We here at The Motley Fool believe that finding great companies to buy and hold for the long term is the best way to build an investment portfolio, and our team of writers has identified Priceline Group (NASDAQ:PCLN), Markel Corporation (NYSE:MKL), and Take-Two Interactive (NASDAQ:TTWO) as stocks that could be worth owning forever. That's quite the endorsement.
Read on to find out what makes these businesses appealing from an ultra-long-term vantage.
This stock makes the world its oyster
Dan Caplinger (Priceline): The best core stocks for a portfolio are ones that you can see having appeal as far into the future as you can think. Priceline Group is a good example, having helped to pioneer the online travel industry and evolved into a leader among the many players in the space. Born from a gimmicky concept, Priceline has matured and used considerable foresight in correctly identifying the true scope of the opportunity in online travel. Its global scope stems largely from early decisions to focus on the international travel market, and as travelers have become more cosmopolitan in their desire to go beyond their local environs, Priceline has been in a better position to deliver in-demand accommodations and other services than some of its key rivals in online travel.
So far, Priceline has overcome several obstacles to keep its growth figures strong. On numerous occasions, catastrophic events like terrorist activity or economic downturns have led prognosticators to predict that the travel industry would decline, taking Priceline down with it. Yet time after time, those dire predictions have been incorrect, and Priceline has been able to survive and thrive by seeking to keep growing its core business and expand wisely into promising new arenas. The stock isn't cheap, but its growth demands respect, and given the perennial nature of travel demand, one can feel comfortable owning Priceline shares forever.
A rare combination that's worth holding forever
Jason Hall (Markel Corporation): At 1.6 times book value and nearly 31 times last year's earnings, insurance and financial holding company Markel isn't exactly cheap today. I may not be looking to add shares to my current holding right now, but I'm definitely not selling. There are two characteristics that make Markel a "never-sell" stock in my book.
First is the quality of the company's insurance business. While many insurers aim to break even on their underwriting, making a profit on investments of the "float" of payments they receive before having to pay claims, Markel has a long history of steady underwriting profits. One of the big reasons for this is the company's focus on specialty insurance markets, where it has less competition, and where it has demonstrated a strong ability to analyze risk and write profitable policies.
Second is the company's history of investing success. Under the hand of Tom Gayner, who ran the company's investment portfolio for 20 years before becoming co-CEO in 2015, Markel's stock portfolio has regularly outperformed the market, while more recently the company's Markel Ventures unit has put more of that capital to work, acquiring entire operating businesses. Markel Ventures' revenue increased 20% in 2016, while earnings before interest, taxes, depreciation, and amortization jumped 81%. Over time, the compounding growth of these efforts has generated immense returns, and I expect that trend to continue for many years.
With the exception of selling for retirement income in 30 years, I have zero plans to sell my Markel shares. If I'm lucky, the company may be paying a dividend when I retire, and I won't even have to sell then.
Video games are serious business
Keith Noonan (Take-Two Interactive): Video games are more popular than ever, but they're still a relatively new form of entertainment, and there's huge growth potential in the medium. With the aim of riding momentum in interactive entertainment, I'm planning on holding Take-Two Interactive stock for the very long term.
The company is still small compared to rival publishers Activision Blizzard and Electronic Arts, but it has demonstrated a smart approach to expansion that has focused on quality of product rather than taking on a wide range of projects in an effort to grow as quickly as possible. This has enabled the company's core franchise Grand Theft Auto to remain one of the most popular and bankable properties in entertainment for more than 15 years, and helped Take-Two to build the strongest brand lineup in its history.
With new technologies such as virtual reality and augmented reality bringing a wealth of new possibilities to the medium, the rapidly expanding popularity of eSports, and a growing global middle class set to expand the addressable market, there are a lot of growth drivers for the games industry. Interactive entertainment has a very bright future, and Take-Two stands out as a likely winner in the space.
Dan Caplinger owns shares of Priceline Group. Jason Hall owns shares of Activision Blizzard and Markel. Keith Noonan owns shares of Activision Blizzard and Take-Two Interactive. The Motley Fool owns shares of and recommends Activision Blizzard, Markel, Priceline Group, and Take-Two Interactive. The Motley Fool recommends Electronic Arts. The Motley Fool has a disclosure policy.