Finding FTSE 250 stocks to buy and hold for the next decade is a challenge. While a company might look like it’s on top of the world today, it isn’t guaranteed to maintain its growth or competitive advantage.
That said, there are a couple of companies on the market I believe have a higher chance than their peers of growing for the next decade. So I’d buy these stocks for my portfolio and hold them until at least 2030.
FTSE 250 stocks to buy
The first company is a leading provider of IT infrastructure technology and services Softcat (LSE: SCT).
I think companies with a subscription-based business model stand a better chance of achieving growth in the long run. That’s precisely how Softcat operates. The organisation is both trying to win new customers and sell more to existing customers.
As the world becomes increasingly dependent on technology, I think the demand for services from companies like Softcat will only grow. This could present a once-in-a-lifetime opportunity for the group over the next decade. Last year was a record one for the firm, as the demand for IT services jumped significantly.
The group’s now building on this growth. For its fiscal third-quarter ended 30 April, revenues and gross profit both jumped at double-digit rates. This suggests the company’s growth in 2020 wasn’t a one-off.
Still, I should note that Softcat operates in a highly competitive market. So while the company may have the edge today, it could lose market share to competitors if management takes its eye off the ball.
That’s something I’ll be keeping an eye out for as we advance.
The other FTSE 250 company I’d buy is 888 (LSE: 888). As one of the world’s leading online betting groups, this enterprise might not be suitable for all investors.
But I like the stock for its growth potential. For the six months ended 30 June, overall revenues increased 29%. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $97m, compared to $70m in the prior-year period.
888’s returning some of these profits to investors, and the rest is being ploughed back into the business to drive growth. It’s investing heavily in the US and has a partnership with Sports Illustrated, the well-known American sports brand, which gives it an edge in this highly competitive market.
I believe the company’s growth investments will continue to support its expansion as we advance. That’s why I’d buy the stock as a buy-and-hold investment.
One thing I’ll be keeping an eye on is regulation. The group gleans 75% of its revenue in regulated and taxed markets. And there’ll always be a risk that regulations or taxes will change. This could hurt growth, or even force 888 to exit a previously profitable market.
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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has recommended Softcat. 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.