2 Brilliant Growth Stocks to Buy Now and Hold for the Long Term

If you're looking for stocks capable of performing well over long periods, it's a good idea to start with companies that are well-established leaders in industries with excellent long-term prospects. These include sectors such as e-commerce, cloud computing, and fintech. Here are two corporations, each a top player in two of those industries: Amazon (NASDAQ: AMZN) and MercadoLibre (NASDAQ: MELI). These market leaders have crushed broader equities over the long run, but they might still just be getting started. Here's what investors need to know.

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1. Amazon

In the U.S., Amazon has a leading share of the e-commerce market. The company also leads the global cloud computing industry. Part of the tech giant's success is that it identified these opportunities faster than almost every other corporation and benefits from a first-mover advantage. However, that's only part of the story. Amazon also developed a robust competitive advantage from multiple sources, allowing it to maintain its leading position. In e-commerce, the company built deep network effects and a strong brand name. And within its cloud division, Amazon Web Services (AWS), it benefits from high switching costs.

The company has several catalysts that could help it improve its results over the long run. The first is that both industries still have pretty low penetration. For instance, e-commerce sales made up only 16.3% of total retail sales in the U.S. as of the second quarter. It almost certainly hasn't peaked. In the cloud, CEO Andy Jassy has noted that 85% of IT spending still occurs on-premises, despite the advantages of cloud computing.

Also, Amazon should improve efficiency, partly thanks to AI. Its e-commerce division has low margins, but the company is working to improve profitability. Amazon unleashed a fleet of robots whose travel efficiency in its warehouses will be improved thanks to AI. The goal is to reduce the company's costs while speeding up customer delivery times. And Amazon's cloud division is also benefiting from increased demand for AI-related services.

The company does have several other growth avenues. Amazon's advertising business has been growing as fast -- sometimes even faster -- than its cloud division, for instance.

Meanwhile, the company's financial results remain strong: Third-quarter revenue and earnings grew at a good clip. Overall, Amazon's excellent results, economic moat, and strong growth prospects make it likely to outperform the market over the long run. That's why the stock is a buy today.

2. MercadoLibre

MercadoLibre is the leading e-commerce platform in South America. That's why it is sometimes dubbed "The Amazon of Latin America." However, MercadoLibre's business is different from that of its U.S.-based competitor. Yes, it is the largest e-commerce platform in the region, but it also has a massive fintech arm, Mercado Pago, and a service that helps merchants build customized online storefronts, called Mercado Shops. One reason MercadoLibre has performed well is that it's been hard for competitors to replicate its reach across Latin America.

The company's presence spans multiple regions, some of which are challenging to navigate due to political instability. But MercadoLibre has successfully done so, building strong network effects and switching costs in the process. That almost guarantees it will remain a leader for the foreseeable future, even if we put aside the significant upfront investments companies would need to build the sort of infrastructure MercadoLibre already has in the region.

Even with more challengers, MercadoLibre should benefit in the long run as the e-commerce and fintech markets expand significantly. Latin America has been one of the fastest-growing e-commerce markets in the world in recent years, and the industry should continue to grow at a good clip. MercadoLibre has already benefited from its efforts. Revenue has grown at a good pace for a long time, and the company has been consistently profitable for a few years now. Thankfully, it's not too late to buy the stock given its long-term outlook.

Prosper Junior Bakiny has positions in Amazon and MercadoLibre. The Motley Fool has positions in and recommends Amazon and MercadoLibre. The Motley Fool has a disclosure policy.