Top Stocks With Long-Term Potential for Investors

Top Stocks With Long-Term Potential for Investors

My favorite holding period is forever. Imagine owning a timeless business, one that grows in profits year after year, slowly generating wealth that will change the life of you and your loved ones. Of course, these companies are not easy to find. Most stocks do not entitle you to a lifetime membership in an investor’s portfolio.

However, Amazon (NASDAQ:AMZN) And Hershey (NYSE:HSY) could qualify. I’ll tell you what makes them so special and why they’re worth buying today and keeping forever.

A three-headed wealth machine

Chances are, Amazon affects your life in one way or another. It is the dominant e-commerce company in America, with 38% of the market. Amazon Web Services, its cloud segment, underpins much of the Internet.

And if you’re a football fan, Amazon is a media giant that streams National Football League games, as well as thousands of movies and shows. earn billions of dollars in advertising revenue while doing it.

Not only is Amazon’s presence in these three industries impressive, but the size of these markets has also given Amazon the virtual real estate needed to become a multi-billion dollar company. Today, its revenue exceeds $570 billion, generating $85 billion in operating profits that are reinvested in the company.

Its advantage over the competition starts with its e-commerce business, which has become so large that it is difficult to replicate. Its supply chain handles nearly a quarter of all packages shipped in the United States. This size, combined with its aggressive culture of innovation, makes it hard to see Amazon disappearing anytime soon.

Top Stocks With Long-Term Potential for Investors

Chart AMZN/CFO Price per Share (TTM)

I like to value the stock based on its operating cash flow, because Amazon is investing heavily in growing the company, even at its current size. If you compare the stock price to operating cash flow per share, the stock remains cheap relative to its long-term average.

Investors can confidently add Amazon to their portfolios. And barring an unforeseen disaster, don’t give up.

Sweet never goes out of style.

Hershey is on a completely different end of the spectrum. He prepares chocolate and salty snacks. It’s not a complex business model, but it can be a good thing.

This is the brand that makes Hershey special. There are other candy companies on the market, but Hershey’s name dates back more than a century and its brands are consistently among America’s favorites throughout the year. Who doesn’t love a Hershey Bar, Kit Kat, Twizzlers, Heath Bar, Jolly Rancher hard candy, or a Reese’s Peanut Butter Cup?

The popularity of the company allows it to benefit from privileged storage space in points of sale, just like Coca-Cola And PepsiCo do in the beverage industry. Hershey has about 24% of the U.S. candy market, an impressive figure considering that any company can make chocolate bars. It’s the brand that makes the magic.

This is also reflected in the finances. Hershey is a simple and very profitable business that earns an impressive 22%. return on invested capital. This means that when Hershey injects a dollar into its business, it gets back $1.22. This indicates that Hershey has pricing power, which helps the company weather a surge in cocoa prices that threatens to squeeze its profit margins.

HSY PE Ratio Chart (Forward)HSY PE Ratio Chart (Forward)

HSY PE Ratio Chart (Forward)

While this is bad news for the company, it creates an opportunity for long-term investors. Shares fell to a price-to-earnings ratio of 20, below the company’s long-term average.

Over time, it is expected to adapt to rising cocoa prices, and there is a good chance that the shortage will end and prices will normalize again. In other words, take advantage of a short-term problem to buy this great stock and enjoy subsequent years of dividends and price appreciation.

Should you invest $1,000 in Amazon right now?

Before buying stocks on Amazon, consider this:

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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. Justin Pope has no position in any of the stocks mentioned. The Motley Fool posts and recommends Amazon. The Motley Fool recommends Hershey. The Motley Fool has a disclosure policy.

2 Great Stocks You Can Buy Now and Hold Forever was originally published by The Motley Fool

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