Investing in growth stocks can be a great way to add to my portfolio’s value over a long period of time. Having looked through the indices, I think I’ve found two exciting firms that could bring me growth over the next decade. Let’s take a closer look.
Benefiting from copper?
Atalaya Mining (LSE:ATYM) shares have been volatile in recent times and in the past three months they’re down 30%. At the time of writing, they’re trading at 250p.
The firm – a copper mining business – has been benefiting from increased demand for the base metal that’s used in products like electric vehicles.
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Over the longer term, the company’s earnings growth is striking. Between 2017 and 2021, earnings per share (EPS) rose from ¢15.5 to ¢96.7. By my calculations, this results in a compound annual EPS growth rate of 44.2%. This is both extremely strong and consistent.
Over the same period, both revenue and pre-tax profit increased markedly.
| Year | Revenue | Pre-tax profit |
| 2017 | €160m | €21.9m |
| 2021 | €405m | €159m |
In the three months to 30 June, copper production at the Riotinto project also increased to 3.8m tonnes, up from 3.3m, year on year.
However, revenue dipped during the first half of 2022 from €197m to €179m. While I would like to see this reverse in the near future, I’m also aware that the business has a generally strong balance sheet, with cash reserves of €67m. This may well be a growth stock built to last.
All fun and games?
Frontier Developments (LSE:FDEV) is also an interesting growth stock. In the past three months the share price is up 28.7% and at the time of writing the shares are trading at 1,600p.
The video games publisher saw its EPS increase from 22.7p to 55.4p for the year ended May, between 2017 and 2021. This results in a compound annual EPS growth rate of 19.5%. While this may not be as high as Atalaya Mining, it’s still more than satisfactory.
It’s worth noting, however, that this growth is not guaranteed in the future.
But the trend of increased gaming that emerged during the pandemic may be unsustainable. There’s the possibility that customers lose interest or find it difficult to buy products due to the cost-of-living crisis.
However, for the year ended May 2022, the firm announced that revenue was expected to be a record £114m, up 26% on the previous year.
Furthermore, it sold more than 1.3m units of the game Jurassic World Evolution 2. With a sequel due for release soon, among other games, the company may have more success to look forward to in the coming months.
Overall, both of these businesses present attractive buying opportunities. They exhibit very strong earnings growth over a long period of time, and I think they could be prudent additions to my portfolio in the coming weeks. To that end, I’ll buy shares in both firms soon and hold them for the long term, potentially over a decade.
