There are about three dozen different stocks in my portfolio, and I own them all for the same basic reason: I think they'll produce returns over the long run that will beat the overall stock market.
Having said that, I wouldn't exactly call my conviction level equal for all of them. There are some stocks that have lots of reward potential, but come with elevated risk levels. Others would fit nicely into the low-risk category, but I'm not quite as confident that they'll beat the S&P 500 by a significant margin over the long run.
Then there are a select few that I feel very confident about, both in terms of their ability to beat the market long term and their relatively low risk levels. Not surprisingly, they are some of my largest holdings. With that in mind, here are the five stocks I own that I'm most confident about as the COVID-19 pandemic rages on.
STORE Capital (STOR 0.13%) is designed for consistent growth and income. The company owns a portfolio of single-tenant commercial properties, which are leased on a long-term triple-net basis. This means that tenants agree to cover property taxes, insurance, and maintenance -- that is, the variable costs of owning property -- and also agree to annual rent increases. STORE Capital is still a relatively small company, especially when you consider that it estimates its addressable market opportunity of properties to acquire at over $1 trillion.
Berkshire Hathaway (BRK.A -0.82%) (BRK.B -0.90%) has grown from a struggling textile manufacturer into a half-trillion-dollar conglomerate in the 55 years since Warren Buffett took the helm. During that time, the company has delivered 20.3% annualized returns for investors.
To be clear, the company will not replicate its performance over the next 50 years; it's simply become too large for gains like that to be sustainable. But there's no reason that Warren Buffett and his team can't continue to utilize the time-tested value creation business model to produce returns that outpace the market going forward, and that's exactly what I think will happen.
Markel (MKL 0.82%) is often referred to as a mini-Berkshire -- and for good reason. Like Berkshire, Markel is an insurance company at its core, but with an investment strategy that involves acquiring non-insurance businesses as well as a portfolio of publicly traded stocks. Markel's core insurance operation involves specialty insurance products (i.e., insuring unusual and tough-to-analyze risks). This can be a very profitable business for insurers who are good at it (which Markel is), and its investment strategy could supercharge its long-term returns even more.
Digital Realty Trust
When the market was going crazy as the coronavirus outbreak spread, the vast majority of the stocks in my portfolio plunged. As of April 1, there was only one stock in my portfolio that was higher for the year: data center real estate investment trust Digital Realty Trust (DLR -1.02%).
Simply put, data centers are a type of real estate with massive growth potential, as the number of and sophistication level of internet-connected devices is growing at an exponential pace. With the surge in remote work and streaming activity that has resulted from the pandemic, data centers found yet another growth tailwind.
The growing need for healthcare over the next several decades is about the closest thing to a guaranteed trend you'll find. The older segments of the population are growing rapidly, and life science innovation is accelerating.
Healthpeak Properties (PEAK -0.84%), formerly known as HCP, is a healthcare-focused real estate investment trust, or REIT, that takes a diversified approach. It invests roughly one-third of its assets in senior housing, life science properties, and medical offices, all of which have massive long-term growth and income potential.
Invest with the long term in mind
To be clear, I don't have a high conviction about what these or any other stocks will do in the short term. I own these because I'm a firm believer that they will outperform the market over the next decade and beyond, so keep this in mind as you do your own due diligence.