Finance

3 Great Stocks I “Never” Sell


When I buy stocks, I try to remind myself that I’m buying a small piece of a business and I intend to hold my shares for the long term. Warren Buffett famously said that his favorite holding period is forever. While this is a more ideal choice, most importantly, it reminds us that investing success comes from identifying great businesses and then allowing them to compound over decades.

While some stocks in my portfolio have a lot to justify staying there forever, there are also some that I can’t imagine myself selling. These businesses have long track records and competitive advantages that should pave the way for a bright future. There’s a saying: “Never say never.” However, with these stocks, I would almost never sell.

costco

Every time I struggle to find a parking space or stand in a long (but efficient) checkout line, I ask myself why I don’t have more costco wholesale (NASDAQ: COST) stock. While most of my fellow shoppers may not have the same idea, we are all about taking advantage of large quantities and low prices.History tells us that this business model has been extremely successful, with Costco shares up more than 81,000% since its initial public offering.

As of the second quarter of fiscal 2024 (ending February 2024), Costco became the third largest retailer in the world and the 12th largest company among the Fortune 500, with 874 stores worldwide. Its membership model works well. More than 92% of Costco members have renewed their memberships, and members and the company generated nearly $5 billion in membership fees over the past 12 months.

Low prices draw customers in, and because Costco sells fewer items than its competitors and turns inventory so quickly, items can sometimes be sold before payment is required, which helps reduce cash flow and expenses.

Amazon

If besides Costco, the first retailer I think of must be Amazon (NASDAQ: AMZN)I don’t think I’m the only one who finds myself shopping there before anywhere else. Over the past 12 months, Amazon shares have risen 82%. However, the company’s shares have fallen nearly 50% during the 2022 market downturn, as the company has struggled to get its finances back on track after a massive distribution expansion due to a surge in pandemic orders.

Amazon is definitely back on track and ready to accelerate growth again. Amazon’s revenue grew 12% in 2023, but the more impressive results were further reflected in the income statement. operating income It grew by 202%, and net profit increased by 1,226%. These results were driven by a recovery in the e-commerce business, which finally turned a corner after struggling in 2022. It’s also worth remembering that Amazon Web Services (AWS) remains the leader in the cloud infrastructure space, with revenue growing 13% in 2023.

apple

Consumer electronics giant apple (NASDAQ:AAPL) Been in the news lately for all the wrong reasons. Finding itself increasingly under the spotlight of a federal antitrust investigation, the stock has fallen 12% in the past three months. The news is certainly worth watching, but it will take years to show up. The modest decline in Apple’s stock price suggests the market is not as concerned as some of the headlines suggest.

Taking a step back, it’s important to remember that Apple is still a ubiquitous brand around the world, especially in the United States. Apple, best known for its iPhone and other consumer electronics devices, is slowly becoming a software company. Apple now has an installed base of over 2.2 billion devices.

This creates an ecosystem of apps and subscription services that provide companies with high-margin revenue streams. In the most recently reported quarter, services revenue (which reports revenue from all subscription products) increased 11% to $23 billion. Accounting for 19% of total revenue, up from 18% last year.

Why I “Never” Sell

Under what circumstances might I sell these companies? Of course, anything is possible. However, all three businesses have such large competitive advantages and are still growing in size at a breakneck pace that it’s hard to imagine a situation where they don’t warrant a spot in my portfolio. Investing can be as simple or complex as you want it to be. In my opinion, buying and owning these three stocks is as simple as investing.

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John Mackey is the former CEO of Amazon subsidiary Whole Foods Market and a board member of The Motley Fool. Jeff Santoro Holds positions at Amazon, Apple, and Costco Wholesale. The Motley Fool has positions and recommendations at Amazon, Apple, and Costco Wholesale. Motley Fool at disclosure policy.

3 Great Stocks I “Never” Sell Originally published by The Motley Fool



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