3 Superior Growth Stocks That Can Outperform for the Next 10 Years

For investors searching for stocks with the potential to outperform over the next decade, three companies stand out: Axon Enterprise, Toast, and Spotify. These companies are expected to grow their earnings at a rate significantly higher than the S&P 500's historical average of 11% annualized growth.

Axon Enterprise's software platforms are helping law enforcement agencies with evidence management, records, and emergency response. The company's software segment grew 43% year over year in Q3, with annualized revenue reaching nearly $500 million. Revenue growth is further fueled by strong customer demand and contracts totaling $15.8 billion, with 20% to 25% expected to be fulfilled in the coming year.

Analysts project about 27% annual earnings growth for Axon over the next several years, justifying a forward earnings multiple of 43.

Toast, a restaurant-technology provider, is building a bigger business through expansion into larger chains, international markets, and retail. Its revenue from new markets is on track to double for the second straight year, reaching $200 million annualized. Toast's profit margins are improving as growth continues. Analysts project about 23% annual earnings growth for Toast, supporting its current valuation of roughly 24 times forward earnings.

Spotify, an audio-streaming service, has more than doubled in value over the past five years. The company has plans to expand its audiobook presence from 22 markets to more than 180 by year-end, and it already boasts 788 million monthly users, up 11% year over year. Spotify is turning user reach into profits, with third-quarter operating income up 15% year over year and trailing-year free cash flow totaling about $3.7 billion.

Analysts project about 26% annualized earnings growth, justifying Spotify's current valuation of roughly 44 times forward earnings.