Investing for the long haul should be the goal of everyone who puts money into the market. Trying to make a quick buck will more often than not result in losing your capital, rather than adding to it.
So, to help investors find ideas that will allow them to grow their investments over years -- think decades -- rather than the next quarter or two (or worse, the next few days!), we asked three Motley Fool contributors to come up with their best ideas for long-haul investing. Let's take a look at why they think TPI Composites (NASDAQ:TPIC), Priceline Group (NASDAQ:BKNG), and Align Technology (NASDAQ:ALGN) fill the bill not only as stocks to hold for the long term, but also ones that can help make you rich.
Profits are in the wind
Rich Smith (TPI Composites): For today's pick, I'm going to do something I don't do enough of -- suggest buying a stock I actually own myself: TPI Composites.
TPI is a company you probably haven't heard of, but I think it has the potential to create riches for investors over the long term, as the world continues its evolution toward renewable energy. TPI manufactures wind blades for windmills in a market for wind power that some experts estimate will grow at 20% annually over the next five years.
Why should you want to own it? For one thing, because of its partners. Even if you have never heard of TPI Composites, energy giant General Electric (NYSE: GE) has, and three of its entities all provide financial backing to the company, while GE itself is a customer of TPI.
Even if it lacked these connections, TPI Composites would be worth a look on its own merits. While not a household name, Morgan Stanley notes that TPI is actually the nation's largest manufacturer of wind blades. And as big as that sounds, many analysts expect it to grow bigger.
According to data from S&P Global Market Intelligence, analysts who follow TPI Composites stock expect to see revenues nearly double between 2016 and 2019, from $755 million last year to $1.49 billion three years from now. What's more, over that same three-year time frame, these analysts are predicting that TPI's profits will quintuple, from $0.48 per share last year to $2.59 per share in 2019.
Admittedly, TPI is not a particularly cheap stock to buy today. Up 43% since its July 2016 IPO, TPI stock sells for nearly 40 times earnings. But with the potential to grow its profits five times in three years, even that price could prove cheap -- and make you rich over the long term.
A highflier that can soar even higher
Rich Duprey (Priceline Group): Why recommend a stock that's returned, like, a gazillion percent over the past decade or so, has gained more than 50% since it dipped last summer, and is up more than 20% so far in 2017? Because Priceline Group isn't finished growing -- not by a long shot -- and there are plenty of great returns to still be squeezed from it.
Priceline may not own the online travel market, but it is the 800-pound gorilla dominating it. Gross bookings continue to run higher at double-digit rates -- they were up 28% on a constant-currency basis in the fourth quarter, to $15.1 billion -- while net income surged 34% year over year. International operations, which is largely its online accommodation reservation service, Booking.com, contributed a 26% increase in gross profits for the company. It had over 1.1 million properties in more than 220 countries on its site at the end of last year, about half of which are vacation rentals, an increasingly important business for it, but also a stat that makes it the world's leading booking brand based on room nights reserved.
Certainly there is competition, and not just from traditional rivals like Expedia, but also alternative venues like Airbnb and even TripAdvisor (NASDAQ: TRIP), which has gone from merely rating accommodations and services to taking reservations for them. Which is why the latter is once again the subject of rumors about a takeover by Priceline, an acquisition that, if it did happen, would give Priceline a huge boost and an influx of some 390 million active TripAdvisor users, most of whom use the service for U.S. travel.
Even without a merger, which could quite possibly run into antitrust opposition, Priceline still looks good to grow on its own. Analysts are looking for it to grow its earnings some 17% annually over the next five years, an impressive rate of growth for an $87 billion company. But the way it's been going, investors might not be so far off the mark if they're expecting the online travel site to post another huge return over the next decade and beyond.
Straightening things out
Keith Speights (Align Technology): If you want to make plenty of money, buy the stock of a company that has figured out a way to address a problem better than anyone else. Align Technology is a perfect example of such a company.
Align focuses on malocclusion, or misalignment of teeth. Others have addressed this issue through metal braces. However, that solution created another problem: Many people hate the idea of wearing metal braces on their teeth because of how it changes their appearance. Align Technology figured out a way to fix the problem of malocclusion without metal braces.
Dentists and orthodontists can create a 3D digital model of a patient's teeth using intraoral scanners, such as the iTero scanner made by Align Technology. This digital model is sent electronically to Align's operations center, where a digital treatment plan is developed. The plan is sent back to the dental professional for review. If everything looks good, it's then sent electronically to Align's automated manufacturing facility, where a set of Invisalign clear aligners are custom-made for the patient.
The end result is that patients get their teeth straightened out over a period of several months wearing clear aligners that are nearly invisible. Problem solved.
How can buying Align Technology stock make you rich over the long run, though? The company has only scratched the surface of its market potential. There is a significant opportunity for Align in developing nations that have growing middle-class populations. Align is also developing new products to address more complex cases of malocclusion -- straightening out yet another set of problems.