You already know buying and holding stocks over the long term is essential for building your nest egg. With the Dow still down nearly 20% from its February high, you may be looking at a market that offers good bargains and a chance for superior long-term capital gains.
You're not alone.
The definition of an investor is someone who assesses the earnings potential of a company, buys shares in that company, and then waits for the company to execute on its growth plan. It could take months or it could take years, but really big money is made over the long term. Just ask Warren Buffett.
But you're here because you want know which companies are going thrive when the current health crisis passes.
That's where we can help. In fact, Money Morning Executive Editor Bill Patalon revealed three stocks you can buy and hold for the next 20 years.
But before we show them to you, let's first go over why they are "the right stocks" to meet the goals of just about any investor. All of them have these characteristics:
- They have good growth prospects, especially when the pandemic is over. They should be able to make money for years to come.
- They have a business "story" you can understand and explain. This gives you the ability to follow their real progress.
- They offer lower risk. There's still a margin of safety if the stock market and/or the U.S. economy sell off one more time.
Now, lower risk doesn't mean the share price can't fall, but rather that the company is likely to survive all the bumps in the economic road we may encounter.
The most important feature for such a company is cash. It must have plenty of cash on hand for emergencies. If it is beholden to a bank or the bond market to finance its daily operations and that lifeline drops out - like it has during the pandemic today - then the company will be in trouble.
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As Bill pointed out, "a big cash hoard gives a company plenty of cushion to ride out any tough stretches: It can pay its bills, drop prices to maintain market share, hold the line on its dividend, and cover any negative surprises."
That's exactly what you want in a stock right now.
And here are three that fit the bill perfectly...
The Best Stocks to Buy and Hold Forever
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Alphabet Inc. (NASDAQ: GOOGL)
The company that most folks still refer to as "Google" is stuffed with cash - a net $104 billion - and avoided falling for the debt trap of the low-interest-rate era. That means it's not saddled with lots of interest payments.
And it's one of the few brands that people substitute for the product name, like Kleenex, Jell-O or, for the older generation, Frigidaire. What other company's name has been turned into a verb ("I'll Google that.")?
That matters. This isn't a company going out of style when trends change next year. And its massive cash stockpile means it will be an innovator instead of a follower.
Apple Inc. (NASDAQ: AAPL)
The pioneer and master of the "ecosystem" strategy. Apple sells more than just tech; it sells an end-to-end way of running your life - from work to health, communication, and entertainment. Apple's innovative array of devices, software, and services work together seamlessly, which has cemented its reputation for ease of use.
With 5G coming, we could see a whole new "upgrade cycle" heading our way once the economy gets back into gear. Right now, the company is sitting on a net cash hoard of $90 billion after debt is considered.
Microsoft Corp. (NASDAQ: MSFT)
Very few companies dominate one era, fall from the lead to regroup, and then make it back to dominance in a new paradigm. Microsoft has done just that. From dominating personal computing and office productivity, which it still does, it has made the leap to the cloud storage business. The company has net cash of $47 billion.
Yes, these are all members of the so-called FAANGM group of mega-cap technology stocks that dominated the bull market a few years ago. You've read it here before, but the road to wealth really is paved by tech.
The strategy now is to start accumulating these stocks and buying more on dips or as you get more investment funds, even if you already own some of their shares. You will likely be very happy with the results down the road.
Quick Cash and Long-Term Growth - All in One Move
America's No. 1 Pattern Trader, Tom Gentile, just recently collected over $14,000 himself, doing it straight from his phone.
Now he's looking to potentially make $120,000 on a boatload of shares he is dying to own. All thanks to Microsoft.
It's definitely a unique scenario. Go here to see it in action.