There are many ways to get rich in the stock market, but one of the easiest and most profitable methods is to find companies with fantastic growth opportunities, solid competitive advantages over their peers, and great management teams. Buy them at reasonable prices, then do absolutely nothing for years and years.
Long-term winners give you get the benefits of compounding returns, and that growth is tax-free until you sell your shares. And the returns can be absolutely incredible. Time really is an investor's best friend. If you bought some NVIDIA (NASDAQ:NVDA) stock 15 years ago and held on to your shares, your position would have returned roughly 2,800%. A similar investment in Netflix (NASDAQ:NFLX) shares would have given you an 11,600% return over the same period. Other great businesses have delivered their big gains more recently. For example, electric-vehicle giant Tesla (NASDAQ:TSLA) rose more than 12,400% over the past 10 years.
You should always have a healthy respect for market risks, but you can also miss out on great investments if your portfolio keeps too much cash on the sidelines. The best idea is to have some of that dry powder ready in case another market correction sweeps in to create lots of fantastic buying opportunities, while also putting money into a few high-quality stocks that can provide great returns regardless of where the market as a whole is going. You won't always buy every stock at the best price, but picking great businesses with sustainable advantages in growing markets will get you some big wins. On that note, read on for a look at two companies that have what it takes to crush the market over the long term.
Disney means business
No stock is absolutely immune to risks, but the House of Mouse comes close.
Founded 98 years ago, the company has made it through everything from a world war and every conceivable economic crisis to the death of its founder and the ever-changing tastes of consumers. The company has always been quick to adapt when market conditions changed and has often been seen leading the charge into uncharted waters. Walt Disney has evolved from a pure-play cartoon creator to an entertainment conglomerate, spanning many industries on every continent. And the company's unmatched content portfolio forms the heart of each and every Disney product, service, and resort.
Another sea change is happening as we speak. Streaming media services are turning the media market upside down and inside out, threatening to end the centennial studio system and its long-standing reliance on movie theaters. Every media company worth its salt is carving out its own share of the new market, setting the stage for a whole new era in the entertainment industry. Guess who's emerging as an early leader, sure to challenge video-streaming veteran Netflix every step of the way?
Yep, that's Disney. The brand-new Disney+ streaming service exploded out of the gates in November 2019 and has already landed 94.9 million subscribers. Mighty Netflix reached that many streaming subscribers in 2017, a full decade after the introduction of video streams as a free bonus for DVD-mailer subscribers and six years after the Qwikster-branded debacle that separated streaming into a new business unit. Disney got there in less than 14 months.
The whole company has been reorganized to focus on the streaming opportunity. Disney is embracing the market shift rather than trying to defend the outdated business plans of old. It's still all about Disney's matchless collection of stories and characters but the company is using a different set of tools to broadcast and monetize its valuable content.
This company is built to last for generations. Disney knows how to roll with the punches and bounce back stronger from every challenge. You can sleep tight with Walt Disney's stock under your pillow.
MongoDB is hungry and disruptive
If Disney is a nimble industry giant with its ear to the ground, MongoDB is the upstart in the early days of disrupting the database software industry.
MongoDB's document-based NoSQL systems are more closely related to search engines than to traditional databases of the relational model. Relational databases are strictly structured and managed, often requiring a large group of trained and battle-tested administrators to keep the wheels turning. On the other hand, document stores give application designers and other data consumers easy access to unstructured data collections. This type of database is a perfect fit for messy data sources such as direct end-user input, expanding sets of environment sensors, or machine-based analysis of audio and images.
Relational database veterans have already tipped their hand, proving that the NoSQL upstarts have the upper hand. Oracle (NYSE:ORCL) is promoting its own NoSQL database solution nowadays, but it's an uphill battle against MongoDB and other emerging leaders in the new sector. MongoDB's sales are skyrocketing while Oracle's ran out of rocket fuel many years ago:
This market shift is only getting started. MongoDB is well on its way to becoming a serious alternative to nearly any workload currently served by Oracle and its relational database brethren. Investors have not yet fully embraced the incredible scale of MongoDB's long-term opportunity. Oracle's market cap is more than ten times the size of MongoDB's, despite the relational database expert's stagnant revenue growth.
We're watching the early days of a long-term winner here. I won't lose any sleep over my MongoDB holdings for the next couple of decades, either.