Though most parents will agree that we probably shouldn't teach our kids to boast, few investors would pass on the opportunity to find stocks that even their children might be tempted to brag about owning someday.
However, finding such stocks is easier said than done, so we asked three top Motley Fool contributors to offer their thoughts. Read on to learn why they like Boston Omaha (NASDAQ:BOMN), Disney (NYSE:DIS), and Editas Medicine (NASDAQ:EDIT).
A mini-Berkshire with intriguing roots
Steve Symington (Boston Omaha): A company that deals in billboards, surety insurance, and strategic acquisitions in other businesses (think banks, home builders, and real state) might not sound like the most exciting stock for kids. But considering Boston Omaha is following a similar model to the one Warren Buffett used to turn Berkshire Hathaway into a more than $500 billion business -- and with a market capitalization of less than $500 million as of this writing -- this tiny, diversified financial holding company could be brag-worthy down the road.
Incidentally, shares climbed late last year after The Wall Street Journal reported that Boston Omaha's co-CEO, Alex Buffett Rozek, is one of Warren Buffet's nephews. And while the elder Buffett doesn't own Boston Omaha stock and has no say over the company's operations, he did praise Rozek for his "good mind" and "good values."
Fast-forward to today, and Boston Omaha shares have fallen modestly on the heels of those gains. But the company is working hard to position itself for future growth, with management noting in recent conference calls that the core billboard and insurance operations are being built to "manage a lot more business than they currently handle."
Disney isn't just for kids
Demitri Kalogeropoulos (Disney): If you were worried that Disney might be losing its business mojo, those concerns should have been put to rest by the company's latest earnings report. The House of Mouse easily overcame soft results from its TV network division in the fiscal third quarter to achieve higher overall sales and profits. Revenue for the trailing nine months is up 7%, and operating income has climbed 5%.
The studio segment, its chief platform for launching and building up new intellectual property, grew 20% as hits like Avengers: Infinity War and Incredibles 2 pushed the company over $6 billion in annual box office receipts for a third straight year. Those market-leading numbers should only climb as Disney incorporates assets from its Twenty-First Century Fox acquisition.
Long-term shareholders risk learning about some surprising complications and unexpected costs around that massive buyout in the years to come. Meanwhile, Disney's new direct-to-consumer streaming offering might take longer than expected to reach profitability. Yet those potential downsides should be outweighed by growth in areas like theme parks and a packed pipeline of content set to flow from the Marvel, Lucas Film, Disney, and Pixar studios over the coming years.
Curing blindness in kids? Yeah, that's something to brag about
Keith Speights (Editas Medicine): A big reason I enjoy covering the healthcare sector and investing in it personally is that many of the companies are developing products that could transform people's lives. Editas Medicine is a great example.
The biotech is one of a handful of pioneering companies using CRISPR gene editing to develop therapies for genetic diseases. Editas' primary focus right now is on using CRISPR to tackle Leber congenital amaurosis type 10 (LCA10). It's the top cause of inherited childhood blindness.
Investors do need to realize that Editas has a long way to go. The biotech hasn't begun clinical testing in humans for its LCA10 candidate, although it hopes to file in October for U.S. regulatory approval to begin those tests. Also, some concerns have been raised about the risks of using CRISPR gene editing. While Editas' management seems confident that its therapy won't be derailed about these issues, there's always a chance that real problems could emerge.
Allergan recently exercised its option to develop and market Editas' lead LCA10 candidate. I view that as a very good sign of the potential of Editas' gene-editing approach. With its solid market position in vision care, Allergan also appears to be a great partner for Editas on LCA10.
Editas is developing CRISPR therapies targeting several other genetic diseases in addition to LCA10, including sickle cell disease. If Editas is successful, there could be cures for diseases for which few or no effective treatments are available today. I'd say that would be something to enthusiastically brag about.
The bottom line
In our ever-changing market, there's no way to guarantee that these three businesses will survive and thrive as your children grow older. But as Boston Omaha positions itself for future growth, Disney asserts its entertainment industry dominance, and Editas continues to advance its CRISPR gene-editing technology, we think chances are high that they'll go on to crush the broader market. If that happens, it could mean life-changing wealth for astute investors who buy now.
Demitrios Kalogeropoulos owns shares of Berkshire Hathaway (B shares) and Walt Disney. Keith Speights owns shares of Editas Medicine and Walt Disney. Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends Berkshire Hathaway (B shares) and Editas Medicine. The Motley Fool has a disclosure policy.