3 Stocks to Hold for the Next 50 Years
Buying and holding great stocks is the best way to predictably generate wealth over the long term. But truly life-changing gains are reserved for investors who are willing to own their stocks for years -- or decades, even -- without selling, letting the power of compounding returns do its work.
However, finding stocks worthy of such patience is easier said than done. So to help get you started, we asked three top Motley Fool investors to each pick a stock they'd be comfortable buying and holding for the next 50 years. Read on to see why they chose Corning (NYSE: GLW), Amazon.com (NASDAQ: AMZN), and BofI Holding (NASDAQ: BOFI).
The future is clear
Steve Symington (Corning): Founded in 1851, Corning knows a thing or two about surviving and thriving in our fast-changing world. In large part, Corning has been able to achieve that feat by consistently investing its cash to foster innovation and pursue multiple opportunities for incremental growth. To that end, under a strategic capital allocation framework unveiled in late 2015, Corning is on track to not only invest $10 billion in its business toward capturing those new growth opportunities, but also return at least $12.5 billion to shareholders through dividends and share repurchases by 2019.
Shares of the glass technology specialist are up nearly 30% so far in 2017 alone, most recently driven by the continued outperformance of both Corning's optical communications segment and specialty materials. In the former, which earlier this year surpassed its Display Technologies segment (think LCD glass substrates) in terms of revenue, Corning recently reached 1 billion kilometers of optical fiber sold as telecom giants roll out their respective next-gen fiber networks. Meanwhile, strong demand for Corning's latest Gorilla Glass product -- previous versions of which have already been used to protect more than 5 billion mobile devices from over 40 OEMs -- helped drive sales in the latter 26% higher from the same year-ago period.
But Corning has many more irons in the fire. Automotive variants of Gorilla Glass are gaining traction, for example, winning adoption on over 25 auto platforms so far. And thanks to collaborations with Merck and Pfizer, Corning is in the early stages of modernizing the pharmaceutical glass packaging industry following its introduction of Corning Valor Glass this past July.
All told, I see no reason Corning won't still be harnessing its innovative spirit to drive market-beating gains for investors 50 years from now.
The company that's taking over the world
Leo Sun (Amazon): Amazon's stock rallied nearly 1,000% over the past decade, but that run won't end anytime soon. Its high-margin cloud platform business, Amazon Web Services (AWS), supports the expansion of its lower-margin marketplace businesses, and that virtuous cycle is blowing competitors in both markets out of the water.
Amazon adds hundreds of new features to AWS every quarter to lock in its customers. That's how the business hit an annual run rate of $16 billion last quarter -- and its revenue is still growing more than 40% year over year.
On the e-commerce front, Amazon's prisoner-taking Prime ecosystem ensures customer loyalty with an ever-growing list of perks -- including discounts, free shipping options, streaming video and music, and an e-books lending library. It ties all that together with hardware devices like the Echo, which remove "friction" from the overall shopping experience.
Research firm CIRP recently reported that Amazon now has 90 million Prime members in the U.S. -- a 38% jump from the previous year. The average Prime member also spends $1,300 annually on Amazon compared to $700 for non-members.
Amazon's recent purchase of Whole Foods Market also adds groceries to that ecosystem. It could also further expand into the drugstore and apparel markets, which would hurt even more brick-and-mortar retailers. With each new piece added to the ecosystem, its wall becomes tougher to crack. Therefore, Amazon might not look cheap at 86 times next year's earnings, but it's one stock I'd be comfortable owning for the next 50 years.
Most banks will look like this one in a half-century
Jason Hall (BofI Holding, Inc.): In 50 years, a lot of things about modern life could be very different. Amazon -- as Leo describes in this article -- is a perfect example of how the internet is changing how we buy things, find information, and consume entertainment media.
It's also shaking up banking. People simply don't need to go inside a bank very often anymore, if ever. This is putting commercial banks with brick-and-mortar retail operations at a big disadvantage to online-only competitors like Bank of Internet. BofI is America's oldest online-only bank, but is also one of the best, having just been named "best online bank" by Money magazine.
Eventually, traditional banks will close branches and catch up to the future of banking, but today, BofI's model gives it a big advantage, making it far more profitable since its expenses are far lower. The bank's management is using those profits to invest in new technology, expand into new lines of lending, and further position itself for many more years of growth.
While a lot about banking will change over the next 50 years, one thing that won't is the fact that people will need access to money, and banks will almost certainly be a key part of how commerce and the economy work. Since BofI is already far closer to being the future of banking today, it's definitely a stock I intend to hold for decades to come.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jason Hall owns shares of Amazon, BofI Holding, and Corning and has the following options: long January 2018 $30 calls on BofI Holding. Leo Sun owns shares of Amazon. Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and BofI Holding. The Motley Fool recommends Corning. The Motley Fool has a disclosure policy.