It pays to spot promising
growth stocks
that you can buy and keep for years or even decades. Such stocks can enable the value of your investment portfolio to increase over the years, bringing you closer to your dream retirement. Stocks that should be on your radar include those with a strong business model and brand, with a track record of growing their revenue and earnings. Ideally, they should also have large total addressable markets that they can tap into for continued growth and sustainable catalysts that will drive the business to the next level.
With the above attributes in mind, here are three attractive growth stocks that you can consider adding to your investment portfolio.
Spotify
Spotify Technology
(NYSE: SPOT)
offers a music, podcast, and video streaming service allowing users to access millions of songs and content from creators worldwide. The company is seeing steady growth in revenue and just turned profitable in 2024. Free cash flow ballooned from just 21 million euros to 2.3 billion euros from 2022 to 2024.
Metric
2022
2023
2024
Revenue
11.727 billion
13.247 billion
15,673 billion
Operating income
(659 million)
(446 million)
1.365 billion
Net income
(430 million)
(532 million)
1.138 billion
Free cash flow
21 million
674 million
2.284 billion
Data source: Spotify. Note: All figures in euros. 1 euro is worth about $1.124 at current exchange rates.
Spotify's strong performance continued in the first quarter of 2025. Total revenue rose 15% year over year to 4.2 billion euros, aided by 16% year-over-year growth in the company's premium segment. Gross margin stayed healthy at 31.6% with gross profit climbing 32% year over year to 1.3 billion euros. With operating expenses dipping 2% year over year, operating income more than tripled year over year to 509 million euros. Spotify's free cash flow also leapt 158% year over year to 534 million euros.
Monthly active users (MAUs) increased 10% year over year to 678 million, with around 44% of MAUs coming from Europe and North America. Growth in premium subscribers was better, posting 12% year-over-year growth to 268 million -- 3 million above the company's guidance. Sixty-three percent of premium subscribers came from the two key regions mentioned above. Spotify continues to enhance its offerings to attract more ad-supported and premium members. It expanded its Spotify Partner program to nine new markets so that eligible content creators can enroll, thereby expanding the platform's offerings.
Earlier in May, Spotify introduced Plays, a new method of seeing which content is resonating with podcast fans by capturing engagement across audio and video content within the platform. Premium members also had access to enhanced tools and more control over their playlist curation, which enables better customization and optimization. These improvements and business developments should ensure that Spotify continues to grow its earnings and free cash flow in the years ahead.
Lyft
Lyft
(NASDAQ: LYFT)
offers ride-sharing services for cars, bikes, and scooters all on an app and platform to connect drivers and passengers. Lyft, like Spotify, demonstrated growing revenue over the last three years and also broke even last year. The business also turned free-cash-flow-positive in the same year.
Metric
2022
2023
2024
Revenue
$4.095 billion
$4.404 billion
$5.786 billion
Operating income
($1.459 billion)
($475.604 million)
($118.912 million)
Net income
($1.585 billion)
($340.320 million)
$22.784 million
Free cash flow
($352.255 million)
($248.063 million)
$766.267 million
Data source: Lyft.
The first quarter of 2025 saw the continuation of Lyft's solid performance. Revenue was up 13.5% from a year ago to $1.45 billion while net income stood at $2.6 million, a sharp turnaround from the net loss of $31.5 million in the previous year. Free cash flow also more than doubled year over year from $127 million to $281 million. The number of rides increased by 16.4% year over year to 218.4 million with bookings climbing nearly 13% year over year to $4.2 billion.
There could be even more growth to come with Lyft announcing the acquisition of FreeNow in an attempt to expand its operations into Europe. FreeNow offers a multi-mobility app with taxi offerings at its core, and was acquired for approximately 175 million euros from Mercedes-Benz Mobility. FreeNow operates across nine countries and more than 150 cities stretching from Ireland and Germany to countries such as France, Poland, and Austria.
FreeNow had around 6.3 million drivers in 2024 and gross bookings of over 1 billion euros, and will support Lyft's target of 15% annual growth in bookings to reach around $27 billion by 2027. With this acquisition, Lyft has also increased its combined total addressable market to around 300 billion personal vehicle rides per year. This number includes around 161 billion rides per year for Lyft in North America and close to 150 million rides for Europe, of which both Lyft and FreeNow saw less than 1% of these rides booked through their respective platforms.
Leidos
Leidos
(NYSE: LDOS)
is an engineering and consulting company that provides services to government and commercial customers in the national security and healthcare industries. Leidos saw steady increases in revenue, operating profit, and net income in 2024. Note that 2023 was impacted by a goodwill impairment charge of $596 million, otherwise operating and net income would have been higher compared with 2022. The good news is that free cash flow has also improved in tandem with net income.
Metric
2022
2023
2024
Revenue
$14.396 billion
$15.438 billion
$16.662 billion
Operating income
$1.088 billion
$621 million
$1.827 billion
Net income
$685 million
$199 million
$1.254 billion
Free cash flow
$863 million
$958 million
$1.243 billion
Data source: Leidos.
The healthy growth momentum carried on into the first quarter of 2025 with Leidos reporting 6.8% year-over-year revenue growth to $4.2 billion. Operating and net income climbed almost 28% year over year to $530 million and $363 million, respectively. The business churned out a positive free cash flow of $36 million for the quarter. This consistent free-cash-flow generation enabled Leidos to increase its quarterly dividend to $0.40, up from $0.38 a year ago. This increase marks the company's third consecutive dividend increase since 2022.
Management affirmed its 2025 guidance for revenue of between $16.9 billion and $17.3 billion, representing 2.6% year-over-year growth at its midpoint. The business also expects to generate around $1.45 billion of operating cash flow for the year.
Management has also allocated $500 million for an accelerated share repurchase program and is focusing more attention on its cyber segment. Leidos runs the largest cyber operation across the federal government and believes that significant investments in this segment will follow.
The company is also looking at other ideas such as the next-generation air traffic control system and a missile defense system. These plans, along with the company's laser-focus on cybersecurity, should enable the business to do well over the long term and enjoy further growth in revenue and earnings.
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Royston Yang
has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Spotify Technology. The Motley Fool has a
disclosure policy
.
