Buy Hold Sell: 5 stocks with massive growth runways

It's every investor's dream: get in at the right time on a great growth company and ride the wave to untold riches. It might sound like a pipedream, and it is indeed hard to do, but there have been plenty of examples over the past decade. 

Globally, names like Nvidia, Apple, Microsoft and Google spring to mind, whilst local names like Pro Medicus and TechnologyOne fit the bill. 

So, how does one go about hunting these unicorns, and what are the companies right now with massive growth runways ahead of them? We're talking about names with sustainable competitive advantages, good returns on capital, strong balance sheets, and are disruption-resistant.

To help answer that question, and run the ruler over three prospective growth standouts, Livewire's James Marlay was joined by Vihari Ross from Antipodes and James Tsinidis from Munro Partners. 

For good measure, they also share one company they believe is destined to rise up the growth stock leaderboard over coming years. 

Note: This episode was recorded on Tuesday, 25 February 2025. You can watch the video, listen to the podcast or read an edited transcript below.

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Edited Transcript

James Marlay: Hi there, ladies and gentlemen, and welcome to this episode of Buy Hold Sell where we're going to be talking about companies with massive growth runways. I'm joined today by James Tsinidis from Munro Partners and Vihari Ross from Antipodes. Welcome, ladies and gentlemen, thank you very much for joining us. All right. We're talking about runways. Our first stock today is Airbus. Vihari, buy, hold, or a sell?

Airbus (ETA: AIR)

Vihari Ross (BUY): This is a buy. Continuing on the pun theme, this is going to take off. The profitability of this business could double to triple over the next few years. This is a business that has the infrastructure layer built for a huge ramp in aeroplane deliveries which were constrained by Boeing taking a nosedive, as well as COVID supply constraints. And there's a nice structural tailwind sitting behind this. Four billion additional passenger journeys over the next 20 years, unlocking of new routes, and also the replacement cycle of planes. Very much a buy.

James Marlay: James, Airbus, it's in an industry where there's not a lot of competitors. Tough to get in there, it's got a strong position. Buy, hold, or a sell?

James Tsinidis (HOLD): Love the industry but we actually prefer, on the civil side, the engine makers. And on the defence side we actually just prefer companies in Europe on the defence side because of Ukraine. So that's our aerospace and defence exposure.

James Marlay: Okay. We're going to change topics, we're going to go to payments. Visa, it's probably in most people's wallet somewhere. Buy, hold, or a sell?

Visa (NYSE: V)

James Tsinidis (BUY): Definitely a buy. A great network affect in those businesses, both Visa and MasterCard. Any disruptive threat over the last decade has been voluntarily put to bed. When you think about things like Apple Pay, it was going to take over but in the end they ended up becoming a partner with Visa and MasterCard because they connect to your credit cards. So that actually just ended up helping Visa and MasterCard because it increased the amount of acceptance and also the amount of use of your credit card. Yeah, a great network affect businesses. Still buyers even after all these years.

James Marlay: Okay. Vihari, it's had a great 12 months, Visa. There are newcomers but Visa has led the charge. Buy, hold, or a sell?

Vihari Ross (SELL): I'm a sell on this one. I think this is a stock trading at 35 times its growth profile. It used to be that 10 to 15% per annum, but the transition from cash tailwind is done, the e-commerce tailwind is done. Looking forward, it's growing probably more at 9% than that 15%. And we see better value elsewhere. You've got companies like Wise, just digital native, a cross-border remittance business trading on slightly lower multiples but with a really big growth runway sitting behind it.

James Marlay: Okay. Let's go US tech. Microsoft, third-largest company in the world, buy, hold, or sell?

Microsoft (NASDAQ: MSFT)

Vihari Ross( HOLD): This is a hold for us. It's in our portfolios. It's a stock that clearly is a cloud transition winner. Obviously, transition to the cloud is super important in order to interrogate your own data with AI technology. Clearly, an AI beneficiary as well. That CapEx cycle has been very much in focus in the last six months. But as a result, it sort of ended up being a bit of a laggard with those long-term tailwinds remaining, including a very tangible monetisation pathway for its AI investments which can't be said of all of the players in this space.

James Marlay: Okay. It's a competitive space. Microsoft, buy, hold, or a sell?

James Tsinidis (BUY): Buy. Valuation, it's not optically cheap at a high-twenties PE but it's still growing in the teens. As Vihari said, it's in everyone's desktop so a great opportunity to sell its AI tools through that installed user base. So yeah, it's still a buy.

James Marlay: Okay. We're going to change tack. We're going to go for Costco which doesn't sound like a particularly exciting business, it's one of those mega-supermarkets where you can get just about everything. Buy, hold, or a sell?

Costco (NASDAQ: COST)

James Tsinidis (HOLD): Hold on this one. I love Costco, executive member myself. Been there many times to buy detergent and walked out with a canoe or something. But, unfortunately, it trades at 50 times earnings. Great business, very defensive. No one can undercut it on price so it continues to grind up at 8% growth per annum. Yeah, 50 times earnings is just too full for us so, unfortunately, we had to move on from it a couple of years back.

James Marlay: Okay. Too expensive for James. Buy, hold, or a sell for you?

Vihari Ross (SELL): This is a sell for me. This is a stock I've covered for many, many years. In all my years in global equities, I have no beef. I'm surprised you haven't bought some when you're on your Costco visits. It has an exceptional value proposition to its member base, it has a slow, durable growth profile. It has all of those things. It has a negative working capital position. But this is about what are you paying for and what are you getting in return. And that just is not a good deal at 55 times for Costco right now.

Guest picks

James Marlay: Folks, I've asked our guests to bring along a stock that they think meets our criteria of having a massive growth runway. We're talking about companies with sustainable competitive advantages, good returns on capital, strong balance sheets, disruption resistant. James, I'm going to kick it off with you, what's your pick?

Formula One (NASDAQ: FWONK)

James Tsinidis: I'm going to go with Formula 1. Growing fan base, obviously, with the Netflix Drive to Survive series, getting into the US with three races now. Very attractive demographic so a younger demographic, more female, more affluent so very valuable to advertisers and also for TV rights. You probably see a streamer come in for the next round of TV rights bids. Obviously, also race promotion, demand for live experiences going up. Hopefully, we keep the race in Melbourne and you don't pinch it up here in Sydney. But you will expect a step-up in those contracts as those cities roll through those contracts. Great for the earnings profile for Formula 1.

James Marlay: Okay. Race cars for James. Vihari, what's your pick?

Tencent (HKG: 0700)

Vihari Ross: I'm going to go to the tech space with Tencent. Obviously, many of our listeners would be familiar with that Chinese tech name. I think there's been so much exuberance with that opportunity in American technology companies, and we have a Chinese tech company which is actually one of, given their data sets, given their locked-in user base, it has a real opportunity to benefit from the AI deployment within the network. They have 1.4 billion monthly active users on Weixin. They also have their FinTech business, it's a rapid grower. In both those components, regardless of what's going on in the broader Chinese economy and they're a business that is also generating high returns on capital and buying back stock. So it has all of those sort of tenets of quality that investors should be looking for but at a fraction of the multiple, at 18 times. And that's after this recent China rally. Before that it was at 13.5 times.

James Marlay: Well, ladies and gentlemen, I hope there's a few ideas in there on some of these companies with big growth runways. Remember, check out our video content on our YouTube channel, we've got fresh shows like this dropping every week.