Truly successful investing is a marathon. While we all dream of getting into the market and making a million dollars overnight, traders with a short-term “get rich quick” mentality usually find out pretty quick that there is no free lunch in the market.
To be a truly successful investor you have to look at the big picture. Take Warren Buffett for example. Buffett is considered to be one of the most successful investors of all time. Did he gain this reputation from a couple quick scores? No… Buffett is considered one of the best because of his longevity in the market and his ability to find the best stocks to buy and hold for long periods of time. His strategy is long-term, and has proven to be very lucrative for himself and traders that seek to copy his every move.
Long-term investing requires you look for companies that are so dominant in their sector and successful at their underlying business that you can reasonably assume that they will continue to grow and stay a step ahead of the competition moving forward. These are the types of stocks you can buy and hold “forever”.
Make no mistake, every company can run into trouble. You need to always stay on top of your holdings and be ready to make a move when you feel the need, but if you buy stocks you think you can hold forever those moves will come few and far between.
Here are my 5 top stocks to buy and hold forever.
Alphabet (GOOGL) is the parent company of search engine giant Google. Over the years Google has become the absolute king of online search, with the only real threat to its dominance coming from Facebook (FB) which is currently dealing with a user trust issue that risks its future growth. Alphabet is a cash machine that despite its maturity continues to grow at a blistering pace. Last quarter earnings rose from $9.70 to $12.77. Looking ahead analysts forecast earnings to rise 17.6% per annum over the next five years after rising 14.3% annually over the last five years. Google dominates search, and its dominance is so extreme that it will be tough for any new competitor to pose a meaningful threat to its leadership.
GOOGL gets an overall score of 78 on the Stock Score Report.
When looking for stocks to buy and hold forever you want to make sure you are looking for companies that are at the top of their sector and have the economy of scale to remain on top. Retail giant Wal-Mart (WMT) is the perfect example of such a company. While online e-commerce has posed a threat to traditional brick-and-mortar retailers, Wal-Mart’s dominance of the brick-and-mortar space is undeniable, and the company has also made big strides in beefing up its e-commerce business to better compete against Amazon in the new retail age.Wal-Mart is a slow grower, with earnings forecast to rise just 3.5% annually over the next five years, but if the company is able to continue boosting its online business the actual growth it can achieve could turn out to be much higher. Wal-Mart dominates brick-and-mortar retail and that is unlikely to change any time soon.
The stock gets an overall score of 57 on the Stock Score Report. The stock is also a powerful dividend play with a 2.2% yield and a 44-year streak of dividend increases.
Johnson & Johnson (JNJ)
Johnson & Johnson (JNJ) is a top stock pick for several reasons. The company is very diversified, and is a leader in medicines, medical instruments and personal healthcare products. The need for each of these will only increase with time as the population ages. The company has grown profits 8.2% per annum over the last five years and looking ahead analysts expect earnings will rise an annual rate of 6.7% over the next five years. Investors can also count of the company’s dividend plan, which has boosted its payout for the last 56 years and currently offers a yield of 2.6%. Stock
Score Report gives JNJ an overall score of 65.
Waste Management (WM)
There are only a few things in life you can always count on, and garbage is one of them. What I really like about trash and recycling stocks is the huge barriers of entry to the sector. The leaders of the industry are Waste Management (WM) and Republic Services (RSG). Both stock have enjoyed strong gains over the last five years, and there is no reason to expect demand for their services to dry up any time soon.A misconception is that garbage is slow growth sector, but Waste Management has grown its earnings 14.4% per annum over the last five years and is expected to grow profits at an annual rate of 10.5% over the next five years. Populations continue to expand which will drive demand and makes WM a very favorable stock to buy and hold forever.
WM gets an overall score of 78 on the Stock Score Report.
A big change in the world over the last decade has been the shift towards a cashless society. Payment processors like Mastercard (MA) are benefitting from this shift. Mastercard has enjoyed profit growth of 19.5% annually over the last five years, and is not expected to slow down any time soon. Analysts forecast profits will rise by 21% per annum over the next five years as the world moves even closer to being cashless. E-commerce definitely helped move things along as more shopping was done with debit and credit cards and the trend has extended to offline transactions as well.Cash is simply not a big part of day to day life as it was even just a decade ago. The latest move towards cashless has been with cryptocurrency, but even the crypto market needs payment processors to deposit and withdraw money from the cryptocurrency exchanges. Mastercard is well-established and has a lot of consumer trust. There are pretty big barriers of entry into the payment processing sector which puts companies like Mastercard, Visa (V) and American Express (AXP) is a great position to remain at the top of the sector for the foreseeable future.
Stock Score Report gives MA an overall score of 90.