3 Tech Stocks to Buy and Hold Forever
It isn't Facebook's (NASDAQ: FB) past results -- stellar as they've been --that should impress investors; it's the fact the social media company has so many growth drivers that should make for a great ride for years to come. As for Microsoft (NASDAQ: MSFT), it doesn't sport Facebook's sky-high revenue and earnings growth, but it has positioned itself as a leader in a market with unlimited potential. Finally, Adobe Systems (NASDAQ: ADBE) makes this list of tech company stocks to buy and hold forever thanks to CEO Shantanu Narayen's plan to alter its business model to emphasize building a reliable foundation investors can rely on.
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Despite their differences, these tech industry leaders have one thing in common: each warrants a place in a long-term investor's portfolio.
Image source: Facebook
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Advertisement Motley Fool Founders Issue New Stock Buy Alert Forget Apple! Heres a Better Stock to Buy Forget GE! Heres how to play the largest growth opportunity in history He Made 21,078% Buying Amazon. Heres His New Pick The expectations ahead of Facebook's third-quarter results earlier this week spoke volumes as to why the company is on this list. Earnings estimates were for $0.97 a share andrevenue of $7 billion,56% above Q3 2015's $4.5 billion. Facebook actually over-delivered on those sky-high estimates,reporting $7 billion in sales and earnings-per-share excluding one-time expenses of $1.09, an astounding 91% improvement over last year's $0.57. Facebook's resultsare even more impressive considering it has multiple, as-yet-untouched, revenue drivers waiting in the wings. The billion-plus monthly average users (MAUs) on both WhatsApp and Messenger aren't even contributing to Facebook's industry-leading results, yet it still commands an estimated 68% of the world's social media ad spend. With a recent change to WhatsApp's privacy policy, it appears Facebook is getting closer to monetizing one of its two messaging apps. Instagram is essentially printing money for Facebook. The company doesn't share specifics, but estimates are that Instagram will add $3.2 billion in sales this year, and it's just getting started. Beyond that, you can add in the possibilities for Oculus Rift, Facebook at Work, and the list goes on. Image source: The Motley Fool. When CEO Satya Nadella took the reins at Microsoft, shareholders were not a happy bunch. Microsoft stock had been languishing in lockstep with the already fading PC industry. Then came Nadella's "cloud first" initiative, and today Microsoft offers investors long-term growth potential along with a 2.6% dividend yield. Windows is still a critical piece of its business, but the perception of Microsoft is changing. No longer is Microsoft "the PC company." Now, it's all about the cloud. And with an annual cloud revenue run-rate of over $13 billion last quarter, Microsoft is one of the ballooning industry's undisputed leaders. Microsoft separated itself from the cloud pack by recognizing early on that its real opportunities lay in utilizing its Azure cloud platform as a means to an end -- in this case, generating cloud Software-as-a-Service (SaaS) sales. It's not a coincidence that commercial Office 365 revenue soared 51% last quarter, or that Dynamics CRM grew sales 11%. Then there's Microsoft's pending $26.2 billion acquisition of user-data-rich LinkedIn (NYSE: LNKD), which will give it another source of growth on deck. Image source: Adobe Adobe isn't going to report the 91% jump in earnings in the current quarter Facebook did, nor can it boast $13 billion in cloud sales, a la Microsoft. But what Adobe will deliver, as it has since its shift to building its annual recurring revenue (ARR) began, is stable, consistent growth that investors can expect to continue for years to come. There was a lot to like about Adobe's third quarter, but what really jumped out was its $3.7 billion in ARR. In a record quarter during which it generated $1.46 billion, to already have recurring revenue equal to more than three times that is a significant win. For some perspective, Adobe's ARR was 40% higher than last year's $2.65 billion, and 30% higher sequentially. Narayen's focus on building subscription-based recurring revenue lacks the pizzazz of some high-flying tech companies' business plans -- and that's is exactly why it has earned a spot on this list. There's usually a place in most portfolios for the proverbial tortoise to balance out the aspiring hares, and Adobe fits that niche perfectly. And with its recent expansion into virtual reality and augmented reality taking root, Adobe has its own additional sources of future growth mapped out, too. A secret billion-dollar stock opportunity Tim Bruggerfree for 30 daysconsidering a diverse range of insightsdisclosure policyChange is good
Slow but steady
The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here