Predicting which stocks will prove successful over the long term has always been somewhat difficult. A lot can change over the long term and a winner that looks well-positioned today can see its strengths erode over a period of years or months, if not overnight.
At the same time, investors have made fortunes by simply holding on to companies for 10 years or more that exhibit strong competitive advantages. Of course, identifying stocks to hold for the next decade and beyond requires research. Some things to focus on include satisfying demographic trends, companies with strong histories of innovation, and strong financial positions.
Utilizing a replicable set of filters along those lines goes a long way in identifying potential candidates. No one knowsexactly what tomorrow holds but we can make educated guesses. With that in mind, let’s look at three stocks to hold for the long term and beyond.
Apple (AAPL)
There are many strong reasons to believe that Apple (NASDAQ:AAPL) stock is one of the best choices to hold for the next decade. Past performance is no guarantee of future results but it’s certainly correlated. Apple has done very well from that perspective, returning an annual average of 26.4% over the last decade.
That makes it an actual 10x stock during that time frame. Simple arithmetic dictates that $10,000 invested a decade ago would have grown to more than $100,000 today.
Anyway, let’s focus on the things that Apple has that indicate it will continue to grow into the future. In the introduction to this article I noted that cash reserves are particularly important. Apple shines in that regard: the company currently has more than $67 billion in cash available. That large cash position grants Apple the freedom to pursue any number of strategies it deems viable.
We also have to note that Apple has a history of product innovation suggesting it will continue to introduce products that generate high demand. The iPhone is its most successful product and the recent application of generative AI therepromises to push Apple higher again.
Tesla (TSLA)
It’s fairly easy to be bearish about Tesla (NASDAQ:TSLA) stock these days. Revenues declined by 9% in the first quarter and margins declined as well.
If that weren’t enough to scare some investors there’s also the fact that Tesla is not the largest EV manufacturer anymore. Well, sort of. It had been supplanted by BYD (OTCMKTS:BYDDF) on an annual basis in each of the last two years. However, Tesla did slightly edge out BYD in Q1 deliveries as the Chinese economy continues to falter. Point being, Tesla is no longer the clear EV choice it was not so long ago.
Despite all that, I remain bullish on Tesla. Yes, margins are going down and Tesla can’t continue to sell its vehicles at extreme premiums. The company will have to find ways to compete on volume and lower margins. However, Tesla’s margins are far better than those from legacy manufacturers. Fundamentally it’s a stronger stock in that regard and that matters. EV sales are going to return and the company is profitable.
While I believe in the vehicles, I’d also like to note that Tesla makes sense in the long-term in relation to AI. The company just released its second generation Tesla bot prototype at the World Artificial Intelligence Conference in Shanghai. If Tesla ultimately folds those operations into the car company it will spur growth. It’s reasonable to assume that the company will, given that the bots are being developed for application within the company.
Visa (V)
Visa (NYSE:V) is arguably the best fintech stock available to any investor. There are more than 4.4 billion Visa cards in circulation. More than 130 million merchants in 200 plus countries accept it as a form of payment. Pretty much wherever you go, you can rest assured that your Visa card will be accepted if there are digital payments.
Here’s another thing to consider. Visa reported $32.65 billion in 2023 revenues. By 2027 that figure is expected to eclipse $48 billion dollars. On such a massive scale, 50% growth at the top line is quite impressive. Visa’s earnings are expected to increase by an even greater 76% during that time frame. Earnings growth is one of the surest routes by which a given stock price increases.
That time frame does not cover the next 10 years. It only covers the next three or four years. Nevertheless, it’s a strong indication that Visa will continue to thrive over the long term.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a long position in AAPL.