A decade is enough time to make life-changing gains in the stock market. And while many Robinhood investors gravitate toward high-risk stocks without track records of success, others are betting on companies with the potential to win over the long term.
1. Walt Disney
Known for legendary intellectual property like Star Wars and Marvel Studios, Walt Disney is ideal for investors looking to future-proof their portfolios. The company is bouncing back from the impact of the coronavirus pandemic. And over the long term, its pivot to streaming could unlock value for shareholders for decades to come because of its potential edge in original content.
Disney's fiscal fourth-quarter revenue fell 23% to $14.7 billion because of weakness in its amusement park and studio entertainment segments, which are down by 61% and 52%, respectively. The company is still suffering from reduced visitor traffic to its resorts and disrupted theatrical releases.
Despite the challenges, Disney's fourth-quarter result is a dramatic improvement from the third quarter, when revenue was down 42% against the prior-year period. And investors can expect the recovery to accelerate as coronavirus vaccines become more widely available to the public.
Over the coming years, Disney's streaming business is on track to become its key growth engine. Disney+, Hulu, and ESPN+ boast a combined total of 121 million subscribers, and CEO Bob Chapek expects that number to soar to 230-260 million by 2024. To put that in perspective, rival Netflix has 195 million subscribers and generated a profit of $1.87 billion in 2019. Management credits Disney's streaming success to the strength of its intellectual property and "unparalleled" brands.
Walmart is the world's largest company by revenue, with sales of $524 million in fiscal 2020. And it didn't get there by accident. The supermarket retailer is known for its quality goods and low prices. And its stock is an excellent pick for long-term investors because of the company's pivot to online grocery shopping, where it enjoys a competitive advantage thanks to its trusted brand and logistics infrastructure (next day delivery is available to 75% of the U.S. population).
The coronavirus pandemic has accelerated the consumer shift toward online shopping. And Walmart was quick to capitalize on this trend by rolling out its Walmart Plus subscription service in the fiscal third quarter. So far, the platform has enjoyed a warm reception with consumers, with research firm Piplsay estimating that 11% of Americans subscribed within two weeks of its launch.
Management hasn't provided specific subscriber data for Walmart Plus as of the company's most recent earnings call, but the company's impressive e-commerce growth rate seems to speak for itself.
Third-quarter revenue grew by 5.2% to $134.7 billion, while U.S. e-commerce sales jumped 79%. The company's pick-up and delivery service, which is geared toward grocery shopping, grew by triple digits in the period. E-commerce only represented $10.3 billion of Walmart's U.S. sales, so the business is a tiny fraction of revenue right now. But in the coming years, e-commerce can help drive long-term growth and stave off competition from rivals like Amazon.com.
Betting on strong brands and megatrends
One thing Walmart and Walt Disney have in common is their strong brands. Walmart has served customers since 1962, while Disney has been around since 1923 -- a staggering 97 years. Both companies have built a rock-solid reputation with consumers, which may help them beat back competition as they pivot to new growth drivers over the coming decades.