Discovering the best stocks to buy and hold is a key to building wealth.
We can probably agree that the whole point of our collective investing journey is to create a lifetime of wealth that we can enjoy throughout our golden years.
While many employ a strategy of timing the market, it’s also important to have a longer view with several stocks to buy and hold in your portfolio to help you achieve your long-term goals.
Investors who focus on stocks to buy and hold will keep stocks for months, years, or even decades. Through the power of compounding interest, they enjoy seeing their assets grow and their value increase, creating larger-than-average returns.
They can also live a less stress-free life because they avoid some pitfalls of short-term traders. There are fewer transaction fees to eat into their profits.
There are fewer tax issues to worry about when you concentrate on stocks to buy and hold. And they avoid the risks of timing the market, which sometimes can cause investors to miss out.
Long-term investors ignore the short-term noise and fluctuations of the market while playing the long game. Just look at Warren Buffet, he’s the unquestioned master of finding the best stocks to buy and hold.
I’m using the Portfolio Grader today to evaluate several ideal stocks for a buy-and-hold portfolio. Notably, I own every one of these names myself.
If you want to have a long-term investment horizon, consider these candidates.
Encore Wire (WIRE)
Encore Wire (NASDAQ:WIRE) makes copper wire products for residential, industrial, commercial and renewable energy uses. Copper wiring is important for telecommunications, housing and other key infrastructure components, so the company operates in a highly desirable space.
Copper wiring has a lot of value. It’s durable, flexible and relatively low maintenance. It also has a long service life and has a high resale value. You’ve probably heard stories about abandoned houses or construction projects where thieves have stripped out the copper wiring for this reason.
These are all reasons WIRE stock is an ideal buy-and-hold investment that you don’t have to worry about on a monthly or quarterly basis.
Consider Q2 results. Revenues of $635.5 million were down from $838.2 million a year ago. But WIRE still recorded a gross profit of 26%, net income of $104.7 million and earnings per share of $6.01.
Encore Wire stock is up 31% this year, and it gets a “B” rating in the Portfolio Grader.
Unlike Encore Wire, Nvidia (NASDAQ:NVDA) is seeing amazing year-over-year growth. The rise of generative artificial intelligence and Nvidia’s key role in supplying the semiconductors that power the technology pushed Nvidia’s market cap to over $1 trillion this year.
The stock is up more than 200%. Revenues jumped from $6 billion for the fourth quarter of fiscal 2023 to $13.5 billion two quarters later. Next month, when Nvidia reports its fiscal Q3 2024 earnings, it’s expected to reach $16 billion in revenue.
That’s crazy growth and very exciting from an investment standpoint.
I understand why some naysayers may say that Nvidia’s risen too fast and that a bubble’s bound to hit. But also remember, from a buy-and-hold perspective, we aren’t worried about the daily ups and downs. You’re just worried about the long-term potential.
And from there, you have to love NVDA stock. Nvidia has a dominant market share for providing generative AI chips, and that’s not going away. The demand for Nvidia’s product will grow as more developers look for ways to incorporate generative AI into their offerings.
NVDA stock has an “A” rating in the Portfolio Grader.
Costco Wholesale Corp. (COST)
Costco Wholesale Corp. (NASDAQ:COST) is a membership warehouse club for people who want to stock up on consumer staples.
By avoiding advertising and relying on word-of-mouth, Costco keeps its prices down. The company has 81 warehouses worldwide, with nearly 600 in the U.S. Other locations are in Canada, the U.K., Korea, Australia, China, Spain and others.
The company charges its members an annual fee, so it’s assured of a revenue stream even when customers aren’t shopping.
But fortunately, they are shopping. And that’s good news for buy-and-hold investors. Sales in September were $22.75 billion, up 6% from a year ago.
Costco is seeing its most impressive growth from international markets, where September sales were up 10% from a year ago.
Costco’s business model shields it from recessions as demand for staples will always be consistent. In fact, Costco may be more in demand in a recession as people try to stretch their dollars by buying in bulk.
COST stock is up 25% this year. It gets a “B” rating in the Portfolio Grader.
Palantir Technologies (PLTR)
Palantir Technologies (NYSE:PLTR) sells customized data analytics software that allows companies to analyze data and make quicker, more accurate decisions.
It’s a key contractor of the U.S. government, with Department of Defense contracts that help units in combat situations and State Department contracts to help officials monitor its diplomatic corps.
It uses machine learning and artificial intelligence to power its analytics. Last month, it got a new three-year, $250 million contract with the Pentagon to help the Army and its Special Forces integrate machine learning and AI.
It also partners with PwC, the global professional services company, to combine Palantir’s expertise with AI with PwC’s industry experience. The hope is that the partnership will help more clients use AI and work efficiently.
Palantir is a solid bet on the use of AI. With the U.S. government as its biggest customer, Palantir looks destined for a long period of growth.
PLTR stock is up 175% this year. It gets a “B” rating in the Portfolio Grader.
Novo Nordisk (NVO)
Biotechnology company Novo Nordisk (NYSE:NVO) is arguably a global leader in helping people manage diabetes. The company manufactured over 600 million insulin pens, roughly half the global supply.
The company also makes a weight loss drug, Wegovy, approved by the Food & Drug Administration in 2021, and successfully launched that drug in the U.K. this fall. It also makes Ozempic, a treatment for Type 2 diabetes that is also becoming a popular alternative drug for obesity.
JPMorgan analyst Richard Vosser projects that obesity drugs will be worth about $71 billion within 10 years. That’s a tremendous opportunity for Novo Nordisk, which already has a leading treatment and is seeking approval for more.
Novo Nordisk also successfully implemented a 2-for-1 stock split in September, making the drug more appealing to retail investors looking for low-priced alternatives. NVO stock is now priced at just over $100 per share.
NVO stock is up 49% this year. It gets an “A” rating in the Portfolio Grader.
Shipping giant FedEx (NYSE:FDX) is having a solid year, up more than 40%, even after cooling off a little over the summer. But considering the long-term picture, I think there’s a lot to like about FedEx.
Yes, the stock is down significantly since the Covid-19 pandemic when it was an essential part of keeping the stay-at-home, shop-at-home economy moving.
If you look at the bigger picture as buy-and-hold investors should do, you’ll note that FDX has already bounced off its 2022 lows, gaining 60% to put investors on solid footing once again.
The company is taking additional steps to keep the revenue flowing in, announcing rate increases of 5.9% to FedEx Express, Ground and Home Delivery.
Those increases are important as FedEx deals with rising labor costs and should help keep the profit margin reasonable.
FedEx Express revenue was $21.7 billion in the first quarter of fiscal 2024, down from $23.2 billion a year ago. But reduced operating expenses allowed the company to actually increase profits, from $1.19 billion a year ago to $1.49 billion this quarter.
FDX stock has an “A” rating in the Portfolio Grader.
First Solar (FSLR)
The company announced plans this summer to build its fifth U.S. factory, spending up to $1.1 billion to meet growing demands for solar power.
The factory will add 3.5 gigawatts to First Solar’s U.S. capacity, bringing it to 14 gigawatts. That would allow First Solar to power roughly 12.2 million homes a year.
First Solar expects to have roughly 25 gigawatts of capacity globally by 2026.
Earnings for the second quarter included revenue of $810.6 million, an increase of 30.5% from a year ago. Income was $170.5 million, or $1.59 per share.
FSLR stock is up 5% this year but has a long runway for buy-and-hold investors. It has a “B” rating in the Portfolio Grader.
On the date of publication, Louis Navellier had long positions in WIRE, NVDA, COST, PLTR, NVO, FDX and FSLR.
The InvestorPlace Research Staff member primarily responsible for this article had a long position in PLTR. The staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.