3 Growth Stocks to Buy and Hold Forever

You do not often come across businesses that stand the test of time. Such companies should possess a strong business model and offer products or services that make them relevant over the long term. They should also possess attributes that allow them to post sustainable growth in profits and free cash flow. Once you identify such growth stocks, you can consider including them as part of your investment portfolio.

Of course, no business grows smoothly without any hiccups. Although the identification of attractive growth stocks is the first step, you'd still need to monitor the business to assess if it is on track to fulfill your investment goals.

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Periodic volatility in corporate earnings is part and parcel of investing and should be factored into your investment thesis. As long as the underlying business remains robust and continues to grow, such stocks are great candidates for compounding your wealth if you buy and hold them over the long term.

We shine the spotlight on three such growth stocks that you can consider buying and owning forever.

Image source: Getty Images.

Block

Block (NYSE: SQ) is a financial technology company offering a variety of payment processing services to ease its customers' pain points. Some of its products include Square, Cash App, and Tidal, which offer commerce solutions, digital wallets, business software, and banking services.

Block recorded steady growth over the years, with total revenue rising from $17.7 billion in 2021 to $21.9 billion in 2023. Gross profit increased from $4.4 billion to $7.5 billion over the same period. Apart from 2023, when the business registered a small negative free cash flow, both 2021 and 2022 saw healthy positive free cash flow generation.

Block's momentum continued into the first nine months of 2024. Total revenue climbed 12% year over year to $18.1 billion, while gross profit increased by 20% year over year to $6.6 billion. The payments processing company also saw its free cash flow nearly double year over year to $1.6 billion.

Management is optimistic about its two main products, Square and Cash App, with Square's gross payments volume seeing year-over-year rises in October, and acceleration is expected in 2025.

Cash App saw monthly transacting actives increase from 55 million to 57 million year over year for the third quarter of 2024, while inflows per transacting active also improved from $1,132 to $1,233 over the same period. The plan is to increase gross profit per active user and drive paycheck deposit adoption for Cash App. As for Square, the company will drive the acquisition of new sellers while increasing retention for existing sellers.

The company continues to improve its platform with the introduction of new products such as Order Platform during the quarter. It also signed several new partners across different markets for Square, such as a distribution partnership with SalonCentric with hardware and software offerings to more beauty professionals.

This month, the company also announced a tie-up with Sysco, a global food service distributor, to introduce new features that help food and beverage sellers to run their businesses more easily. Block estimates that the total addressable markets for Cash App and Square are $75 billion and $130 billion, respectively, giving the business significant room to continue growing.

Palantir

Palantir Technologies (NASDAQ: PLTR) operates a platform that utilizes artificial intelligence to derive insights into big data provided by government organizations and corporations. The company touts versatility in helping its customers to solve their pain points and come up with novel solutions.

Palantir has demonstrated remarkable growth in the past several years. Revenue jumped from $1.5 billion in 2021 to $2.2 billion in 2023, and the business also posted an operating and net profit for 2023 as it managed a turnaround from the losses sustained in both 2021 and 2022. Palantir's free cash flow generation also more than doubled from $321.2 million to $697 million over the same period.

Palantir continued to report a strong set of results for the first nine months of 2024. Revenue increased by 26.1% year over year to $2 billion, while operating income soared more than fivefold year over year to $299 million. Net income stood at $383.2 million, more than triple the $116.4 million achieved in the prior year. Free cash flow also did well, surging by 70% year over year to $684 million.

The business saw its total customer count increase by 39% year over year to 629 for the third quarter, while its commercial customer count leaped 51% year over year to 498. The company continued to snag contracts with the U.S. Army and Special Operations Command. Palantir expanded its contract with the Special Operations Command to deliver software deployment on the edge by utilizing its AI capabilities. I

It also extended its partnership with the U.S. Army with its Vantage software, which enables the Army to perform essential missions and make faster decisions. This new contract, valued at around $400.7 million over four years, will introduce new AI capabilities to enable better data analytics across the organization.

Palantir's long-term relationship with the U.S. government and the Army is a strength that will enable the business to post long-term growth even as it continues to capture more customers to grow its top and bottom lines.

Carnival Corporation

Carnival Corporation (NYSE: CCL) is a cruise company that operates cruise brands such as Princess, Cunard, and Carnival across diverse locations around the world. The company recovered strongly after the pandemic to post solid growth, demonstrating that the strength of its brand and balance sheet can help it weather crises.

Revenue came in at just $1.9 billion back in fiscal 2021 (ended Nov. 30) as activity ground to a halt with the spread of the virus. By fiscal 2023, as countries reopened their borders, Carnival saw its revenue shoot up to $21.6 billion. That fiscal year, the cruise company posted an operating profit of $1.9 billion and a small loss of $74 million, a far cry from the $7.1 billion operating loss and $9.5 billion net loss incurred in fiscal 2021.

Free cash flow also recovered strongly post-pandemic, going from negative $7.7 billion in fiscal 2021 to positive $1 billion by fiscal 2023.

Carnival recently released its fiscal 2024 earnings, which was a blowout set of financial results. Full fiscal year revenue achieved an all-time high of $25 billion, up around 16% year over year. Operating income also hit a new record of $3.6 billion, up more than 82% year over year. Net income stood at $1.9 billion, a sharp turnaround from the small loss posted in fiscal 2023.

The company's cruises carried 13.5 million passengers in fiscal 2024, up from 12.5 million a year ago. Passenger cruise days also hit 100.5 million, an increase from 91.4 million in the previous fiscal year.

There could be more to come for Carnival as the cruise industry roars back to life after three tough years. Cunard reported record-breaking guest numbers for 2024, with the arrival of the brand's newest ship, Queen Anne, being a key factor for the stellar performance. The British cruise brand also launched three new cruise programs for 2026 and 2027 to drive demand.

Princess Cruises also saw record-breaking bookings through the Black Friday period, with bookings for 2025 sailings increasing 32% year over year. Bookings for 2026 itineraries were up 66% compared to bookings made for 2025 voyages. Carnival looks set to attain new records as demand for its cruises remains robust, and investors can look forward to better numbers in the years ahead.

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Royston Yang has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Block and Palantir Technologies. The Motley Fool recommends Carnival Corp. The Motley Fool has a disclosure policy.