Warren Buffett once declared that his favorite holding period for a good stock was "forever." However, patiently holding stocks for decades is easier said than done, as market downturns can rattle even the most seasoned investors. But today, our Motley Fool contributors will highlight three stocks that you can hold for decades without losing sleep at night: Amazon.com (NASDAQ:AMZN), Goldman Sachs (NYSE:GS), and Repligen (NASDAQ:RGEN).
Amazon is still amazing
Leo Sun (Amazon): Amazon's stock rallied more than 2,400% over the past decade as it crushed brick-and-mortar retailers and expanded its cloud business. It probably won't replicate those gains over the next few decades, but it remains a solid long-term investment.
Amazon is the largest e-commerce company in the world by annual revenue, and it continues to lock in customers with its Prime subscription, which offers shoppers free shipping options, discounts, streaming video, and other perks.
It's also expanding that online ecosystem into the brick-and-mortar market with its Whole Foods, Amazon Books, Amazon Go, and 4-Star stores; it's infiltrating homes with its ever-expanding lineup of Kindle, Echo, and Fire TV devices; and it's constantly launching new private-label brands and testing out new services to widen its moat.
Amazon can afford to pursue so many low-margin and loss-leading strategies because it generates most of its profits from Amazon Web Services (AWS), the biggest cloud platform in the world -- which serves massive customers like Netflix, Adobe, Comcast, and NASA.
Amazon's revenue growth is slowing, partly due to its brick-and-mortar efforts, but its profit growth is accelerating. Wall Street expects its earnings to grow at an average annual rate of 44% over the next five years, which matches its forward P/E of 44. Amazon's stock might not seem "cheap," but investors should keep paying a premium for the world's biggest e-commerce marketplace and cloud platform for the foreseeable future -- which makes it a great stock to hold for decades.
Bet on Wall Street
Dan Caplinger (Goldman Sachs): There aren't many things that you can count on staying the same decades into the future, but financial markets are likely to survive well into the 21st century, and Goldman Sachs is likely to retain its reputation for taking advantage of the opportunities that markets offer. With decades of expertise in tapping into various financial markets and finding ways to profit from them, Goldman has an enviable track record of performance, marred only by the episodes in which its relentless pursuit of success went a bit further than public perception was comfortable with the investment banking giant going.
Even now, Goldman is evolving. Despite its historical reliance on investments, the financial giant has made a big push into consumer banking, with strategic moves like the rollout of its Marcus online banking platform and its relationship with Apple in creating the tech giant's new credit card offering. Goldman isn't afraid to go beyond its areas of proven prowess to tap into new markets, and early signs show those efforts are paying off.
Goldman's strategic vision might include new businesses down the road, but the company hasn't forgotten what got it this far, and it's certain to work hard to preserve its leadership role on Wall Street. Between the riches that the financial markets can provide and its other banking efforts, Goldman Sachs is in a good position to be even more important decades down the road than it is today.
A high-growth, lower-risk investment in biopharma
Maxx Chatsko (Repligen): If you want to cash in on the never-ending stream of innovations from the biopharmaceutical sector but are wary of the all-or-nothing outcomes of clinical trials, then Repligen might be a stock worth a closer look. The company develops, markets, and sells bioprocess products that are required to manufacture and purify biologic drugs. It offers a wide range of solutions for customers, whether they're exploring a novel molecular antibody in the lab or readying a gene therapy for commercial-scale production runs. That shields the business from clinical trials altogether.
The timing couldn't be better. Seven of the top nine best-selling drugs in the world last year were biologics. The most common type of biologic on the market today, monoclonal antibodies, generated an estimated $115 billion in sales in 2017. Meanwhile, a record 13 new monoclonal antibodies were approved by the U.S. Food and Drug Administration in 2018, with more than 400 others in development.
The strength of biologics, combined with an ambitious acquisition strategy, has led to impressive growth for Repligen in recent years. It grew revenue 37% year over year in 2018, while operating income and operating cash flow grew 86% and 88%, respectively. Full-year 2019 guidance calls for operating margins to expand, although revenue growth will slow as the business swells in size.
Investors who take a balanced approach to the stock will see that Repligen is relatively expensive, with shares trading hands at 70 times future earnings and near an all-time high price per share. That may suggest it would be best to wait for a potential pullback to get a better entry point, or to build a position over an extended period of time, but those with a long-term mind-set might not be too concerned. After all, the stock has crushed the return of the S&P 500 in recent years, and biopharma innovation isn't going to dry up anytime soon.