It can be hard to hold huge winning stocks, but that is the best way to beat the stock market through buying individual companies. Just ask Warren Buffett, who sometimes holds a stock for multiple decades. Or founders of large technology players like Jeff Bezos, who still maintains a large position in Amazon to this day.
Holding a stock and not trimming your winning investments is more difficult than it seems. Your instinct will tell you to take a profit when a stock jumps, as it feels like the safe play for your portfolio. This is contrary to the philosophy of the great long-term investors.
Here are two stocks I think are buys today and plan on holding through thick and thin for the next decade.
Image source: Getty Images.
First up is the fast-growing Remitly Global(NASDAQ: RELY). It has come on the scene quickly and taken a share of the remittance market for individuals sending money overseas back to friends and family. Through a sleek mobile app, lower fees than traditional players and banking institutions, as well as a wide ability to pay out in local markets like India, Remitly is gaining a lot of share in the United States and increasingly other countries for cross-border transfers.
Total transfer volume was $16.2 billion last quarter, up 41% year over year and well outpacing industry growth. It has a measly 2%-3% market share of remittance payments, giving the company a huge runway for expansion as it goes for the United States to other countries around the world. Revenue grew 34% year over year to $362 million, while the company is now generating a positive net income, albeit just slightly at $11.4 million in the period.
Current earnings power underestimates the profit potential of Remitly’s business. With an asset-light model, the company’s true costs come from transaction processing and fees paid to financial partners. Most of its revenue is currently getting reinvested in product development and marketing to acquire new customers, which will fuel more revenue growth.
When the business matures, investors should expect Remitly’s profit margins to begin to expand, likely to 20% or higher. Its peer Wise already has a profit margin of 20%.
Growing quickly, Remitly’s annual revenue should soon hit $2 billion and has a path to grow to $5 billion over the long haul. This will enable the company to eventually generate at least $500 million in annual earnings, if not more.
Today, the stock has a market cap of $3.77 billion, which makes the stock cheap compared to the future earnings potential. Buy Remitly and sit tight through the ups and downs of the stock price.
The world of investing has changed rapidly in the last decade. Investors want free stock trades, global access to markets, easy-to-use mobile applications, and a variety of different financial instruments to buy. Robinhood Markets is the most well-known disrupter in stock brokerages, but it is underfollowed Interactive Brokers(NASDAQ: IBKR) that is the most profitable in the industry.
Born to serve advanced trades and investment funds, Interactive Brokers is a technology-first brokerage that offers global coverage, a wide variety of financial instruments to buy, and cheap or free trading fees for its brokerage clients. It is gaining a lot of market share, with customer accounts up 32% last quarter to 3.62 million. It may have a lot fewer total users than Robinhood (which has 26 million), but Interactive Brokers has close to double the total client assets at $573.5 billion, which demonstrates the high-end customer base that it serves.
These figures and Interactive Brokers’ asset-light efficiency enable it to generate pre-tax profit margins of 74%, which is better than almost any company in the world.
With hundreds of millions of investors around the world, Interactive Brokers is just scratching the surface when it comes to taking market share in the industry. It has a current price-to-earnings ratio (P/E) of 32, which is slightly high, but it still remains a great hold for investors over the next decade. As customers grow, so should earnings, which will drive the stock price higher over the long term.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Brett Schafer has positions in Amazon and Remitly Global. The Motley Fool has positions in and recommends Amazon, Interactive Brokers Group, and Wise Plc. The Motley Fool recommends the following options: long January 2027 $175 calls on Interactive Brokers Group and short January 2027 $185 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.
