The technology sector is brimming with resilient stocks that stand the test of time, but among them, two exceptional companies shine brighter than the rest.
What exactly qualifies as a resilient stock? In my perspective, it’s a stock characterized by robust fundamentals and strong growth potential, making it a valuable long-term investment — ideally for a duration of five years or more.
Fortunately, the tech industry boasts a wealth of stocks that fit this description. Let’s delve into two of the most promising options.
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1. Spotify Technology: A Leader in Music Streaming Growth
Kicking off our list is Spotify Technology (SPOT 11.44%).
Having surged nearly 500% since the beginning of 2023, Spotify has undoubtedly transformed the fortunes of many investors. Nonetheless, I firmly believe that the stock still possesses substantial growth potential ahead.
Spotify operates as the premier music streaming platform globally. In its latest quarterly report, covering the three months ending September 30, Spotify disclosed an impressive tally of over 640 million monthly active users (MAUs), reflecting an 11% increase year over year.
This enormous user base not only represents approximately 8% of the global population but is also becoming increasingly profitable. Spotify’s subscriber count has reached 252 million, marking a 12% rise from the previous year. Importantly, this segment is expanding at a faster rate than the total user count and enjoys higher profit margins compared to its ad-supported counterparts.
In fact, Spotify’s premium subscribers account for a remarkable 88% of the company’s total revenue, while ad-supported users contribute just 12%. Moreover, Spotify is capitalizing on the robust growth of the streaming market, with overall revenue climbing 19% year over year and operating margins hitting a historic high of 11.4%.
Overall, Spotify stands as a high-performing company with a clear trajectory for continued success, making it an exciting prospect for investors.
2. Meta Platforms: A Digital Advertising Powerhouse
Next on our list is Meta Platforms (META -0.82%).
One compelling reason why I consider Meta a bulletproof stock poised to enrich investors in the coming years is its status as a massive cash-generating entity.
Meta is a leading player in the digital advertising landscape, which is an expansive market. According to Statista, the digital ad market has already reached a valuation of $740 billion and is projected to grow to $965 billion by 2028.
With more than 3.3 billion daily active users (DAUs), Meta utilizes its vast reach to generate approximately $150 billion in annual advertising revenue. A significant portion of this revenue is transformed into profits and free cash flow due to the company’s impressive profit margins.
For instance, over the past 12 months, Meta has reported net income exceeding $55 billion and free cash flow surpassing $52 billion. These figures reflect remarkable increases of 201% and 146%, respectively, over the last five years.
This growth is crucial because stock prices often mirror fluctuations in profits and free cash flow. The correlation is evident in Meta’s stock performance over the past five years.
META data by YCharts
Furthermore, consensus analyst estimates from Yahoo! Finance suggest that Wall Street anticipates even greater financial growth for Meta. The average projection for next year indicates a revenue increase of 15%, reaching $187 billion.
Clearly, Meta stands as a financial titan. Its robust profits and free cash flow allow the company to provide significant value to shareholders through various means, including dividends and share repurchases. For those in search of a resilient tech stock, Meta is undoubtedly a compelling option to consider right now.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Spotify Technology. The Motley Fool has positions in and recommends Meta Platforms and Spotify Technology. The Motley Fool has a disclosure policy.
