Successful investing is really very simple. Just buy shares of great businesses, hold them for the long term, and collect huge gains after a few decades of rising stock prices and undisturbed sleep. The tricky bit here lies in finding truly fantastic businesses that you can bet will remain success stories in 2030, 2050, and 2070.
Here are two companies that fit the bill. Buy these incredible long-term winners today if you want to retire rich.
Image source: Getty Images.
1. Amazon
Amazon.com (AMZN 1.19%) is a world leader in two industries with centennial staying power, and has the resources to expand into others. What started as a simple bet on online shopping and related e-commerce services has grown into a dual play on digital retail and cloud computing. Cloud services grew out of Amazon's easy access to massive amounts of computing power, turning a bit of idle hardware into a massive profit center. Amazon Web Services, as the cloud-computing division is known, generated $7.3 billion of operating profits in 2019. That's 72% of Amazon's consolidated operating income.
The COVID-19 health crisis has accelerated Amazon's growth across the board as people and businesses under stay-at-home orders turned to online retail and cloud services. The 26% year-over-year revenue boost in Amazon's first-quarter report is more than a strong result in what's usually a seasonally challenging quarter. It's an additional boost to Amazon's long-term growth engines, as consumers around the world get used to the idea of buying stuff online.
E-commerce experts will continue to crush traditional bricks-and-mortar retailers for decades to come, and Amazon is leading the charge. The same is true for cloud computing platforms in the world of business computing -- and Amazon is in the vanguard once again.
Both of Amazon's core businesses are ready to drive fantastic business growth for decades to come. Amazon belongs in every serious investor's portfolio.
Image source: Walt Disney.
2. Disney
Media powerhouse Walt Disney (DIS +1.27%) is going through some hard times right now. Theme parks and movie theaters are closed, cruise ships are docked and empty, and ESPN doesn't have any live sports on tap. The novel coronavirus is really hurting the House of Mouse. The stock is down 9% year to date.
I can think of a few classic adages that would apply to Disney right now:
- This, too, shall pass.
- Buy when there's blood in the streets.
- Too big to fail.
The COVID-19 crisis will indeed pass, and Disney's financial footing is much too solid to let the company die here. The company has $14.3 billion of cash equivalents on hand, along with $17.3 billion of untapped revolving credit lines and an investment-grade credit rating in case all of these cash reserves dry up. Disney has paused its dividend payouts in order to protect these assets, and management is in no hurry to reopen the parks. In fact, Disney had a chance to reopen Disney World in early July, but management didn't even bother meeting with Florida governor Ron DeSantis to discuss that idea.
Disney will be back in action eventually, churning out blockbuster movies and packing its theme parks to the rafters like before. The company's unmatched brand power alone is enough to guarantee a long, stable, and enriching future for us Disney shareholders. Buy Disney at a rare discount today, forget about the stock for a few decades, and wake up rich when it's time to cash in those long-term retirement holdings.
