Three Stocks To Consider For Long-Term Growth Amid Megatrends

These stocks may not seem cheap, but their growth potential driven by current megatrends makes them appealing for long-term investments. Below are insights on Synopsys (NASDAQ: SNPS), PTC (NASDAQ: PTC), and Hexcel (NYSE: HXL).

Invest in Synopsys: A Leader in EDA and AI

Synopsys provides electronic design automation (EDA) software essential for engineers focused on designing and testing silicon chips, including those powered by AI. Management emphasizes that Synopsys is effectively “an AI company” in the early stages of this technological shift.

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While many companies are eager to embrace AI, Synopsys stands out as a significant beneficiary. The rise in AI applications is spurring demand for AI chip design, which benefits existing semiconductor and electronics clients while opening opportunities in industries like automotive, aerospace, healthcare, and software.

Fueling this growth is Synopsys’s planned acquisition of Ansys (NASDAQ: ANSS) for $35 billion, scheduled to close in the first half of 2025. The two firms have a history of collaboration; Ansys’s simulation data complements EDA software, enhancing innovation. Ansys serves a diverse clientele as well, with only 31% of its annual contract value coming from high-tech customers.

As AI accelerates chip demand across various sectors, Ansys’s non-tech clients may evolve into Synopsys customers. Currently trading at nearly 48 times expected free cash flow in 2025, Synopsys may seem pricey, but analysts anticipate earnings growth in the mid-teens and 30% annual growth in free cash flow.

The acquisition of Ansys is set to unlock new markets and position Synopsys for substantial gains from AI spending over the next decade.

Consider PTC: Capitalizing on Digital Transformation

PTC, known for its computer-aided design (CAD) and product lifecycle management (PLM) software, is another key player partnered with Ansys. This partnership aids in data integration between simulation and CAD applications.

The driving force behind PTC’s growth is the rising adoption of digital technology in manufacturing. The “digital thread” spans a product’s entire lifecycle, starting with design and extending through manufacturing, service, and disposal.

Throughout this process, accumulated data can be utilized to optimize future iterations. For instance, insights from a digital twin may suggest redesigning a product or altering production methods to reduce service costs.

Despite possible market overreactions to recent performance, PTC’s potential remains bright. The company is experiencing mid-teens growth in free cash flow and trades at 24 times 2025 Wall Street estimates for cash flow.

Image source: Getty Images.

Hexcel: The Future of Aerospace Composites

Hexcel provides advanced composite materials, known for being lighter yet stronger than traditional options, which are increasingly used in next-generation commercial aircraft. This trend not only improves efficiency but also helps manufacturers meet emissions regulations.

Hexcel is positioned well with leading aircraft manufacturers like Airbus and Boeing, who represent significant portions of its client base. However, challenges can arise when these companies fall short of delivery targets, as seen in 2024.

Despite short-term setbacks, the long-term outlook for Hexcel remains strong. Patience will likely pay off as global demand for new aircraft picks up, marking Hexcel as a solid stock for patient investors.

Don’t Miss Out on Future Opportunities

If you’ve ever felt you missed the chance to invest in leading stocks, take note.

On rare occasions, our team issues a “Double Down” stock recommendation for companies poised for significant growth. If you think you’ve been left behind, now may be the opportune time to invest.

• Nvidia: An initial $1,000 investment in 2009 could now be worth $340,048!*
• Apple: A $1,000 investment in 2008 has grown to $44,908!*
• Netflix: An investment of $1,000 in 2004 could be valued at $554,019!*

Currently, we are issuing “Double Down” alerts for three remarkable companies. Don’t miss this opportunity.

Learn more »

*Stock Advisor returns as of February 3, 2025

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Synopsys. The Motley Fool also recommends Ansys, Hexcel, and PTC. The Motley Fool maintains a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.