I have bought and sold quite a few stocks through the years. Some I wished later that I hadn't bought at all. But, more often than not, my regret was that I had sold stocks. That doesn't mean that I won't sell some of the stocks in my current portfolio. I can almost guarantee you that I will.
However, there are three stocks that I own right now I'm planning to never sell. AbbVie (ABBV 1.25%), Alphabet (GOOG -0.72%) (GOOGL -0.74%), and The Walt Disney Company (DIS 0.78%) are definite keepers, in my book. Here's what sets these stocks apart from the rest.
AbbVie is arguably the best big pharma stock on the planet right now. Among all big pharma stocks, AbbVie claims the highest total shareholder return, the highest adjusted earnings-per-share growth, and the second-highest revenue growth over the last three years. It also handily topped its peers in stock performance over the last 12 months, gaining over 70%.
But those accolades really aren't why I'm going to hold on to AbbVie stock for a long time. They're simply the outward results of an underlying reason for holding on to AbbVie. That underlying reason is the company has what it takes to survive and thrive for the long run in a highly competitive industry.
Just a few years ago, many people wondered what would happen to AbbVie with its top-selling drug, Humira, facing loss of key patents. The company was -- and still is -- heavily dependent on Humira. However, AbbVie built up its intellectual property portfolio for Humira enough to successfully negotiate keeping a major biosimilar rival off the U.S. market until 2023. Just as important, AbbVie wisely invested the enormous amount of cash that Humira generated.
AbbVie now owns one of the fastest-growing cancer drugs, Imbruvica, thanks to its acquisition of Pharmacyclics in 2015. The pharma company also boasts a soon-to-be blockbuster in hepatitis C drug Mavyret and a pipeline loaded with potential winners. Sooner or later, each of these drugs will face loss of patent exclusivity, just like Humira has. But I'm convinced that AbbVie will continue investing for the future in ways that pay off.
Alphabet isn't a household name across the world, but pretty much all of its product names are. Google is by far the top search engine globally. YouTube is the top video website and the No. 3 most visited website in the world overall. Android holds over 85% of the global market share in mobile operating systems.
I view Alphabet stock as one to hold on to in part because of the dominance of the company's current products. Google, YouTube, and Android enjoy moats that aren't likely to be overcome anytime soon. That should translate to massive cash flow for Alphabet for years to come.
However, perhaps an even bigger reason why I don't intend to sell this stock is what Alphabet is doing behind the scenes with these products and more. The company ranks as a top leader in artificial intelligence (AI). Alphabet uses its AI expertise in several of the applications used by millions, including the Google search engine, Google Maps, and Google Translate. It's also using AI technology to go after more of the lucrative cloud computing market.
And while everything I've mentioned should be enough on their own to make Alphabet stock one to keep, the company's other bets could also pay off big. Waymo is a pioneer in driverless-car technology. I'm especially intrigued by what Alphabet is doing in healthcare, including its collaboration with AbbVie to tackle aging.
The Walt Disney Company
Disney, on the other hand, is definitely a household name. Children across the world flock to the company's theme parks. So do many adults -- with or without kids. Disney's television networks, including ABC, Disney Channel, ESPN, and Freeform, are watched in millions of homes. And the company makes some of the most popular movies year after year, including the Marvel superhero and Star Wars franchises.
Try to imagine a future where kids don't want to go to Disneyland or Walt Disney World. Picture a time where fans couldn't care less about the next Avengers or Star Wars movie. Or think of a scenario where hardly anyone wants to watch college football. It's possible my imagination isn't that good, but I don't see any of those things happening. Ever.
The reality is that Disney has an incredible moat. Some might point to the current trend of cord-cutting, which has hurt the company's cable TV revenue. In my view, that's a temporary issue rather than a long-term one. Disney is launching its own streaming services that I suspect will be big winners for the company. And if Disney's acquisition of the film and television properties of Twenty-First Century Fox goes through, the company will truly be a force to reckon with in TV streaming.
As long as adults and children want to be entertained, Disney should be successful. I think people will always want to be entertained, so I plan on holding on to my Disney stock.
In his 1988 letter to shareholders, Warren Buffett famously wrote, "Our favorite holding period is forever." People often quote this maxim, but most leave out what Buffett wrote immediately beforehand. Here's the full quote (italics added): "In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."
Buffett's qualifying criteria make sense. Don't sell an outstanding business with outstanding management. AbbVie, Alphabet, and Disney definitely have outstanding businesses with outstanding management, in my opinion. But while I don't plan on ever selling these three stocks, I realize that there is a possibility that a rotten management team could one day down the road mess up a terrific business. So when I use the word "never," it comes with an asterisk.