Long-Term Potential: These Growth Stocks Could Dominate the Market

Selecting the right companies for an investment portfolio is crucial for achieving sustainable growth. Companies with promising business models, financial strength, and leadership competency are ideal candidates. Two outstanding candidates for long-term investors are Vertex Pharmaceuticals and MercadoLibre. Although Vertex Pharmaceuticals may not be as well-known as some other companies in the healthcare sector, it is a strong contender for investors aiming for sustainable success. For years, Vertex has led the market for cystic fibrosis therapies. Currently, Vertex generates the majority of its revenue from the drug Trikafta, which is approved for over 90% of U.S. patients with cystic fibrosis. The patent for this drug is secured for well over a decade. Together with its development partner CRISPR Therapeutics, Vertex received a groundbreaking approval for the CRISPR therapy Casgevy at the end of 2023, designed as a one-time functional cure for sickle cell anemia and transfusion-dependent beta-thalassemia. Despite these impressive milestones, Vertex plans to introduce further promising products in the near future, including a new triple-combination therapy for cystic fibrosis and the non-opioid pain medication Suzetrigine. In the past five years, Vertex has increased its annual revenues by more than 130%, while annual profits rose by about 200%. Free cash flow also grew by over 130% during this period. The company's stock has risen by more than 170% in this timeframe, significantly outperforming the S&P 500. Given its solid financial foundation, strong market position, and rapid advancements in new therapeutic areas, Vertex is likely to continue delivering above-average returns for investors. Another promising candidate is MercadoLibre, the leading e-commerce and fintech provider in Latin America. MercadoLibre controls about one-fifth of all e-commerce sales in the region, with Brazil and Mexico being the largest markets. With its fintech and e-commerce segments, the company covers an estimated 27% of the Brazilian and 14% of the Mexican market. In the first quarter of 2024, MercadoLibre's gross merchandise volume in these two countries increased by 30% year-over-year on a currency-adjusted basis. MercadoLibre is present in 18 countries and offers a wide range of services and products, including POS devices, digital payment solutions, prepaid and debit cards, as well as savings and investment products. In the last 12 months, MercadoLibre generated revenues of more than $15 billion, with profits exceeding $1.1 billion. The operating cash flow amounts to approximately $5.8 billion, and free cash flow stands at about $3.8 billion during this period. The company achieved a net revenue of $4.3 billion in the first quarter of 2024, an increase of 36% year-over-year (94% without currency influences). The total payment volume grew by 35% to $40.7 billion, while the gross merchandise volume rose by 20% to $11.4 billion. These increases are 86% and 71% respectively on a currency-neutral basis. Thanks to its broad market influence, MercadoLibre holds a significant advantage for continued growth in the future. The company's stock has more than doubled in recent years, and its strong financial growth could continue to support this trend. For investors, it might be advisable to get in early.