Monster stocks tend to tap into long-lived trends that support growth in their markets, and they typically do so using evergreen business models that don't change much over time. If you can pick up a few of these companies and hold on to their stock for long enough, your chances of getting richer increase. The longer you're willing to hold, the less short-term factors like valuation will matter, which makes it even easier to decide to invest today.
With that in mind, here are two monster growth stocks that are likely to keep performing strongly whether you're investing for three years or for 30 -- and both are ripe for purchase right now.
Without Steris, (NYSE: STE), you probably wouldn't find the cleanliness standards of your local hospital to be up to snuff, as it's one of the most crucial suppliers of sterilization products and services for the entire healthcare sector. It's a monster stock because its customers can't do much of anything they need to do without the company's products, and there aren't many substitutes for what it offers.
For example, its sterilization consumables segment sells the alcohol wipes and other cleaning chemicals that hospitals and clinics need to keep their sensitive spaces in pristine condition. It also sells those same customers sterilization hardware that they use for tools and medical waste, which makes it more convenient to buy other sterility goods from Steris rather than from a competing smaller supplier.
That's how its trailing-12-month (TTM) revenue is greater than $4.7 billion, and why its TTM sales rose by 226.3% over the last 10 years. A pullback in one of its segments is unlikely to spill over into its others, making its top line relatively secure.
Supply chain issues have been a headwind this year, but management expects them to abate, and they shouldn't be a long-term drag on the stock.
There's not much chance of hospitals stopping their purchases of sterility goods without a major upset in their operations, nor is there much of a chance that a competitor might develop something dramatically better than what the company is offering. While there are a few different grades of sterility for healthcare materials and facilities, beyond a certain level of sterilization the benefits of additional sterilization are negligible.
So as long as Steris enables its customers to reach their target sterility thresholds (which vary depending on the intended application), new technologies are unlikely to be both cheaper and more effective, which are the preconditions for stealing its market share.
To sweeten the pot even more, Steris also sells to life sciences businesses that are conducting laboratory research or pharmaceutical manufacturing. Therefore, as the healthcare sector itself grows over time (and it will), the company will benefit from sales to both slowly expanding segments, like hospitals, and to more-rapidly expanding segments like biotechnology. And that ensures it will be able to keep rewarding investors with long-term growth.
2. Costco Wholesale
Imagine a business where customers pay for the right to walk inside of the store to look at the products for sale, even if they don't buy anything. That's precisely the case with Costco Wholesale(NASDAQ: COST), and that's a big part of the reason it's another monster stock worth buying today.
Its business model is to sell bulk groceries and other bulk consumer goods to its subscribers, who benefit from the wholesaler's bargain-basement pricing and ongoing resistance to hiking prices during periods of inflation, like now. You can buy everything including salmon filets, lawn furniture, clothing, and prescription medicines at its warehouses, and when paired with its low prices, it has the potential to be a one-stop-shop for most of the things that consumers need.
And that's another reason it has staying power regardless of the economy, which should reduce any hesitations that investors have about buying the stock right now.
It brought in more than $226.9 billion in revenue during 2021, and its TTM net income nearly doubled in the last five years alone. Management is keen on rewarding investors with hikes to its dividend, share buybacks, and the occasional special dividend. And with 120.9 million members worldwide and TTM membership fee revenue of $4.3 billion, Costco's razor-thin profit margin of near 2.5% on the products it sells isn't a red flag because of the company's massive scale.
It can always hike membership fees if it wants to juice its annual income during a downturn. Nothing needs to change about its strategy. Simply building out new warehouses to add to its global collection of 845 locations has been a very successful approach to growing the company. And for companies meant to be long-term investments like Costco, being able to keep growing by doing more of the same thing is a treasure for investors.
10 stocks we like better than Steris
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Steris wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of December 1, 2022
Alex Carchidi has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.