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2 Stocksto Buyonthe Dipand Holdfor 10 Years The Motley Fool

2 Stocks to Buy on the Dip and Hold for 10 Years

In the ever-volatile world of stock investing, market dips often present golden opportunities for long-term investors. These temporary declines in stock prices can allow savvy buyers to acquire shares in high-quality companies at discounted valuations, setting the stage for substantial gains over the coming decade. This approach aligns with the time-tested strategy of buying low and holding through market cycles, as advocated by legendary investors like Warren Buffett. In this analysis, we'll delve into two standout stocks that have recently experienced price pullbacks but boast strong fundamentals, innovative business models, and significant growth potential. These are companies poised to thrive in evolving industries, making them ideal candidates for a buy-and-hold strategy spanning at least 10 years. By examining their current challenges, competitive advantages, and future prospects, we'll uncover why now might be an opportune moment to invest.

The first stock worth considering is Alphabet Inc. (GOOGL, GOOG), the parent company of Google and a dominant force in the digital economy. Alphabet has faced headwinds recently, with its shares dipping amid broader market concerns over regulatory scrutiny, economic slowdowns, and shifts in advertising spending. As of mid-2024, the stock has pulled back about 15% from its all-time highs, trading at a forward price-to-earnings (P/E) ratio that's more attractive than in recent years. This dip stems partly from antitrust lawsuits in the U.S. and Europe targeting Google's search dominance, as well as macroeconomic factors like rising interest rates that have pressured tech valuations. However, these short-term pressures mask Alphabet's enduring strengths.

At its core, Alphabet's business is built on an unassailable moat in search and digital advertising. Google Search commands over 90% of the global market share, generating billions in revenue through targeted ads. In 2023 alone, advertising accounted for more than 80% of Alphabet's total revenue, underscoring its reliability as a cash cow. Beyond search, the company is diversifying into high-growth areas like cloud computing via Google Cloud, which has seen triple-digit revenue growth in recent quarters and is challenging leaders like Amazon Web Services and Microsoft Azure. Alphabet's "Other Bets" segment, including ventures in autonomous driving (Waymo), life sciences (Verily), and quantum computing, represents moonshot opportunities that could yield exponential returns over the next decade.

Looking ahead, Alphabet is well-positioned to capitalize on the artificial intelligence (AI) boom. Its Gemini AI model and integration of AI across products like Search and YouTube position it as a leader in this transformative technology. Analysts project that AI could add trillions to the global economy by 2030, and Alphabet's vast data resources give it a competitive edge. Moreover, the company's financial health is robust, with a massive cash pile exceeding $100 billion, enabling strategic acquisitions, R&D investments, and share buybacks. Over a 10-year horizon, as digital transformation accelerates and emerging markets adopt more online services, Alphabet's revenue could compound at a healthy clip, potentially delivering annualized returns in the double digits for patient investors. The current dip, therefore, offers a compelling entry point for those willing to weather near-term volatility.

Shifting gears to the second stock, let's examine Shopify Inc. (SHOP), a leading e-commerce platform that's empowering millions of merchants worldwide. Shopify's shares have endured a significant correction, down roughly 50% from their 2021 peaks, amid concerns over slowing growth rates and increased competition in the online retail space. This pullback has been exacerbated by broader economic uncertainties, including inflation and reduced consumer spending, which have tempered e-commerce expansion after the pandemic-fueled surge. Trading at a more reasonable valuation now—around 10 times sales, compared to over 20 times at its height—Shopify appears undervalued relative to its long-term potential.

What makes Shopify a buy-and-hold gem? The company provides an all-in-one platform for businesses to build, manage, and scale online stores, handling everything from payments and inventory to marketing and logistics. This ecosystem has attracted over 1.7 million merchants, ranging from small startups to enterprise giants like Allbirds and Gymshark. Shopify's subscription-based model ensures recurring revenue, while its app store and partnerships create a sticky network effect—once merchants are onboarded, switching costs are high. In recent years, Shopify has expanded internationally, with significant growth in Europe and Asia, and has bolstered its offerings with tools for physical retail (like point-of-sale systems) and B2B commerce.

The e-commerce sector, despite recent slowdowns, is far from mature. Global online sales are projected to reach $8 trillion by 2027, up from about $5 trillion in 2023, driven by digital adoption in developing regions and innovations like social commerce and augmented reality shopping. Shopify is innovating aggressively, investing in AI-driven personalization, blockchain for secure transactions, and sustainability features to appeal to eco-conscious brands. Financially, the company is on solid footing, with gross merchandise volume (GMV) surpassing $200 billion annually and a path to consistent profitability. Management's focus on operational efficiency, including recent cost-cutting measures, positions Shopify to emerge stronger from the current economic cycle.

Over the next 10 years, as brick-and-mortar retail continues to digitize and new entrepreneurs flock to online platforms, Shopify could see its market share expand dramatically. The company's adaptability—evident in its pivot during the COVID-19 boom and subsequent adjustments—suggests resilience. For investors, this means potential for robust compounding: if Shopify achieves even moderate revenue growth of 20-25% annually, combined with margin expansion, the stock could multiply several times over. The current dip, fueled by temporary headwinds, provides an attractive risk-reward profile for long-term holders.

In conclusion, both Alphabet and Shopify exemplify the type of innovative, moat-protected businesses that thrive over extended periods. Alphabet's dominance in search and AI, coupled with its diversification efforts, makes it a cornerstone for any tech-focused portfolio. Shopify, meanwhile, is riding the unstoppable wave of e-commerce globalization, with tools that democratize online business. While short-term risks like regulatory changes or economic downturns persist, their underlying growth drivers—technological advancement, digital shifts, and network effects—point to outsized returns by 2035. Investors should conduct their own due diligence, considering factors like diversification and personal risk tolerance, but for those with a decade-long horizon, buying these dips could prove prescient. As markets fluctuate, remember: time in the market often beats timing the market. (Word count: 928)

Read the Full The Motley Fool Article at:
[ https://www.fool.com/investing/2025/08/16/2-stocks-to-buy-on-the-dip-and-hold-for-10-years/ ]