We all would love to have some massive long-term winners in our investment portfolios -- better yet, many of them. To end up with such massive long-term winners involves a lot more than luck: You need to not only invest in great and growing companies, but you also have to hang on to their stock through lots of ups and downs because no stock goes up in a straight line. In addition to that, you'll need to keep up with the companies' progress to make sure you remain confident in their growth potential.
The hardest thing you have to do, though, is simply wait. Long-term winners generally take many years to double, triple, quadruple, and eventually increase in value perhaps tenfold or even 20-fold.
Here are three potential massive long-term winners to consider adding to your portfolio.
1. Boston Beer
If you're not too familiar with the Boston Beer (NYSE: SAM) company, know that it's a major player in the beer arena, rated as the top beer supplier in 11 out of the past 13 years by the Tamarron Beverage Supplier Performance Survey. It raked in more than $2 billion in revenue in 2022, netting profits of $67.3 million.
Boston Beer will always face meaningful competition, but it has advantages over many rivals in its scale, its savvy acquisitions, and its ability to keep up with trends and changing tastes (like hard seltzers and ciders), among other things. A miscalculation on the level of popularity for hard seltzers concerned some investors and helped drop the stock price nearly 76% from all-time highs set in mid-2021. But this short-term problem actually presents an appealing opportunity for long-term investors to buy in at a discount.
Founder and chairman Jim Koch summed it up this way when speaking in February:
"We continue to believe building a diversified Beyond Beer portfolio is the right strategy to deliver long-term balanced growth and value creation. Although near-term trends remain challenging because of the hard seltzer category's trajectory, we have strong brands across multiple segments, the top salesforce in beer and a highly cash generative business with a strong balance sheet."
Boston Beer features brands such as Samuel Adams (a top craft beer name), Truly Hard Seltzer, Twisted Tea, Angry Orchard Hard Cider, Dogfish Head Brewery, Angel City Brewery, Coney Island Brewing Hard Mountain Dew, and Sauza Agave Cocktails. Long-term investors can see where this diversified beverage portfolio will go while buying in at a price-to-sales ratio of 1.8, which is well below its five-year average of 4.
The company does face challenges, such as competition from smaller brewers, but it's uniquely positioned to prosper over the long term. It's shown an ability to innovate, to get ahead of trends (like the growing popularity of hard cider), and to make acquisitions. In recent years, its long-term debt has shrunk while its cash pile has grown. That bodes well for its future growth.
MercadoLibre (NASDAQ: MELI), referred to by many as "the Amazon of Latin America," straddles two realms that are exciting to lots of investors: e-commerce and fintech. It's a major player in both, boasting "the largest e-commerce and payments ecosystem in Latin America," a region with hundreds of millions of customers and currently underserved potential customers. It will also appeal to investors intrigued by the growth prospects of emerging markets, as MercadoLibre operates in Argentina, Brazil, Mexico, Colombia, Chile, Venezuela, Peru, and 11 other countries.
In February, MercadoLibre posted fourth-quarter results featuring revenue up 56.5% year over year on a currency-neutral basis (up 6x over the past decade), with total payment volume in the quarter rising 80% (10x over the past decade) and gross merchandise volume rising 34.7% (up 5x over the past decade). Those are some big numbers, explaining why the stock is once again gaining investor interest.
One of MercadoLibre's strengths is its vertical integration, encompassing not only online marketplaces and digital payments, but also logistics services (via its Mercado envois business), credit solutions (via Mercado credito), and advertising services (via Mercado publicidad). The company can face headwinds such as economic challenges in Latin America and volatile currency exchange rates, and it has a lot of debt. But it also has a lot of long-term potential.
Its annual growth rates may eventually slow, but they are likely to remain in the double-digits for quite a while, and it counts only a modest fraction of its total addressable market as its customers at this point. As more Latin Americans engage in more shopping and financial transactions online, they'll likely do so via the local market leader, which is, for many of them, MercadoLibre. With recent price-to-sales and price-to-earnings (P/E) ratios less than half of their five-year averages, the stock seems attractively valued.
Nike (NYSE: NKE), the global leader in athletic footwear and apparel is a storied retailer and manufacturer. It recently ranked 10th on Interbrand's 2022 list of the biggest global brands, with an estimated brand value topping $5 billion. Having such a strong brand means that whenever Nike slaps its name on a new product, it's taken seriously and trusted to be of good quality. (Nike also owns the popular Converse brand, as of 2003.)
Nike's fiscal 2023 third quarter (ended Feb. 28) featured some impressive numbers, such as revenue rising 14% year over year (19% on a currency-neutral basis), with its digital sales growing by some 20% (24% on a currency-neutral basis). For context, know that revenue has averaged growth of 6.3% annually between 2017 and 2022. CEO John Donahoe attributed the gains to Nike being "[f]ueled by compelling product innovation, deep relationships with consumers and a digital advantage that fuels brand momentum." He said the company has a proven playbook that helps it navigate volatility while creating value and driving long-term growth.
Nike is a dividend payer, with a somewhat low yield of 1.1%. However, the payout ratio is also low, leaving plenty of room for further growth. The dividend has grown at an average annual rate of 11% over the past five years. Expect the dividend to keep growing over the long term. Given that Nike's recent price-to-sales and price-to-earnings (P/E) ratios were both below their five-year averages, it's reasonable to expect the company's share price to grow, too -- in part due to the company's deep pockets, ability to innovate, and to make the most of its powerful brand. The sluggish global economy has pressured the stock, but that won't last forever.
Buy in now at a discount
These are just three of many companies that have the potential to be massive long-term winners. Each is facing some challenges, but each also has the wherewithal to deal with them and prosper for many years. If any intrigues you, take a closer look at them. If these stocks intrigue you but you want an even lower entry point, you might add them to your watch list -- or dollar-cost-average your stock purchases over time.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Selena Maranjian has positions in Amazon.com and MercadoLibre. The Motley Fool has positions in and recommends Amazon.com, MercadoLibre, and Nike. The Motley Fool recommends Boston Beer and recommends the following options: long January 2025 $47.50 calls on Nike. The Motley Fool has a disclosure policy.