The best stocks to invest in and hold on to
The general advice of the stock market always has been – buy stocks for the long-term. One will ask what the ‘length’ of the term should be. When you buy a stock, think of yourself as a business partner forever – that is, until you need the cash. Still, thinking about forever even in terms of, say, 30 years is quite inconceivable. A more manageable term seems 15 years. So, let’s say if you invest $20,000 today in 2017 in a stock that gives average returns of 12% p.a., you’ll end up with about $1,09,000. Buying a stock and holding on doesn’t seem like a bad idea now, does it?
However, not all stocks are suited to be good long-term buys. The best stocks to invest in and hold on for a long time must have 6 unique characteristics – they should have sustainable products/services and shouldn’t be fads, leaders of the company should be adaptable, balance sheet should be strong, the competitive environment should be benign, the strategy should be long-term and look beyond the next year, and the company should have a track record of innovation while being vigilant about not taking a lot of risk. While it is hard to find all characteristics in one single company, you can start here. Listed below are the best stocks to invest in and hold on for a lengthy time period.
Boeing
Building planes are no mean feat, and it is one hell of a long-term business. In fact, it took the aerospace giant Boeing (ticker BA) 7 long years to convert its first order for its 787 (plane that can fly up to 8,300 nautical miles and can reduce fuel consumption by 20%) into an actual plane and deliver it to the client. Since 1965, more than 10,000 of those jets have been sold, and the company still continues to sell 500 of those workhorses every year. Although Boeing has had manufacturing problems in the past, they have tackled the problems head-on, making the number one priority. Boeing is also said to be tackling innovation in small, short increments rather than the ‘all-in’ way. In the long run, that’s what investors should look for. With strong demand for passenger planes and with a double-digit but strong and stable price-earnings ratio of 15, Boeing is one of the best stocks to invest in. Boeing’s only noteworthy competitor is Airbus.
Washington Real Estate Investment Trust
The Washington Real Estate Investment Trust (ticker WRE) is a venerated real estate company founded way back in the year 1960. The acclaimed firm, which is a real estate investment trust, happens to be the landlord to tenants across apartments, medical and office buildings and 54 shopping centers in and around Washington D.C. Since it is a trust essentially, WRE doesn’t pay any corporate income taxes as long as it distributes to its shareholders 95% of its profits as dividends. The stock has held up well in rough economic times – during the 2008 crash while the S&P500 fell 37%, WRE fell just 4.4%. With an annualized return of 7.5% in the last 15 years and a current attractive yield of 4.4%, WRE remains a silent, strong stock.
Netflix
With its original content such as ‘Stranger Things’ and ‘House of Cards’, Netflix (ticker NFLX) is doing brilliantly and it has but just begun. Since 2003, the stock is up by a whopping factor of 40. The video platform currently has 48 million paid users which have risen by 35% in just one single year. What’s more, Netflix has barely stepped into the overseas markets. For the next 15 years, it’s one of the best stocks to invest in.
Walt Disney Co.
Apart from having some very lovable prime assets such as Cinderella and Goofy, the Walt Disney Co. (ticker DIS) also has a powerful, effective distribution system – networks such as A&E, ESPN, ABC, 8 TV stations in all the big cities of the US, cruise ships, music, video games, studios, and theme parks, to name a few. Albeit it has a huge market cap ($150 billion), Disney has an excellent balance sheet with a top A++ rating for financial strength.
Whole Foods Market
Whole Foods Market (ticker WFM) is known to forge an emotional connection and a life-long relationship with its customers. The stock has seen an annualized return of 14.7% over the past 15 years, so there very well might be a repeat. Sales revenue went up from $8 billion in 2009 to $16 billion in 2015. While the stock dropped more than 40% since 2013, long-term investors needn’t worry.
FedEx
With the online shopping market growing from strength to strength, people will need FedEx (and its rivals) all the more to deliver the goods, becoming one of the best stocks to invest in. However, FedEx (ticker FDX) has cleverly exploited the internet technology to track and expedite their shipments, something which it, sort of, pioneered. There’s still a lot of room for FedEx to expand as more and more of online shopping happens.