2 Unstoppable Growth Stocks to Buy and Hold for the Next Decade

Investing in stocks is one of the best ways to build life-changing wealth. Over the past two decades, the S&P 500 has produced an annualized return of 7.3%, a pace that would double your money every 10 years. Of course, the easiest way to tap into that wealth is to buy an exchange traded fund, or ETF, that tracks the popular index. But if you're willing to do the extra work, a diversified portfolio of individual stocks could make you even richer.

For instance, HubSpot (HUBS 2.50%) and Axon Enterprise (AXON 0.24%) are key players in sizable industries, and I think both stocks could grow fourfold in the next decade, a pace that would turn $250,000 into $1 million.

Here's what you should know.

Source: Getty Images.

1. HubSpot

HubSpot specializes in customer relationship management (CRM). Its software suite consists of front-end tools for marketing, sales, service, and content management, as well as back-end tools for operational efficiency. Collectively, those products help clients attract and engage leads, convert leads into customers, and maintain customer loyalty over time.

In 2006, HubSpot started with marketing automation software built around an inbound strategy. To clarify, outbound marketing involves reaching out to consumers with unsolicited ads, but an inbound strategy seeks to create content (i.e. websites, social posts) that draws consumers in. And that approach is still core to HubSpot's CRM software. But as the company has added new products, its ecosystem has become increasingly sticky.

In 2017, less than 35% of HubSpot's clients used multiple products, but that figure ticked up to 57% in the first half of 2021. Similarly, less than 20% of customers started by purchasing multiple products in 2017, but 50% now start with multiple products. In both cases, that means clients are relying more heavily on HubSpot, which makes it harder to cut ties. In other words, the switching costs are rising.

Not surprisingly, that trend has powered an impressive financial performance. During the most recent quarter, HubSpot surpassed 128,000 customers, up 34%, and the average subscription revenue per customer jumped 9% over the past year.

Source: YCharts. TTM = trailing-12-months. CAGR = compound annual growth rate.

Bank of America (BOA) Securities analyst Brad Sill puts HubSpot's addressable market at $87 billion, a figure that underscores the importance of CRM software. In an increasingly digital world, consumers have more options than ever, and businesses that hope to maintain customer loyalty must provide a great experience during every interaction. HubSpot plays into that trend perfectly, and the company has demonstrated the effectiveness of its land-and-expand growth strategy.

Over the next decade, if HubSpot can keep its sales growth above 20%, I think the company could achieve a market cap of $84 billion, approximately fourfold higher than its current valuation.

2. Axon Enterprise

Axon has long been the leading manufacturer of conducted electrical weapons (i.e. TASERs), but the company's portfolio has expanded significantly in recent years, becoming an ecosystem of connected sensors and software that aims to make law enforcement agencies more efficient. Specifically, Axon's sensors -- body-worn cameras, dash cameras, drone-mounted cameras -- feed data to Axon Evidence, the world's largest cloud-based repository for digital evidence.

That video data can also be integrated with Axon Records, an AI-powered platform that simplifies report writing, meaning officers spend less time on paperwork. Additionally, Axon's sensors power its real-time situational awareness software, Axon Respond, helping dispatchers and commanding officers make data-driven decisions based on live video feeds from officers in the field.

Of particular note, Axon has customer relationships with 17,000 of the 18,000 law enforcement agencies in the U.S., and it works with numerous international clients across Canada, Europe, Asia, and Latin America. Axon is a global leader in conducted electrical weapons, body-worn cameras, and digital evidence management software, and the company's dominance has translated into strong financial results.

Source: YCharts. TTM = trailing-12-months. CAGR = compound annual growth rate.

Axon has recently doubled down on two adjacent markets: justice software and consumer safety. In December, the company debuted Axon Attorney Premier, a digital evidence management solution for prosecutors and defense attorneys. And in January, Axon released a new TASER device for consumers as part of its self-defense product line; when paired with the mobile app, dispatchers are automatically alerted when the TASER device is fired.

Collectively, management puts its addressable market at $52 billion, leaving plenty of room for Axon to grow its business. And in light of the company's strong competitive position, I wouldn't be surprised to see Axon's market cap grow fourfold (from $9 billion to $36 billion) over the next decade. That's why this growth stock looks like a good addition to a long-term investor's portfolio.