It can be tough selecting a company to own over the long term. Economic conditions change constantly, while major events such as the COVID-19 pandemic can bring about sweeping changes to peoples' behavior and consumption patterns. Despite periodic economic fluctuations and the occasional upheaval in financial markets, some companies still manage to beat the odds and post consistent growth over years, if not decades.
The secret lies in these companies' ability to evolve and adapt to changing circumstances over time, which ties in with them having a strong competitive moat and a dominant presence in the markets they operate in. By innovating and consistently improving their product and service offerings, these winning companies continue to endear themselves to their customers.
These are the attributes that make them long-term performers, and here are three great stocks that fit these criteria.
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PayPal
Online payments have been growing steadily over the years, but the pandemic greatly accelerated this trend, benefiting companies such as PayPal (PYPL -2.49%). The company's online payments platform supports money transfers, and it also has a digital wallet service called Venmo that can be easily linked to a bank account for quick usage. As more and more jump online to transact, this also translates into a surge in business for PayPal.
The company had just reported a year of record results, with total payments volume (TPV) for the full year 2020 growing 39% year over year to $936 billion. PayPal also added 72.7 million net new accounts (NNA) for the year, a record for the company, and ended the year with a whopping 377 million active accounts. Revenue rose in tandem with the surge in TPV, climbing 22% year over year to $21.5 billion, while net income soared 71% year over year to $4.2 billion.
PayPal foresees another strong year in 2021, with the company expecting to add around 50 million NNA along with a 19% year-over-year growth in revenue. The company has also hopped on the cryptocurrency bandwagon by launching a service last year that allows its customers to buy, hold, and sell cryptocurrencies directly from their PayPal account. More recently, PayPal acquired Curv, a company that focuses on security solutions for blockchain. This acquisition seems to affirm its commitment to enhancing its cryptocurrency offering, and signals there may be more to come in this aspect.
MercadoLibre
Another dominant company in the e-commerce and online payments space is MercadoLibre (MELI -1.35%). The company is a clear market leader in the Latin American continent and has seen its business going up in strength over the last few years. The pandemic has pushed even more people in the region to adopt electronic payments and engage in online purchasing, leading to a surge in MercadoLibre's user base and payment volumes.
Unique active users nearly doubled year over year from 74.2 million to 132.5 million. Gross merchandise volume (GMV), a measure of the volume of transactions flowing through the company's platform, increased by 49.5% year over year to $20.9 billion. Mercado Pago, the company's payments platform, saw a similar surge in payment transactions, with total payment volume rising from $28.4 billion in 2019 to $49.8 billion last year.
In line with the push for sustainability, Pedro Arnt, CFO of MercadoLibre, announced that the company will publish its second consecutive sustainability report. The company is pushing for its business to serve all its stakeholders and is committed to tracking key initiatives such as social inclusion, greenhouse gas emissions, and waste management. With the global online payments market projected to grow at an annual compound growth rate of 23.7% from 2019 to 2027, MercadoLibre should find ample opportunities to continue its breakneck growth.
Kimberly-Clark
Great stocks aren't always just about growth. For investors who seek a steady source of income from dividends, Kimberly-Clark (KMB -0.17%) fits well into their portfolio as a dependable and consistent dividend payer. The company recently upped its quarterly dividend to $1.07 per share, the 48th consecutive year the company has increased its dividend. This feat brings the company ever closer to becoming a dividend king -- a company that has increased its dividend for 50 consecutive years.
Kimberly-Clark's products are also ubiquitous around the world, and its portfolio of brands such as Huggies and Kleenex hold the number one or two market share positions in around 80 countries. Despite being a $45 billion company, Kimberly-Clark still managed to post growth for 2020, clocking up a respectable 4% year-over-year increase in net sales to $19.1 billion. The pandemic had little impact on this vaunted consumer goods company as it reported a 9% year-over-year increase in net income for 2020.
Kimberly-Clark qualifies as an excellent buy-and-hold stock as it demonstrates resilience in the face of adversity, allowing investors to sleep peacefully even through economic cycles and crises. Its track record of raising dividends for nearly five decades also makes it a suitable income stock for those seeking a consistent source of passive income.
