In 1968, the Apollo 8 mission marked the first manned orbiting of the moon, Gordon Moore and Robert Noyce founded Intel, and the computer mouse had its public debut.
A lot can change in 50 years. And finding the companies that are poised to shape -- and adapt to -- the changes of the day (or even just to keep on keepin' on) is no easy task. But it's still a goal worth pursuing, because identifying great businesses that are poised to go the distance and adopting a long-term, buy-to-hold strategy can pay off in a big way.
With that in mind, we asked three Motley Fool contributors to profile a company that has what it takes to be a winner over the next five decades. Read on to see why they picked Anheuser-Busch InBev (BUD -0.28%), Lockheed Martin (LMT 0.44%), and The Walt Disney Company (DIS -1.58%).
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Branding + booze = long-term investment potential
Tyler Crowe: (Anheuser-Busch InBev): Yes, I know: That stock pitch sounds like the one that business majors give on Friday nights at a fraternity party. Despite the sophomoric sound to the idea, investing for such a long horizon means you need to look at the parts of our lives that are less likely to be disrupted by technology and the strong brands associated with them. Humans have been consuming beer for thousands of years, and it's hard to imagine a technological disruption that will replace eating and drinking anytime soon.
The 2016 merger of Anheuser-Busch and SAB Miller means the company has a stake in five of the 10 biggest-selling beers globally on top of a collection of local brands in more than 40 countries. AB InBev's scale makes it possible to distribute its three signature brands -- Budweiser, Stella Artois, and Corona -- on an international scale and introduce them to new markets as premium products. This past quarter, sales of its three global brands grew by 16% outside their respective home markets, which shows the potential for cross-selling. It's also worth mentioning that beer has very high margins compared with most other consumer staples. The company's EBITDA margin for the most recent quarter was 39.7%.
It's entirely possible that one of Anheuser-Busch's top-shelf brands falls out of favor, but there are plenty of opportunities to nurture and grow other brands in its portfolio. For investors, the important thing is that you are investing in a stable, high-margin business with strong brands, in a market that is highly unlikely to be disrupted. What more could you want for an investment you want to hold for 50 years or more?
1.5 years down, 48.5 to go
Rich Smith (Lockheed Martin): I'm probably never going to be known for my originality. But as long as I'm known for my record of successful stock picking, I'm OK with that. That's why today I'm going to double down on a pick I made way back in February of last year: I think Lockheed Martin is the stock you want to buy and hold for the next 50 years.
In February 2017, I named LockMart my pick for the next 50 years, and I have to say that the first 18 months of that prediction have gone just swell. With Lockheed Martin shares up 21.8%, the stock has beaten the 4.9% gain of the S&P 500 by a factor of four.
Why do I think Lockheed will continue to do well over the balance of the next five decades? Because the facts of my original thesis haven't changed. Lockheed Martin still holds the franchise to build the F-35 Lightning II stealth fighter jet for the U.S. military and its allies. And the Pentagon still believes the F-35 could be the last piloted fighter jet it ever builds, and still plans to be flying F-35s well into the 2060s.
Now, you may argue that at 36 times trailing earnings, Lockheed Martin looks like a pretty pricey stock, and I won't disagree with you. Regardless, unless and until the Pentagon places a contract for something to replace the F-35 (which it hasn't), I think Lockheed's future looks pretty secure.
The biggest name in entertainment is now even bigger
Keith Noonan (The Walt Disney Company): When it comes to stocks worth holding for the ultra long term, I'm a fan of companies that have strong positions in the content space. The Walt Disney Company certainly fits the bill.
At a time when streaming is reshaping the entertainment industry, and tech companies are snatching up entertainment properties and studios in order to supplement their product ecosystems, Disney's move to acquire key Twenty-First Century Fox assets makes a lot of sense. To be sure, the House of Mouse paid a hefty sum for the Fox assets, with the $71.3 billion closing price coming in well above its initial $52 billion offer. But these assets put its business in even better position to thrive going forward.
Courtesy of the big buy, Disney's trove of entertainment assets has expanded to include the FX and Discovery Channel television networks, and franchises like The Simpsons, Avatar, and Ice Age. The deal has also returned the film rights to characters like the X-Men, Deadpool, and the Fantastic Four to Disney's Marvel wing, opening up a slew of new opportunities for stand-alone films and crossovers within the company's sprawling superhero movie universe.
It's no stretch to say the company's collection of franchises has never been stronger, and this advantage should help Disney continue to deliver box office wins, growth at its theme parks, and successful consumer product ventures. Content strength will also help Disney stake out a winning position in streaming. The company's incredible collection of movies, TV programs, and characters already gave Disney solid footing to compete in the streaming video space, but the Fox deal gives it even more clout and substantially raises the chances of long-term success.
Factor in a reasonable forward P/E ratio of 16 and a fast-growing dividend, and Disney looks like a stock that's worth buying and holding on to for the next half-century.
