Two growth stocks I’d buy and hold for 20 years

These two growth shares appear to offer significant long-term capital appreciation potential.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Finding companies that are able to offer growth over a sustained period is never easy. Ultimately, fashion and tastes change, which can make even the most innovative of businesses quickly seem outdated.

However, there are some which appear to have significant tailwinds for the long term. Here are two prime examples which could be worth buying and holding for a long period of time.

Future potential

Reporting on Tuesday was sweeteners producer Purecircle (LSE: PURE). The company was able to deliver double-digit growth in the first half of the year, with sales up 13.3%. It experienced upbeat performances in both the US and Europe, with gross profit increasing to $19.7m.

However, gross margin fell by 3.6 percentage points versus the same period of the prior year. This was largely due to negative currency effects, an unfavourable sales mix, and the transition to a more expensive leaf variety that’s set to yield higher returns in the future.

Looking ahead, demand for natural sweeteners in the food and beverage market is on the up. Consumers are becoming increasingly health conscious and this means that they may turn to alternative products over the long run. As such, its future appears to be positive.

With Purecircle forecast to grow its bottom line by 49% this year and by a further 69% next year, it appears to offer a strong growth outlook. Since its shares trade on a price-to-earnings growth (PEG) ratio of just 0.8, they appear to offer excellent value for money. As such, now could be the perfect time to buy in for the long run.

Diverse business

Also offering growth potential over the long run is fellow ingredients specialist ABF (LSE: ABF). The company has a solid track record of growth while its range of operations mean it’s a relatively well-diversified entity. Certainly, in recent years its retail clothing arm Primark operation has become the main focal point of the business. But with a range of other divisions, it continues to offer relatively stable return potential.

With ABF forecast to grow its bottom line by 10% in the next financial year, the company appears to have a solid growth outlook. Furthermore, with its successful retail division focused on the value segment, alongside growing a US business, it could become increasingly popular if the performance of the UK economy comes under pressure. In fact, in the last financial crisis, Primark won customers from mid-tier operators, and the same could happen in the next few years. Inflation is already relatively high and consumer spending could be squeezed if it remains above wage growth.

As such, ABF could prove to be a strong option for the long run. Its risk/reward ratio seems to be enticing, with a PEG ratio of 1.9 seemingly offering fair value for money given the level at which the wider index trades.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Associated British Foods. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

A pastel colored growing graph with rising rocket.
Investing Articles

How much passive income could I make for every £1,000 invested in Aviva shares?

Even a relatively small investment in Aviva shares could generate much greater passive income, particularly if the dividends are reinvested…

Read more »

Close-up of British bank notes
Investing Articles

I’m considering 100 shares in this FTSE 250 gem to aim for £300 a month in dividends

Mark Hartley outlines why a lesser-known banking stock from the FTSE 250's worth considering for an income portfolio in 2024.

Read more »

Investing Articles

History suggests these UK shares might soar if interest rates are cut in August

Some UK shares could rocket if interest rates fall from its 5.25% high next month. And there's one our writer…

Read more »

Female Doctor In White Coat Having Meeting With Woman Patient In Office
Investing Articles

Here’s why H1 results could boost the AstraZeneca share price

The AstraZeneca share price has been a success story in the past five years. With H1 results due, can it…

Read more »

Investing Articles

£17,365 in savings? Here’s how I’d use it to target a £6,700-a-month passive income

Here's how a lump sum investment could pave the way for me to make a four-figure monthly passive income in…

Read more »

Investing Articles

Down more than 10% in 6 months, Fools are backing these 5 UK stocks to reverse that – and then some! – by 2025

Some of our UK free-site writers have put forward their candidates for turnaround stocks!

Read more »

Investing Articles

Down 23%! Should I buy more CrowdStrike shares for my Stocks and Shares ISA?

Sometimes bad news can be good news for long-term investors. But is that the case for CrowdStrike in relation to…

Read more »

Investing Articles

2 UK shares near 52-week lows I’m considering snapping up

These UK shares are loitering near, or at, 52-week lows. Are these prime opportunities for our writer to boost her…

Read more »