Do you have $5,000? 2 tech stocks to buy and hold for the long term

Jhe Nasdaq Compound, a closely watched index made up of leading tech growth stocks, is down about 24.6% so far in 2022. Several household names have seen their stock prices fall even more than that. But remember that the lower the market, the greater the opportunities to make money when the market inevitably rebounds.

Strong companies with massive growth prospects are already down more than 50% from their all-time high. If you have $5,000, invest an equal amount in Roblox (NYSE:RBLX) and StoneCo (NASDAQ:STNE) could push it into five figures by 2030. Let’s take a closer look at these two growth stocks and why they are good buy-and-hold candidates.

Image source: Getty Images.

1.Roblox

Roblox’s stock price has fallen more than 80% after hitting an all-time high of $141.60 in 2021. The slower growth can be attributed to part of the price drop, but there are several reasons why Roblox is always a good long-term investment. .

The company reported a 3% decline in adjusted revenue (or bookings) in the first quarter, a far cry from the pandemic-related pace of 161% seen in the same quarter in 2021. Growth has slowed as kids are going back to school, but Roblox can keep growing. It ended April with 53 million daily active users, up 23% year-over-year. These users have spent 11.8 billion hours playing games on the platform, providing the company with a highly engaged audience to monetize over time.

According to a recent study by gaming gurus at Newzoo, Gen Zers (ages 10-24) spend an average of more than seven hours a week playing video games. More importantly, when it comes to Roblox activities, 69% of Gen Zers said they were willing to spend money playing games. As a leading gaming platform targeting the same demographic, Roblox has plenty of opportunities to grow its business over the long term, especially with popular brands such as Nike and KeringGucci puts its own immersive virtual worlds on the platform to attract users.

The stock was probably a little overpriced last year, but the sale has completely changed the value proposition. The market may be punishing the stock for Roblox’s reported streak of bottom line losses, but what’s often overlooked is that Roblox generated over $500 million in free cash flow in 2021. Giving away games for free in order to earn money from selling additional content can be a very profitable business strategy.

With a price to free cash flow ratio of just 22, there is currently solid value underpinning this top metaverse stock. That doesn’t mean the stock can’t hit new lows, but investors buying at these levels have a good chance of beating the market over the next 10 years with this stock.

Worker behind restaurant counter with smartphone.

Image source: Getty Images.

2.StoneCo

There are approximately 13.5 million micro, small and medium enterprises in Brazil, where many merchants do not have access to e-commerce solutions. Many small businesses in the region do not have access to financial services or pay too many fees to traditional banks. This is where StoneCo comes in.

Over the past eight years since its launch, StoneCo has gained market share and disrupted traditional banking in one of the fastest growing e-commerce markets in the world. Since 2017, its share of merchant acquiring volumes has increased from 4% to 11.2%. This makes StoneCo the largest merchant acquirer in Brazil and the fourth largest in terms of total volume.

The company still has tremendous growth opportunity to serve millions of merchants in the region. At the end of 2021, StoneCo was serving 1.7 million active payment customers, leaving plenty of room for growth. The company generates revenue through payment processing fees. It also charges monthly subscription fees for other financial services, including the rental of point-of-sale equipment. Revenue more than doubled last year to 4.8 billion reais (about $900 million at current exchange rates).

After an epic slump in 2021, the stock now trades at an attractive price-earnings ratio of 22 based on this year’s analyst consensus estimate – very modest for a company producing such growth with the potential to continue. to add more customers to its network. You can only buy growth stocks cheaply in a bear market.

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John Ballard has no position in the stocks mentioned. The Motley Fool holds positions and endorses Nike, Roblox Corporation, and Stoneco LTD. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.