2 Brilliant Growth Stocks to Buy Now and Hold for the Long Term

In a world where fleeting trends dominate headlines, true long-term growth stocks are rare gems. Two companies, Shopify (SHOP) and Toast (TOST), stand out as exceptional investments for investors seeking to capitalize on secular shifts in commerce and technology. Both boast robust fundamentals, scalable business models, and catalysts that promise decades of growth. Let’s dissect why these stocks deserve a place in your portfolio.

1. Shopify (SHOP): The E-Commerce Titan with AI-Driven Ambition

Shopify’s dominance in the e-commerce ecosystem is undeniable. With over 875 million unique shoppers served in 2024, the company is the go-to platform for businesses of all sizes. Yet, its growth story is far from over.

Why It’s a Buy:

• Revenue Growth: Shopify’s revenue surged 31% YoY in Q4 2024, driven by its $1.5 billion in annual free cash flow, a testament to its ability to scale profitably.
• AI Integration: The company’s recent rollout of AI tools—such as automated inventory management and personalized marketing—has positioned it as the “operating system of e-commerce.” These tools reduce costs for merchants and deepen customer stickiness.
• Global Expansion: With e-commerce expected to hit $7.4 trillion by 2025, Shopify’s 15% global market share leaves vast room to grow.

Valuation and Risk:

At 56x 2025 earnings estimates, Shopify trades at a premium. However, its 10-year compound annual growth rate (CAGR) of 34% justifies the multiple. Risks include rising competition and economic downturns, but its network effects—where more sellers attract more shoppers, and vice versa—act as a moat.

2. Toast (TOST): Revolutionizing the $1 Trillion Restaurant Industry

Toast is the hidden gem of restaurant technology. By offering a cloud-based platform that integrates payments, inventory, and staff management, it’s transforming how restaurants operate.

Why It’s a Buy:

• Market Penetration: Toast serves 134,000 locations in the U.S.—a mere 15% of the total restaurant market—leaving massive upside. The global restaurant tech market is projected to grow at a 10% CAGR through 2030.
• Profitability Turnaround: After years of investment, Toast posted its first profitable quarter in Q4 2024, with $33 million net income, and a 110% net retention rate, meaning customers are adopting more of its services.
• AI-Driven Insights: Toast’s data analytics—such as menu performance tracking and customer preference analysis—provide restaurants with actionable intelligence, creating a self-reinforcing competitive advantage.

Valuation and Risk:

Toast’s stock has dipped recently due to market volatility, but its 47% return over the past year underscores its potential. At 18x 2025 earnings estimates, it’s priced for growth. Risks include slower cloud adoption and regulatory hurdles, but its sticky ecosystem and high-margin Toast Capital division (which originated $1 billion in loans in 2024) mitigate these concerns.

Why Both Stocks Are Long-Term Winners

While Shopify and Toast operate in different industries, their success hinges on similar principles: AI-driven innovation, network effects, and underpenetrated markets.

• Shopify’s Edge: Its $56 valuation multiple may seem high, but its CAGR of 34% in EPS growth and control over a $7.4 trillion market justify it. The company’s AI tools are already attracting large merchants, a trend that will accelerate as automation becomes essential.
• Toast’s Play: With 15% U.S. market share, Toast’s runway is vast. As restaurants migrate to cloud solutions (a sector still in its infancy), Toast’s data analytics and ecosystem will ensure margin expansion and customer retention.

Conclusion: A Decade of Growth Ahead

Investors seeking compound growth should consider both Shopify and Toast as core holdings. Shopify’s premium valuation is warranted by its e-commerce leadership and AI capabilities, while Toast’s undervalued entry point and massive addressable market make it a high-reward, high-potential bet.

The numbers speak for themselves:
- Shopify’s 10-year CAGR of 34% and $1.5 billion FCF underscore its financial might.
- Toast’s 110% net retention rate and $1 trillion restaurant tech market ensure sustained growth.

Both stocks are poised to thrive in their respective sectors, offering investors exposure to two of the most critical trends of the next decade: e-commerce digitization and AI-driven enterprise software. Buy these stocks now, and hold them for the long term.

Disclosure: This analysis is for informational purposes only and should not be construed as financial advice. Always conduct your own research or consult a professional before making investment decisions.