One of the best ways to build wealth is to invest your money and let it work for you. And the most effective way to allow your investments to grow is to leave them alone for a long time and let them do their thing.
But picking just any stocks won't work, no matter how much time you give them, so it's important to have the right companies from the start. To help you get started, here are three great companies that are leaders in their respective markets and have the potential to make great long-term investments. Read on to find out why Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), and Walt Disney Company (NYSE:DIS) are top stocks to add to your forever portfolio.
Investors looking for a fantastic long-term bet on the e-commerce market would be wise to pick up shares of Amazon. About 38% of all online sales in the U.S. this year will happen on the company's platform, and there's likely room for a lot more growth. Just 11% of all retail sales in the U.S. happen online, which means that as the e-commerce market grows, Amazon's business will grow right along with it.
Amazon has done a fantastic job of not just attracting people to its e-commerce platform but also keeping them there. Amazon Prime members spend more money on the company's website than non-Prime members, and the company has built a massive Prime user base of more than 100 million U.S. subscribers so far.
While the majority of Amazon's sales come from e-commerce, the company generates most of its operating profit from its cloud computing segment, Amazon Web Services (AWS). This is important to note because AWS is the No. 1 public cloud computing platform right now, outpacing Microsoft and Google, and this market is expected to be worth $278 billion by 2021. With Amazon's dominating the e-commerce and cloud computing spaces, the company's stock should be an easy pick for long-term investors.
There's no denying Alphabet's dominance in the tech industry. The company has the most widely used mobile operating system in the world, its online suite of services is used by individuals and corporations alike, and the company is on a never-ending quest to tackle big problems it thinks it can fix.
For example, Alphabet's self-driving vehicle company, Waymo, has already launched a commercial autonomous vehicle ridesharing service and is already forging partnerships that could lead to eventually licensing its technology to create safer vehicles. This bet on self-driving cars could eventually pay off, as the driverless car market is expected to be worth $7 trillion by 2050.
But Alphabet's bread and butter is, of course, its advertising business, and that's still humming along quite nicely. This year Alphabet's Google will take more than 37% of the digital advertising revenue market share in the U.S, leaving Facebook with 22%. For investors looking for a tech giant that's not going away anytime soon, Alphabet fits the bill.
Disney has always been a massive force in the entertainment world, but some of its moves over the past few years have set the company up to dominate its rivals for many more years to come.
First, consider the company's $4 billion purchase of Marvel Studios five years ago, which gave Disney ownership of one of the biggest superhero franchises to date. And don't forget Disney's acquisition of LucasFilm in 2012, which gave Disney ownership of Star Wars, enabling the company to not just benefit from the films, but also expand its theme parks. Finally, Disney's purchase of Twenty-First Century Fox gives even more video content to the entertainment company.
Building on all these purchases, Disney has moved into the video content streaming service business and recently debuted its new Disney+ service. The company will combine all its video offerings into the service, giving its customers a blend of Fox programming, Star Wars, Marvel, classic movies, and new shows that its competitors will have a hard time matching. All of which makes Disney an even bigger entertainment juggernaut than it was before.
Don't forget this
While all the companies listed above should make excellent long-term investments, it doesn't mean that there won't be some ups and downs with their share prices along the way. The key to benefiting from these companies is to take a look at their competitive advantages right now, stick with them through the share price dips, and occasionally assess your investment thesis in the companies to ensure that your original reason for buying them still makes sense.