Growth stocks often pose significant risks, especially in bear markets, such as the one impacting the Nasdaq Composite Index in April 2025. During such periods, the volatility can cause these stocks to decline by 20%, 30%, or even more in a short span of time. Acquiring stocks during these downturns can be daunting. The pertinent question isn’t about timing the market perfectly; instead, during widespread panic and shrinking time horizons, the focus should be on long-term investments in stocks that are likely to perform well over the next decade.
Currently, many depreciated growth stocks appear undervalued and may offer substantial returns over a five to ten-year period. Two specific growth stocks are identified as having the potential for significant gains.
- Coupang: A Technology Player Outside the United States
Coupang, a South Korean online marketplace with similarities to Amazon, may be appealing to those concerned about tariffs affecting U.S. consumer spending. Since it doesn’t operate in the U.S. market, Coupang is likely to face limited disruptions from tariff policies affecting American markets. Coupang has demonstrated strong growth, with revenue increasing by 24% year over year to $30.3 billion in 2024, despite facing foreign currency challenges. The depreciation of the U.S. dollar against foreign currencies might benefit the company in 2025.
The marketplace is popular for its diverse offerings and rapid delivery times, which include services such as video streaming, grocery delivery, and appliance installation—services not even Amazon provides. Coupang occupies only a small portion of the South Korean retail market, leaving ample growth potential. The company is starting to generate significant free cash flow, achieving $1 billion in 2024. With a market cap under $40 billion and a forward price-to-earnings ratio below 8, Coupang is perceived as undervalued and positioned for substantial growth over the next decade.
- Alphabet: AI Potential is Underrated
Alphabet, the parent company of Google, is another stock with potential for substantial growth amidst recent market challenges stemming from tariff concerns and fears regarding AI competition. Its trailing price-to-earnings ratio is currently 18, well below the S&P 500 index’s average of 27. Alphabet’s strength lies in its role as a leading researcher and developer of advanced technology tools, supported by its proprietary AI-focused computer chips that enhance its data centers.
Rather than viewing AI as a threat, it should be seen as an opportunity for platforms like Google Search, YouTube, and Google Cloud to expand. Despite not holding a monopoly in search, the market potential is enormous and Alphabet’s financial performance reflects this. For instance, in the fourth quarter of 2024, Google Cloud’s revenue increased by 30% year over year, YouTube advertising grew by 14%, and Google Search revenue grew by 12.5% to $54 billion in one quarter alone.
Alphabet continues to repurchase its stock and has initiated dividends for shareholders, maintaining its appeal as a long-term investment. A broader perspective focused on the next decade reveals Alphabet as a promising growth stock available at a relatively favorable price.
Suzanne Frey, an executive at Alphabet, is a board member of The Motley Fool. Brett Schafer holds positions in both Alphabet and Coupang. The Motley Fool holds positions in and recommends both companies.
