQ3 2025, the company generated $679 million in revenue from these tracker systems. In these first nine months of the fiscal year, the company earned $2 billion, which is a 15% increase compared to last year. The demand for Nextracker Inc.’s (NASDAQ:NXT) systems is very strong, with a record backlog of over $4.5 billion in orders. This backlog has more than doubled since its IPO two years ago.
Nextracker Inc. (NASDAQ:NXT) offers a range of innovative products, including the NX Horizon tracker, specialized foundations, Hail Pro systems for storm protection, and the XTR tracker for uneven terrain. They also have software called TrueCapture that helps optimize energy production. The company emphasizes customer service, product innovation, and efficient operations.
4. Birkenstock Holding (NYSE:BIRK)
3-Year CAGR as of February 11: 17.57%
Number of Hedge Fund Holders: 36
Birkenstock Holding (NYSE:BIRK) manufactures and sells footwear, which includes sandals, shoes, and closed-toe styles. It also sells skincare products and accessories. It operates through e-commerce, owned retail stores, and business-to-business channels globally.
In the full year FY24, the company’s revenue grew by 22% year-over-year. This growth was driven by its footwear business, particularly the core styles of shoes (what they call “coastal silhouettes”), which grew more than twice as fast as the overall business. The company also saw growth in the Asia Pacific, Middle East, and Africa region. Its retail stores also grew more than twice as fast as the overall business. It opened 20 new stores, bringing the total to 67.
Birkenstock Holding (NYSE:BIRK) focuses on creating new and innovative products, like orthopedic shoes, a refreshed professional line, and more options for outdoor use. The company has a growing base of loyal customers, which increased by over 30% to 8 million in FY24. It tries to balance growth between B2B sales and D2C sales.
3. Seadrill Ltd. (NYSE:SDRL)
3-Year CAGR as of February 11: 24.03%
Number of Hedge Fund Holders: 42
Seadrill Ltd. (NYSE:SDRL) provides offshore contract drilling services to the oil and gas industry globally. It owns and operates drillships, semi-submersible rigs, and jack-up rigs for shallow and ultra-deepwater operations in various environments. It serves major oil companies, national oil companies, and independent oil and gas companies.
Its main business is deepwater drilling. In Q3 2024, it earned $263 million from contract drilling, which was flat year-over-year. The revenue from contract drilling depends on how many of the company’s drillships are working and the daily rate they charge. In Q3, some drillships finished their contracts and were taken out of service, which impacted revenue. However, the Sevan Louisiana drillship continued working at a higher rate, which helped balance things out.
As for 2025, Seadrill Ltd. (NYSE:SDRL) has already secured contracts for 70% of its available drillships. The company expects this number to increase as it secures more deals. Its strategy is to operate the “right rigs in the right regions.” It focuses on drillships that can do multiple tasks at once and are mostly newer, seventh-generation models. The company concentrates its operations in an area called the “Golden Triangle,” which includes the Gulf of Mexico, South America, and West Africa, where most deepwater drilling happens.
Due to a favorable industry structure, increasing demand for deepwater drilling, strong financials, and potential for free cash flow growth and shareholder returns, Patient Capital Management added to its Seadrill Ltd. (NYSE:SDRL) position. It said the following in its Q3 2024 investor letter:
“Energy names disappointed in the quarter following commodity prices lower throughout the period. We took the opportunity to add to our highest conviction ideas. We look to names that have idiosyncratic opportunities and are attractive in a variety of different commodity price environments. Many see risk to energy prices over the next year as supply is expected to outstrip demand by 1.3mb/d even before assuming any incremental OPEC supply comes onto the market. With commodities, consensus is rarely right. We assess companies on through cycle returns and normalized prices. From this perspective, we see a handful of attractive opportunities, including Energy Transfer (ET), Seadrill Limited (NYSE:SDRL) and Kosmos (KOS).
Seadrill benefits from a consolidated industry, with more rational players, and an emerging supply and demand imbalance. We think over time as offshore drilling plays a bigger role as the marginal producer, Seadrill will benefit from more attractive contract prices.
Seadrill Limited (SDRL) is the fourth largest pure play deepwater drilling specialist. The company emerged from bankruptcy in February 2022 with a net cash position. The company is set to benefit from limited supply and increasing demand in the deepwater drilling rig market. Nearly half of all deepwater drilling rigs in the world were scrapped during the last decade. In addition, player consolidation puts the industry in a more rational position than we have seen historically. As land-based oil production growth comes under pressure, offshore production is receiving renewed interest. With a highly specialized rig base, the company is benefiting from increasing prices which are leading to strong FCF yields given the limited need for CAPEX. The company has committed to returning 50% of free cash flow to shareholders via dividends and buybacks. Over the last 12-months, the company has reduced shares outstanding by 17%. As old contracts roll-over and new contracts are signed at the higher day rates, operating profit and FCF are expected to expand dramatically. Seadrill could either consolidate the space or be acquired.”
2. Reddit Inc. (NYSE:RDDT)
3-Year CAGR as of February 11: 40.89%
Number of Hedge Fund Holders: 52
Reddit Inc. (NYSE:RDDT) operates a website that organizes digital communities based on specific user interests. These communities allow users to engage in conversations by sharing experiences, links, images, and videos.
The company made $315.1 million from its advertising segment in Q3 2024. That’s a 56% increase year-over-year. It’s getting more ad views because it has more users and its ads are placed more effectively, which is driven by something called the “conversation placement ads.” These ads appear within or alongside online conversations and potentially target users based on the context of those discussions. Its ads are also performing well across the entire “sales funnel,” which means that they’re effective at attracting users at different stages of the buying process, especially those closer to making a purchase.
Reddit Inc. (NYSE:RDDT) is also working on making its ads better and easier for advertisers to use and offering unique ad formats. For example, the “conversation ads” have seen improvements in how often they lead to conversions. It’s also experimenting with putting ads in new places, like within the comments section, which could create more ad space.
JMP Securities is bullish on Reddit Inc.’s (NYSE:RDDT) advertising business, maintaining an Outperform rating and raising the price target to $190 from $160. The positive outlook for its Q4 digital advertising revenue is based on a healthy advertising market driven by strong holiday consumer spending, increased political ad spending, and improved business confidence.
1. Core Scientific Inc. (NASDAQ:CORZ)
3-Year CAGR as of February 11: 27.93%
Number of Hedge Fund Holders: 58
Core Scientific Inc. (NASDAQ:CORZ) provides digital asset mining services in North America. It offers blockchain infrastructure, software solutions, and data center mining facilities. It mines digital assets and provides hosting services for other bitcoin miners. These include equipment deployment, monitoring, and maintenance.
The company strengthened its presence in the high-performance computing (HPC) market by increasing its capacity. It repurposed 100 megawatts of infrastructure from bitcoin mining to HPC and secured a 12-year, 200-megawatt hosting contract with CoreWeave, using existing data centers, and infrastructure. CoreWeave is a cloud computing company specializing in high-performance computing for AI and other intensive workloads.
Core Scientific Inc. (NASDAQ:CORZ) has a competitive edge in the AI/HPC market thanks to its existing power infrastructure and data centers. Bernstein analyst Gautam Chhugani reiterated a Buy rating on the company with a $17 price target. Its hyperscaler status, power access, CoreWeave partnership, and rapid hybrid data center development support growth. While currently valued like a Bitcoin miner, 70% of its capacity is AI-focused, presenting an attractive investment opportunity.
While we acknowledge the growth potential of Core Scientific Inc. (NASDAQ:CORZ), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CORZ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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