There are some companies whose products are obviously used on a daily basis by most people. Tech giants like Google parent Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) and Microsoft (NASDAQ: MSFT) are good examples -- I rarely go more than a day without Googling something or using Outlook to check my email.
On the other hand, there are some companies whose products and services you probably use every day that are not quite so obvious. Here's why you probably use Berkshire Hathaway (NYSE:BRK.B)(NYSE:BRK.A), Johnson & Johnson (NYSE:JNJ), and Procter & Gamble (NYSE:PG) on an almost-daily basis and why all three could be great long-term investfments to look into.
Berkshire is more than just Warren Buffett and his stock picks
Berkshire Hathaway is a well-known company, primarily because of its billionaire investor Chairman and CEO Warren Buffett and the company's $200 billion stock portfolio. However, Berkshire also owns a collection of more than 60 subsidiary businesses, many of which are household names.
Do you have Duracell batteries in any of your electronics? Does GEICO insure your automobiles? Have you eaten at a Dairy Queen recently? Own Brooks running shoes? Or do you have any Pampered Chef products in your kitchen? If you answered yes to any of these, you are a Berkshire Hathaway customer.
Berkshire is a fantastic long-term investment because it's a time-tested growth engine. Its subsidiaries and stocks generate tons of capital that can be reinvested in other businesses and common stocks. Over the years, Berkshire has a great track record of beating the market and doing especially well during recessions and other weak economic times, and although Warren Buffett isn't going to be at the helm forever (he's almost 90), Berkshire's businesses pretty much run themselves and the company's two stock-picking proteges have done very well in recent years.
Some of the best-known brands in healthcare
If you have a baby, you're likely familiar with the Johnson's line of baby care products. However, you might not realize just how massive Johnson & Johnson's product portfolio is.
This is surprisingly not an exhaustive list, but the brands owned by this massive healthcare company include Acuvue (contact lenses), Band-Aid, Benadryl, Listerine, Motrin, Neutrogena, Neosporin, Rolaids, Tylenol, and Visine. I personally use Listerine every day and although I hope to not have a headache, Tylenol is my go-to pain reliever. And there are Acuvue contacts in my eyes as I write this.
The point is that Johnson & Johnson has some of the world's most valuable brands in its portfolio. It has the pricing power that comes with brand recognition and the efficiency advantages that come with its massive scale. It's worth mentioning that even with this long list of consumer brands, Johnson & Johnson's consumer division is a relatively small revenue source for the company – most of its money comes from pharmaceuticals and medical devices.
An impressive consumer brand portfolio and a track record of strong returns
While Johnson & Johnson is a leader in healthcare products, Procter & Gamble makes many of the general products you use in your everyday life. In fact, of the three companies on this list, Procter & Gamble might be the most likely candidate for whose products you use most often.
Just to name some of Procter & Gamble's brands, you might be familiar with Bounty, Charmin, Crest, Dawn, Downy, Febreze, Gillette, Head & Shoulders, Luvs, Mr. Clean, Oral-B, Old Spice, Pampers, Swiffer, and Tide. I don't know about you, but I can name about 10 products in my house made by Procter & Gamble that we use on a near-daily basis.
Procter & Gamble enjoys the same brand recognition and efficiency advantages as the other two on the list, and the company has delivered excellent performance over the years. Income investors can rest easy knowing that Procter & Gamble has increased its payout for 62 consecutive years, and the company has handily beaten the total return of the S&P 500 over the past 20 years, 345% vs. 232%.
Invest for the long term
As a final thought, it's important to emphasize that even though these are rock-solid companies, all of these are best suited as long-term investments. There are simply too many uncontrollable economic and market forces that can affect stock performance over short periods of time. Warren Buffett has advised people to avoid Berkshire stock if they don't have at least five years to let their investment grow, and I'd use the same time guideline for the other two as well.