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3 Growth Stocks to Buy and Hold for 25 Years

By Keith Noonan, Dan Caplinger, and Rich Duprey - Oct 30, 2017 at 7:00AM

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Shopify, Disney, and Alphabet are businesses with competitive advantages that could help them post strong growth for decades.

We asked three of the Motley Fool's top contributing investors to profile a growth stock that's on track to be a winner over the next quarter-century. Read on to see why they think Shopify (SHOP -2.82%), Disney (DIS -1.13%), and Alphabet (GOOG 1.17%) (GOOGL 1.16%) are high-potential businesses that are built for the ultra-long term. 

A man touching a line graph that's moving up from left to right.

Image source: Getty Images.

Building e-commerce one business at a time

Dan Caplinger (Shopify): The rise of e-commerce has started to move beyond the behemoths in the industry as smaller mom-and-pop businesses realize they can compete with the right tools. Shopify has built its business on the idea that anyone can establish a presence in the e-commerce world, and its tools make it simpler for those who don't have the resources to hire dedicated outside professionals or the time to tackle the job themselves to get a functional marketplace online to promote and sell their products and services.

Shopify has been under siege lately by critics who allege that the company's e-commerce solutions business involves what they called questionable customer acquisition tactics. Yet looking at the success rate of businesses that become Shopify clients can be misleading, because small businesses face struggles that cause many of them to fail independent of their e-commerce presence. Shopify's business model focuses most of its attention on those customers that become successful enough to demand its highest-tier services, who already make up a substantial minority of the company's overall sales. As more Shopify clients ramp up their sales volumes and provide positive anecdotal evidence of Shopify's product, the service's popularity should continue to accelerate, producing growth that could last for decades to come.

Get ready to be entertained

Rich Duprey (Disney): For lack of a better phrase, Disney will keep you entertained for years to come. Through its theme parks, movies, and broadcast and cable TV studios, Disney covers the entire breadth of ways people have come to enjoy themselves, and it's paid off handsomely for investors.

When looking for a stock to consider buying and holding for the next 25 years, it might be worthwhile to consider how well it has performed during the past two and a half decades. Over the past 25 years, Disney has provided total returns of nearly 1,000%, almost twice as much as the S&P 500.

DIS Total Return Price Chart

DIS Total Return Price data by YCharts.

Disney also has a decades-long history of paying dividends, too, stretching back some 60 years. While dividend increases have been hit or miss, with long periods without any followed by some dramatic hikes, the fact remains the entertainment giant has regularly shared its success with shareholders.

Although Disney may see difficulties on occasion in one aspect of its business or another, it is diversified enough that the other segments of its operations can pick up the slack. With new attractions always opening, new movies ready to debut, and a bevy of new programming hitting the airwaves, Disney should be a star performer for the next few years as well as the new few decades.

A tech empire that's built to last

Keith Noonan (Alphabet): Alphabet has a range of competitive advantages that give it a formidable moat and position the company to be a long-term winner. Put simply, Alphabet's core batch of products have it in great shape in the near term, and its leadership advantages in these technologies will likely help it remain an industry powerhouse for decades to come.

With the world's leading mobile operating system and a search service that's virtually synonymous with the category, the company is dominating in the digital ad space. Along with Facebook, the two tech giants are expected to claim roughly half of all digital advertising sales in 2017 and capture nearly all of the growth in the category -- and there's a good chance they will retain their stranglehold on the space.

Between its search business, suite of internet tools, and the Android mobile operating system, Alphabet also has access to an incredible wealth of data that puts it in position to be a leading force in potentially massive growth opportunities like artificial intelligence. It's also an early leader in robotics and self-driving cars and has huge opportunities as it moves further into the hardware space. The company even has tremendous brand strength, recently topping Apple as the world's most valuable brand in a study conducted by Brand Finance.

Alphabet has very strong positions in some of today's most vital technologies, and it's poised to remain one of the most influential companies on the planet over the next 25 years and beyond. 

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Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
$2,291.44 (1.16%) $26.18
The Walt Disney Company Stock Quote
The Walt Disney Company
$96.08 (-1.13%) $-1.10
Alphabet Inc. Stock Quote
Alphabet Inc.
$2,304.27 (1.17%) $26.53
Shopify Inc. Stock Quote
Shopify Inc.
$33.04 (-2.82%) $0.96

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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