FREE REPORT

10 Forever Stocks to Buy Now—and How to Find the Best

Growth Stocks

a d k v s

Table Of Contents:
Introduction
10 Forever Stocks to Buy Now I
How to Find the Best Growth Stocks II

by Timothy Lutts, Cabot’s Chief Investment Strategist and Chief Analyst of Cabot Stock of the Week
The goal of this report is not to identify stocks that can give you a decent long-term return, like
Johnson & Johnson (JNJ) and P zer (PFE). My goal is to identify stocks that can make you rich!
I want to identify the next Amazon.com (AMZN), the next Apple (AAPL), the next Google (GOOG) and
the next Tesla (TSLA)—all stocks that were recommended in our agship growth advisory, Cabot
Growth Investor.
The key attributes I look for in growth stocks are these:
1. A product or service or business model that is revolutionary
2. A mass market
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 3. A company that’s still small enough to grow rapidly
4. A company that is not respected—perhaps not even known—by the majority
5. And last but not least, a stock that’s trending up, indicating that investors’ perceptions of the
company are improving—this is important because perceptions are always at least as important
as reality
Also, I keep in mind the words of Thomas Phelps, who wrote, “Perhaps the greatest advantage of all
in buying top quality stocks without visible ceilings on their growth is that when we do so we give
ourselves the chance to pro t by the unforeseeable and the incalculable.”

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In these days where information ows so rapidly that we risk drowning in it, I like Mr. Phelps’
reminder that the unknown can be even more important. It reminds me to think long and hard about
where a company might be years down the road, when it’s far out of sight of the vision of today’s
analysts.
To collect these stocks, I rst went to the Cabot growth analysts, Mike Cintolo, Tyler Laundon and Carl
Delfeld, and asked for their top “buy and hold forever” stocks. Then I did my own research and
analysis to narrow the list to 10.
Below are the 10 stocks.

10 Forever Stocks to Buy Now

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1. Autohome (ATHM)
Autohome (ATHM) is a Chinese stock that came public in December 2013, so if you haven’t heard of it
yet, you’re in the majority.
But the company’s potential for growth is huge, which is why it passes muster as a stock that could
become a huge winner in the long run.
Autohome’s vision is simple—and big. Its goal is to become the dominant player in China’s online
automotive advertising market. And its strategy for achieving that is simply to provide automotive
shoppers with everything they want to complete the car-buying experience.
Today, the company’s business is centered on two websites, www.autohome.com.cn and
www.che168.com. (You can look at these websites and have Google translate them into something
resembling English.) Autohome began operations in 2004, and is already the leading online
destination for automobile consumers in China.
But in the future, the sky’s the limit because the Chinese automobile market, though still rather
young, is already bigger than the U.S. market and has much further to go.
Autohome’s revenues come mainly from dealers (more than 20,000 use its services), and are
generated by three segments: media services (ads and professionally produced editorial content),
lead generation services, and an online marketplace (Autohome Mall) where consumers can
complete the car-buying experience.
In the latest quarter, revenues were $316 million, a 19% improvement over the same quarter a year
ago, while earnings were $1.24 per share, up 31% from the year before. Earnings have grown at an
average rate of 46% over the past four quarters.
ATHM came public at 17 in late 2013, got off to a great start and was at 57 in the middle of 2015. But
then the Chinese stock market fell apart (as did most emerging market stocks), eventually driving the
stock down to 19 in late 2016—all despite steady increases in sales and earnings. Then the buyers
took control for a solid year and a half before emerging markets sagged again in the second half of
2018. Now it’s back on the uptick, and trading back above its 50- and 200-day moving averages.

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Thus, Autohome (ATHM) is a good growth stock to buy now. But my focus today is on buying the stock
and holding “forever,” so I’m more concerned with ATHM’s potential over the long haul. Long term,
I’m very bullish on both the stock and the company, and I think that buying now will work out very
well in the years (hopefully decades) to come.
Note: If you’d like the inside track on other Chinese stocks with great growth potential, I strongly
recommend that you take a look at the recommendations in Carl Delfeld’s Cabot Emerging Markets
Investor. To learn more, click here.
2. Axon Enterprise, Inc. (AAXN)
Axon Enterprise used to be known as Taser, which was one of the market’s (and Cabot’s) biggest
winners of the 2003-2004 bull market. The attraction back then was the company’s stun guns (the
rm prefers to call them electrical weapons) that enjoyed a spell of growth in police departments.
However, growth slowed—revenues actually declined for a while—and the stock fell out of favor for
years.
Over the past six years, however, the company has been expanding its offerings. Those stun guns still
make up the majority of Axon’s revenues—68% in Q4—but growth in that segment is modest (up 10%).
The reason the stock is strong today has to do with excitement surrounding the rm’s new products,
and its overall shift to a steadier, higher-margin recurring revenue business model.
Speci cally, Axon has a hit on its hands with its cameras (both body-worn and in-car), which are
becoming very popular among police departments. About three dozen U.S. cities are using these
cameras, and these cities have seen a huge reduction in the number of complaints from citizens as a
result.
Newer products, and also likely to prove popular, are the rm’s Fleet in-car cameras that are
connected to the network and mobile apps that sync with cameras and record evidence on a
smartphone.
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Most attractive of all, however, is Evidence.com, which is Axon’s cloud-based, digital evidence
management platform that allows investigators to easily upload, store, check and share evidence
les, saving time and money. Axon licenses this system to users, and at year end the system’s
200,000 users had more than 20 petabytes (equivalent to around six million HD movies on iTunes) on
the platform.
All told, Axon controls the market for electronic control weapons (there’s nothing comparable to a
TASER), the bodycam business and associated cloud storage (revenues up 50% for cloud in 2018). And
analysts are looking for EPS to grow 24% this year and 45% next year.
As for the stock, it’s always been volatile, often out of step with the market. But now it’s recovering
nicely along with the rest of the market, up 22% already this year and trading just a shade under its
50-day moving average.

For aggressive growth investors, it’s an attractive pattern, and for “forever” investors, it’s a nice entry
point into what could be a long and pro table relationship.
Note: AAXN was originally recommended by Mike Cintolo in Cabot Growth Investor, and if you’d like
more great growth stock ideas, you can nd them here.
3. Square (SQ)
Square is a stock that I recommended for my Cabot Stock of the Week readers way back on Feb 8,
2017, when it was trading around 14—and just before the release of an excellent earnings report. But I
didn’t hold it forever; I sold in late November of that year, at 43, as the stock suffered a sharp selloff,
and readers who followed my lead took home a pro t of 195%.
But if they had held on—here we are 16 months later—their pro ts would be even greater today!
See the chart here.

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So let’s talk about Square.
The digital payments industry is chock-full of competition, but most of that competition seems
focused on big business and money transfers among individuals; that’s where rms like MasterCard,
Visa and PayPal generally battle. Square, on the other hand, is mostly focused on the needs of small-
and mid-sized businesses, a gigantic market that’s driving the rm’s growth.
Square, of course, was rst known for its little square white dongle (great word) that attached to a
smartphone or tablet, which, along with the rm’s software, effectively turned the device into an
electronic cash register, allowing any sort of merchant to easily collect money from any form of
credit or debit card. Today Square offers a wide range of software and hardware products, all
designed to empower merchants of any size to serve their customers more effectively.
A key to the company’s growth (as with Visa and Mastercard) is the volume of payments that it
processes from merchants—and from which Square takes a cut. The strategy is working
well: revenues were up 51% in the fourth quarter, and the company is nally turning pro table after
years of being in investment mode, building out an infrastructure so that “omnichannel shoppers” –
those who engage through various channels (in person, online, in apps) – will nd the convenience of
Square wherever they turn. (On average, omnichannel shoppers spend 3.5 times more than single-
channel shoppers.). Analysts are looking for EPS growth of 57% in 2019 and 50% in 2020.
Of course, this is a dynamic industry, not least because a little company named Amazon is
developing the capability for its Echo smart speakers (Alexa) to process person-to-person payments
on command. Now, person-to-person is not Square’s forte, but the announcement did raise the
specter of competition if Amazon chose to enter the merchant service business, and did cause more
than a little selling.
But the upside of this is that the stock is now roughly 24% off its high—which is sort of normal for
stocks in the current market. So if the story intrigues you, do some more research, and consider
buying here—and holding forever!
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Alternatively, consider getting a new recommendation from me every week in Cabot Stock of the
Week, where I show investors how to build a diversi ed portfolio, how to let winners run, and how to
cut losses short.
4. SiteOne Landscape Supply, Inc. (SITE)
SiteOne is working to do for the landscape supply industry what Home Depot did for the building
materials and home improvement industry—create a national brand that uses economies of scale to
provide a better experience for the customer.
The difference, however, is that while Home Depot grew by building new stores, SiteOne grows by
acquiring existing businesses.
SiteOne was spun off from Deere & Company in May 2016, and it’s now the largest (and only national)
supplier of landscape products in the U.S. With 477 stores in 44 states and ve Canadian provinces,
the rm offers about 120,000 items, including irrigation products (31% of sales), fertilizers (24%),
nursery items (16%), pest and weed control products (12%), landscape accessories (8%), hardscapes
like paver stones (5%) and outdoor lighting (4%). It’s the only one-stop shop for commercial and
residential customers. In total, SiteOne has four times the market share of its next largest
competitor.
Yet despite its dominant position in the landscape supply eld, SiteOne has just 10% of the market
(estimated at $16 billion). Said another way: 90% of the industry’s sales come from smaller, often
local competitors. SiteOne tops them by using its scale (buying power) to attract customers, and
often, by simply acquiring these local and regional competitors.
SiteOne made four acquisitions in both 2014 and 2015, six in 2016, eight in 2017, and four more last
year: Terrazzo & Stone Supply of Seattle, Washington; Pete Rose of Richmond, Virginia; Atlantic
Irrigation, with 33 locations along the East Coast; and Village Nurseries of California. As these rms
are integrated, synergies kick in, leading to higher margins and an overall stronger competitive
advantage. Right now, SiteOne is the only industry consolidator.
Looking at the 2018 numbers, we see that revenues grew 13% from the year before to $2.11 billion,
with acquisitions contributing 8% of the growth; and gross pro t increased nearly 14% to $678
million.
It looks like a rock-solid business strategy, but having good management doesn’t hurt. That’s why it’s
nice to see that leading the way at SiteOne is CEO Doug Black, a West Point graduate who for 18 years
headed up OldCastle, a huge building-materials supplier. Black took that company from $900 million
in sales to $12.6 billion, with acquisitions playing a key role. He’ll be doing the same for SiteOne in
the years ahead.
As for the stock, it came public in May of 2016 and was going nowhere but up before it hit a big snag
during the fourth-quarter 2018 market correction, dipping to as low as 47. Now it’s back trading in the
55-56 range, and looks poised for a breakout in the near future. It’s worth buying here, keeping the
Home Depot story in mind.
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Maybe you can hold it forever!
5. Carvana (CVNA)
Carvana is an online-only used car dealer that allows customers to shop, nance, and trade in cars
through their website. Founded in 2012, it came public in 2017, and has racked up some very
impressive numbers. In fact, here’s what Mike Cintolo wrote about it in Cabot Growth Investor.
“The term ‘disruptive’ gets thrown around a lot, but Carvana is genuinely disrupting the used-car
sales industry. The company’s big idea is that it turns any online screen into a used-car vending
machine. Shoppers can look at 360-degree pictures of cars and get a guarantee of an undamaged
body and no major accidents. If you buy, Carvana delivers the car within a day or two and offers a
seven-day test drive period, too. The simplicity of this buying process has produced three years of
triple-digit revenue growth (although no pro ts yet, as the company plows cash ow back into
expansion). Used cars are a $739 billion industry in the U.S. and Carvana—which now has operations
in 56 markets, up from 23 a year ago—should be in around 80 markets at year end. Pro tability is a
long way off, but CVNA is holding above the highs of a 10-month base and is setting up nicely.”
Well, guess what: that nice set-up resulted in a huge breakout! CVNA raced from 25 to 43 in just three
weeks, though it has since cooled off a bit. There could be some more cooling off ahead if you want
to wait for a better entry point. But again – these are forever stocks. If you’re in it for the long haul,
you can buy right here and not worry about any remaining short-term consolidation.

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6. iQIYI (IQ)
iQIYI is a Chinese company that some have called “the Net ix of China,” though of course the parallel
isn’t exact.
It was rst recommended in Cabot Emerging Markets Investor.
The company has an online video platform that it uses to stream its own premium content as well as
content from a wide web of partners. iQIYI (the name translates literally into something like “Love
fantastic art”) owns the top spot for most active users and most time spent by those users on its
platform; at the end of 2017, the company was averaging more than 126 million mobile daily active
users (DAU). Additionally, last year the company’s original content contributed ve of the top 10
original internet variety shows and six of the top 10 original internet drama series. Offerings also
include live broadcasting, animations, e-commerce, games and a social platform.
This success has created a network effect for iQIYI (pronounced “ee-chee-yee”) that increases its
attractiveness to both advertisers and prospective viewers. The company offers advertisers a wealth
of data about users to assist in ad targeting. Primary revenue sources are online advertising (47% of
2017 revenue), membership services like premium content subscriptions (38%) and content
distribution (7%).
And IQ is proving just as innovative as Net ix when it comes to rolling out new services – it’s now
expanding into the physical movie theater industry!
The company has been a subsidiary of Chinese giant Baidu (BIDU)—which footed the bill for its
development and rollout—and Baidu’s massive user base is a big reason behind iQIYI’s rapid growth.
Baidu remains the majority shareholder today.
The company’s revenue history is strong, but begins only in Q1 2016. Revenue grew 104% in 2016 and
56% in 2017 and 42% in 2018. Earnings haven’t turned positive yet, although the trend is de nitely
encouraging.
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As for the stock, IQ is young!

IQ came public last March at 18, more than doubled to 44 by June, then retreated for seven months
along with most other Chinese stocks, bottoming at 14 this past December. Since then, it’s recovered
quite well, reaching as high as 27 in February. Having dipped a bit since, and having bounced off
support at 22, buying at current levels (24) seems like a nice entry point.
Long term, I am very optimistic about the prospects for this company in the decades ahead.
To nd out about other stocks featured in Cabot Emerging Markets Investor, click here.
7. iAnthus Capital (ITHUF)
The big story here is cannabis, the fastest-growing industry in America today!
And that includes Canada, which has a head start on the U.S. legally and already has ve growers
valued at over a billion dollars each.
Those big Canadian growers are the most obvious place to invest, but I’ve chosen iAnthus as my
forever marijuana stock for three reasons.
One, it’s a vertically integrated company (cultivation, processing and distribution) so it’s less
susceptible to falling prices should there be an oversupply of marijuana.
Two, it’s a U.S. company and thus will bene t more as the U.S. market grows increasingly legal and
eventually exceeds the Canadian market in size.
And three, it’s not as well known as those big growers and thus will bene t more as it becomes
known and respected.
iAnthus owns and operates growers, processors and dispensaries in six U.S. states—with a strong
focus on the East Coast. But instead of operating under one unifying national brand, it has different
brands for different markets. In Massachusetts it’s May ower; in New York it’s Citiva; in Florida it’s
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GrowHealthy; in Colorado it’s Organix and The Green Solution; in Vermont it’s Grassroots Vermont;
and in New Mexico it’s Reynold Greenleaf & Associates.
Thanks to its recent acquisition of MPX Bioceutical, iAnthus now has operations in 11 states and 21
dispensaries, with the newest opened in Lake Worth, Florida last week.
iAnthus last week opened its 20th U.S. dispensary (in the Hudson Valley of New York), so the
company now has 63 dispensaries and 15 cultivation/processing operations in 11 states, with the vast
majority of them achieved via acquisitions—11 since the start of 2018.
Going forward, I expect to see more acquisitions, either partial or whole, as founders of smaller
operations look to cash out before they are steamrolled by the “big boys.” The pace of acquisitions
will be determined not only by the available supply of founders looking to sell but also by the cash,
credit and shares that iAnthus has available to spend. That, of course, is uncertain but trends are
good.
In its latest quarter, revenues were $3.35 million, up from zero sales the same quarter a year ago. The
company is not pro table yet (though it’s inching closer), and that’s absolutely normal for this
industry, as private equity continues to pour money into companies racing to get big.
As for the stock, which is listed in Canada because the federal legal issue won’t allow U.S. marijuana
stocks on the major U.S. exchanges (but will allow Canadian stocks), ITHUF peaked last September at
6 (in sync with the broad market), sank below 4 in December at the tail end of the Q4 market
correction, and is now back trading just under 6 again.

So the short-term prospects are looking up, but long term, the prospects are even brighter, which is
why I’m happy to make iAnthus my Forever Stock #7.
Note: iAnthus is one of the stocks in Cabot Marijuana Investor, where the average pro t in the
portfolio is 197% (not a typo!).
For details, click here.
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8. HealthEquity (HQY)
This is perhaps the steadiest grower on this list!
HealthEquity has carved out a pro table niche for itself in the U.S. health system by administering
the health savings accounts (HSAs) that go along with high-deductible health insurance plans. With
15% of the HSA market and a market cap of just under $5 billion, HealthEquity is a major player that’s
still growing fast; revenue was up 24% in its most recent scal year. The combination of service,
custodial and interchange fees has driven earnings up by an average of 62% in the last three
quarters, though it’s expected to dip a bit in the coming quarters – analysts anticipate 7.5% EPS
growth this year.
Overall, though, the story is solid, and the only visible risk to long-term success might be a change in
government policy regarding HSAs; I think it’s a minimal risk, but anything’s possible.
As to the stock, it came public in 2014, motored higher over the next year, but then suffered a nasty
correction in early 2016 that took it right back down to its IPO price. It stabilized in 2017, then took off
in the rst nine months of 2018 … before the bottom fell out during the fourth-quarter market
correction. Now it’s back on the uptick.

The past few months have brought great strength to the stock, and the pullback in the last couple
weeks represents a perfect entry point. Regardless of when you buy, however, in the long run, I have
high con dence that HQY will be a winner.
9. Everbridge (EVBG)
Everbridge was founded in 2002, shortly after the 9/11 attacks, to provide fast, automated
communications services during life-threatening situations and mission-critical business events. The
software platform powers apps that help organizations and government entities keep people safe
and businesses running. Customers buy the software to lower the risks to human life and the cost of
business downtime due to terrorist attacks, active shooter situations, severe weather events, IT
outages and cyber attacks.
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As is common among best-of-breed cloud-based software stocks, Everbridge has built a single,
scalable platform that powers its suite of apps. Each app is designed to address a speci c market
need by quickly aggregating data and delivering a contextually relevant message to the right people
on the right device at the right time. It is relatively easy for the company to build new apps on this
platform.
Everbridge started with one product, a mass noti cation solution that it tweaked and expanded for
the rst 10 years of the company’s existence. That solution helped it grow a customer base to 867 by
the end of 2011. Since then, it’s developed six additional solutions and has grown its customer base
to over 3,000 enterprise customers, spanning the corporate, healthcare, transportation, higher
education, energy, governmental and nancial sectors.
Everbridge is one of those “expensive” cloud software stocks that’s also posting super-strong growth
(33% revenue growth expected in 2019). The stock topped out around 77 a couple weeks ago and
revisited that level this week, but has recently dipped back into the low 70s. A pause here has been
expected, and we could easily see shares drop down to their 50-day line around 69. The stock is
trading right near peak valuation from 2018 (EV/Forward Revenue multiple of 12.7).

With the stock trading at all-time highs, you could wait for the next pullback. But the trajectory is
decidedly up, and chances are it will be much higher in the coming years regardless of when you buy.
Note: EVBG was originally recommended by Tyler Laundon in Cabot Small-Cap Con dential, and if
you’d like more great small-cap stock ideas, you can nd them here.
10. Twilio (TWLO)
With a fantastic combination of story, numbers and a resilient chart, Twilio is our nal Forever Stock
to Buy. It looks like an emerging blue chip to us—the kind of company that can grow rapidly for years
and attract hundreds of institutional investors along the way.

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So why is Twilio’s future so bright? Because of the rm’s pervasive, well-rounded, customizable and
easy-to-program communications platform. Basically, if a company (big or small) wants to automate
and simplify communications to customers, clients or coworkers, Twilio is becoming the standard.
The best way to understand the business is to see how the platform is being used by some of Twilio’s
top customers. Coca-Cola Enterprises, for instance, uses Twilio to rapidly dispatch service
technicians. Airbnb uses it to automatically text rental hosts information of potential guests,
including dates and the price of a stay. The Red Cross of Chicago automatically sends texts to
volunteers in an area with pertinent info about a disaster. Trulia uses Twilio to power its click-to-call
app so potential buyers can hook up with an agent quickly. EMC uses the platform to quickly send
texts to employees when an IT service goes down.
Want more? Lyft uses Twilio to provide real-time driver updates with text messages, while allowing
passengers and drivers to call one another without sharing their personal phone numbers. Yelp is
using the platform to allow restaurants to automatically text users that booked a reservation through
its website, and for users to respond. Nordstrom connects shoppers and salespeople via a mobile
app so customers can privately text their salespeople when they need assistance.
Just about any business can use Twilio’s communications platform for text, voice, video, chats and
messaging apps. And thanks to the company’s recent acquisition of Sendgrid, the platform will now
include email capabilities. Twilio also has a new PAY service that allows developers to process
payments over the phone without reading numbers to a customer service rep.
The company is not yet pro table, but that’s expected to change soon. And the sales growth has
been phenomenal: +62% in 2018, with analysts anticipating 65% growth in 2019.
As for the stock, it has been a leader of the post-correction uptrend in growth stocks, streaking from
75 on Christmas Eve to 135 in late March. It has since pulled back to 121, which looks like a nice entry
point for a stock that has been on a tear for more than a year.

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TWLO’s chart is a shining example of a growth stock to buy now. And the story and numbers make it a
great stock to buy and hold “forever”.

How to Find the Best Growth Stocks

I’ve given you 10 stocks I feel con dent will deliver high returns over the long term. But I’d be remiss
if I didn’t give you some tips on how to nd strong “forever stocks” on your own.
The following have been carefully selected as the most important set of guidelines an investor can
use in carrying out a successful investment program. These rules form the foundation of growth
stock investing and they are also part of the investment philosophy used in Cabot Growth Investor.
Invest in Fast-Growing Companies
You’ll usually nd them in today’s fast-growing industries, where revolutionary new technologies and
services are being created. As you study the stocks in these growth industries, you should favor
lesser-known stocks that have yet to reach the point of peak perception. Frequently these will be
smaller stocks, where the potential for high returns is greater!
Buy Stocks with Strong RP Lines
Relative performance (RP) studies are a superb way to identify successful companies and to avoid
problem companies. You should buy stocks that are consistently outperforming the market. This is a
good indication that they are under accumulation, week after week, month after month, and that the
companies are succeeding. The best investing tips come from the performance of the stocks
themselves. So ignore hot tips!
Use Market Timing to Guide Your Investing
Be cautious when the broad market is against you and aggressive when it’s with you. Don’t
underestimate the power of the market to move stocks, both up and down. When Cabot’s market
timing indicators are signaling a bull market, don’t delay. The trend is up, so stocks will be going up!
Buy your favorite stocks and hang on as long as the ride is pro table.
Once You’ve Invested in a Stock, be Patient
Recognize that time is your friend. Frequently stocks don’t go up as fast as you might want them to.
But if you can develop a persistent and tolerant attitude coupled with plenty of patience, you’ll have
a great advantage. We call this STAYING POWER!
Let Your Pro ts Run
This shouldn’t be a problem when you’re investing in stock “forever.” The power of compound growth
can swell your account dramatically—if you are patient. Long-term investments make more money
than short-term investments. So learn to develop staying power. Let your pro ts run and run and run.
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This is how big money is made in the market. Not by taking 10% and 20% pro ts but by thinking big—
in terms of 100%, 200% and larger pro ts.
As Time Passes, Buy More Shares of Your Best-Performing Stocks
Add a modest number of shares to your winners from time to time, trying to do this during
corrections in the stock, not after the stock has posted a major run-up. Called “averaging up,” this is
a great way to reinforce your investments in your best stocks.
Be An Optimist
In our more than four decades of publishing Cabot Growth Investor, we’ve seen many ups and downs
for both the market and our country. But after every tough event, our dynamic country and economy
have eventually rebounded. So no matter how bleak the situation, always stay optimistic because
our country and stock market will give you some dazzling opportunities!