2 Growth Stocks That Could Beat the Market Over the Next 10 Years

Many high-octane growth stocks are primed for a strong recovery after a brutal 2022. That slingshot effect could serve as a quick start to a market-beating performance in the long run. In particular, I see tremendous potential value in media-streaming technology specialist Roku (ROKU 4.43%) and digital-advertising expert The Trade Desk (TTD 3.18%) right now.

Simply matching the returns of the S&P 500 index from the depths of a bear market is a powerful money-making strategy. Roku and The Trade Desk are poised to do much better than that. Here’s how.

Roku: The studio-agnostic giant of streaming video

Founded by serial entrepreneur Anthony Wood in 2002, Roku was the first company to produce video-streaming devices in partnership with Netflix 16 years ago. Wood still runs the show as CEO and chairman of the board, ensuring that the original vision continues to drive Roku’s business operations. Investors love this kind of long-lasting continuity.

Nobody can match this company’s long experience and deep expertise in creating user-friendly digital-viewing platforms. As a result, Roku has become the leading provider of streaming sticks and licensed smart-TV software.

It really doesn’t matter whether Netflix, Disney, or Amazon wins the video-streaming wars in the long run. All of them must support Roku’s products and services or risk losing millions of customers. As long as digital media keeps growing, so will Roku.

You can call this first quarter the bottom of the third or whatever sporty variation on “the early days” you like. Either way, you have barely seen Roku’s long-term growth story’s toddler years.

The Trade Desk: Making online ads more cost-effective

The Trade Desk has a long history, too. The company was founded in 2009 by two former Microsoft employees who still serve today as the company’s CEO and chief technical officer. That’s another promising long-term connection between the founder’s original vision and the state of real-world operations many years later. Great stuff.

This company combines deep expertise in running automated marketing plans with a massive client list and a commitment to the open internet — accessible to everyone. That pledge includes the game-changing introduction of Unified ID 2.0. This anonymous data collection tool should become the de facto ad-industry standard when the major web browsers stop supporting third-party tracking cookies — an unstoppable change that’s already halfway complete.

In other words, The Trade Desk is uniquely equipped to handle the next era of online-advertising campaigns. It’s the literal inventor of the next-generation technology through which ad managers will keep an eye on the performance of their campaigns. Even without that advantage, The Trade Desk could conceivably make do without advanced-tracking tech since it has access to publishing data via long-standing relationships with every major player.

The Trade Desk exists to make online ads more effective and less intrusive. When the company does a good job, it generates more ad-based sales while keeping more money in its clients’ pockets.

We’re looking at another long-term winner here as advertising dollars keep moving off their old billboards or TV screens and onto online content platforms. If that sounds like a good idea, you should put The Trade Desk near the top of your list for further research and stock-buying ideas.

Thriving businesses and crashing stock charts

Roku and The Trade Desk look like no-brainer buys in nearly any economy, given the miles and miles of future growth that lie ahead of them. The fact that they are on fire sale nowadays only makes them more alluring.

These stocks were swept up in last-year’s broad retreat from richly valued growth stocks, and the price cuts were accelerated by the weak online-advertising market. The Trade Desk’s stock now trades 57% below its 2021 all-time highs. Roku shares offer an even beefier discount of 89% over a similar period.

Keep in mind that the companies continued to deliver double-digit revenue growth, even in this ad-sales crisis:

TTD Revenue (TTM) data by YCharts. TTM = trailing 12 months. YOY = year over year.

This mismatch between booming-business results and plunging stock charts makes me reach for the “buy” button. Feel free to check up on my analysis with your own research, but I think you’ll come back to the same conclusion. Buying Roku and The Trade Desk stocks today should set you up to make lots of money as their growth stories develop over the next decade.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Amazon.com, Netflix, Roku, Trade Desk, and Walt Disney. The Motley Fool has positions in and recommends Amazon.com, Microsoft, Netflix, Roku, Trade Desk, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.