2 Stocks to Buy Now to Hold Forever

Prem Jain, author of Buffett Beyond Value, found that Berkshire Hathaway typically holds stocks between 10 and 20 years (including Warren Buffett's short-term arbitrage). That's an eternity compared to the average investor's holding time. Making an investment with this time horizon would inevitably shift an investor's focus from maximizing profits to minimizing risks. A potential investment would require excellent economies, a durable competitive advantage, and good-looking prospects. Here are two stocks to buy now that could potentially fit this mold.

Google (NASDAQ: GOOGL  )
Though high-tech stocks are not typically considered risk-averse, Google could be the one stock in the market that goes against this conventional wisdom. As if its dominant position in online search and advertising isn't enough to fortify its already strong competitive position, the company has a whole spectrum of frequently used products -- like YouTube, Gmail, and Google Maps -- to deepen its relationship with users and expand the distribution of its ads.

Even Buffett's partner, Charlie Munger, hints that Google could be an exception to the high-tech rule: "Google has a huge new moat. In fact I've probably never seen such a wide moat ... I don't know how to take it away from them," said Munger in 2009. "Their moat is filled with sharks." Munger thinks that Google's business model of charging companies when people click on their ads after an Internet search is "incredible."

Starbucks (NASDAQ: SBUX  )
With over 11,100 locations in the U.S., Starbucks has significant scale advantages. Next in line is Dunkin Donuts, with 7,200 points of distribution in the U.S. -- considerably less. Internationally, there's 7,000 Starbucks locations in 60 countries. But Starbucks' scale doesn't end with its physical locations; the company has significant distribution power with developed channels in consumer-packaged foods, too.

If you're worried about brand saturation, just take a look at Starbucks' prospects in emerging markets. The company has 500 units in China and is on pace to hit 1,500 by 2015 and as many as 4,000 to 5,000 over the longer term. Don't forget about Brazil and India, two other markets with significant opportunities for Starbucks to grow further.

Core stocks to buy now
Google and Starbucks both look like great stocks to buy now. The catch-22, however, is that an investor who plans to buy these stocks now should also have a very long time horizon. Neither of these stocks looks cheap at today's prices, both near their 52-week highs. For long-term investors, however, this doesn't mean the stocks wouldn't make excellent additions to your portfolio. Over the long haul, quibbling over a couple dollars in the price could mean missing some top-notch investment opportunities, or core stocks -- opportunities like Google and Starbucks.

Patience isn't always rewarded, but it's surprising how often it is.

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

link


Read/Post Comments (12) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 30, 2013, at 10:34 AM, VegasSmitty wrote:

    Its true, a fool does write these articles!

  • Report this Comment On April 30, 2013, at 10:46 AM, Lugus wrote:

    This recommendation is probably a good reason to sell both of these. A good time to sell any stock is when people start thinking it can only go up.

  • Report this Comment On April 30, 2013, at 11:19 AM, beekeeper6 wrote:

    Maybe these are good "buy and hold" stocks, but I wouldn't recommend buying either "now"...we are so overdue for a massive correction it's ridiculous.

  • Report this Comment On April 30, 2013, at 11:20 AM, Jason87467 wrote:

    I don't believe these two stocks are the right stocks to buy now. Starbucks can go up and down with the economy. People don't want to pay 4 to 5 dollars for a cup of coffee unless the economy is doing great and will look great for some time to come.

    For the Google stock, who wants to buy when it's at it's 62 month high? I think these two stock tip is wrong for the time.

  • Report this Comment On April 30, 2013, at 11:32 AM, Jason87467 wrote:

    The stock to buy now is GM. GM is undervalued an is set to take off. GM is doing everything right and has a worldwide infrastructure to go big time. All the new GM car designs are world class and many more are due to come out soon.

    I've put my money on GM and it is starting to pay off. This is the stock this writer should be pushing out to the public.

  • Report this Comment On April 30, 2013, at 11:32 AM, banmate7 wrote:

    These are great companies. You won't go wrong holding them for the long term. However, I think both are a bit overpriced right now & could be gotten for a cheaper price.

    Massive correction? I disagree. Average valuations are fair to slightly over priced. Earnings are real. North America is experiencing an energy & manufacturing boom.

    In my view, we're on the cusp of a true secular bull. I give it 1 - 3 years to really kick in. We've been in a secular bear since 1999, suffering a dot com & housing market crash...but fundamentals are much better now.

  • Report this Comment On April 30, 2013, at 1:34 PM, mightythor47 wrote:

    Froth.

  • Report this Comment On April 30, 2013, at 8:27 PM, GARYLEEH wrote:

    The fools only suggest stocks for you to buy cause they own them and want to take your investment after you drive up the price and leave you with half value.

  • Report this Comment On April 30, 2013, at 8:46 PM, ethanfrome wrote:

    How about CFP?

    I have 40,000 shares of that one. I'm going to hold that one until it doesn't pay a dividend or until I die {whichever comes later....(8^)...}

  • Report this Comment On May 01, 2013, at 9:45 AM, Jorge224 wrote:

    How about Verizon and Microsoft? I don't own either, but I would load up on these two if I had money to play.

  • Report this Comment On May 08, 2013, at 9:53 AM, ICTOptimist wrote:

    GOOG looks expensive. I prefer BIDU for GARP. SBUX? What if someone finds something bad in coffee like they have in tobacco? Can't happen? Some people actually believe in climate change (formerly global warming).

  • Report this Comment On May 09, 2013, at 10:59 PM, banmate7 wrote:

    I have owned MSFT since 2006 and gotten a 60% total return by reinvesting dividends. It's a great company with great fundamentals. Cash flow. Balance sheets. A great office brand going cloud...a very solid company.

    But at a PE of 17, I think it's slightly too expensive now. My basis for MSFT is a PE of 15. But you won't go wrong long term with company.

    By the way, I have to admit that the end of QE has me concerned. I think we'll get a safe landing if the employment situation is sound. If not, we could be in for some trouble, maybe even a significant enough...though not massive...correction. It shouldn't hurt longs, but I would especially buy only value in this context.

    As I said, my hopes are with the Fed & emerging energy & 3D printing being the core catalyst to reinvigorate the US employment situation. This can and should lift the rest of North America's great companies.

    We will see...but I'm all in for now.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2391868, ~/Articles/ArticleHandler.aspx, 10/22/2014 11:20:26 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement