2 Smartest Stocks to Buy in 2023 and Hold Forever

While not all companies can stand the test of time in investors' portfolios, some businesses are built to withstand and thrive beyond many a market storm. Even if another full-fledged bear market appears on the horizon in 2023, investors with a long-term investment horizon can continue to add to wonderful companies primed to deliver favorable returns over many years. 

If you're looking for two compelling stocks to add to your buy basket in February and hold for the long haul, don't overlook these two household names when you do. 

1. Pinterest

Pinterest (PINS -0.64%) saw a marked rise in growth in the earlier stages of the pandemic, but now as many companies are reeling in ad spending and overall sentiment toward growth stocks remains in flux, some investors might be wondering what the road ahead could look like for this tech stock. Even as companies of all sizes are looking to cut costs in the current environment, advertising spending remains an integral component of operations for businesses across all sectors.

As such, the long-term outlook for the trajectory of digital ad spending remains highly favorable. A near-term slowdown will certainly continue to impact businesses like Pinterest that generate the bulk of revenue from advertising dollars, but this would still be a relative blip on the radar when you're investing in the company for three to five years or longer. Looking ahead, digital ad spending is on track to reach a whopping $1.2 trillion globally by the year 2030.  

Pinterest's business offers something unique to companies looking to buy advertising space that differs from the average social media platform. To the end consumer, Pinterest looks like an intriguing platform with a wealth of image and video content to drive inspiration on whatever topic they're seeking. Even when a user is searching on Pinterest without the intent to actually buy something, many of the "pins" they'll encounter are actually well-placed ads that blend in seamlessly with the broader range of image-centric content. 

In short, any time a platform doesn't automatically scream, "Here's an ad!" to consumers, can engage them via an easy search-and-scroll design, and can sometimes inspire them to make a purchase, you have a valuable platform that companies will continue to want to place ads on over the long term.

And the proof is in the pudding. According to an internal study, Pinterest ads have been found to deliver double the return on ad spending for retail brands compared to traditional social media, while remaining over twice as efficient at delivering cost per conversion.

Bear in mind that while Pinterest's revenue and user growth have slowed from the height of the pandemic, these figures are still up double digits from pre-pandemic levels. The stickiness of Pinterest's platform for both consumers and advertisers is a key component that can enable it to remain competitive in the years ahead, and investors may be short-sighted to think this growth stock is down for the count. 

2. Costco 

Costco Wholesale (COST -0.12%) is one of those retailers that has come through many a market and economic storm in its day, while remaining a veritable safe harbor for both investors and consumers alike. Even as many well-known retailers have fallen from investor grace or simply faded away, unable to deal with the competition brought about by a stream of new brands in the digital age, Costco has remained a mainstay. 

It's not hard to see why Costco's discount retail model has remained so attractive to consumers throughout the years. The diversity of its business model, which covers virtually every segment of retail, has also driven consistent growth and kept consumers coming back for more. However, for Costco and its investors, the company's membership-fee model remains the secret sauce behind the company's continued success. 

Costco does generate significant revenue from merchandise sales, but the lion's share of its bottom line is attributable to the proceeds of membership fees, which also enables it to continue offering such a wide selection of products to consumers at such serious bargain prices. Case in point: In the first quarter of Costco's fiscal 2023, the company reported $53.4 billion in net sales and $1.4 billion in net income, while membership fees alone came to a total of $1 billion for the three-month period.  

While a Costco membership starts as low as $60 per year, as of the first quarter, 45% of its paid members pay for executive memberships, which cost $120 annually and are responsible for about 73% of its total worldwide sales. Meanwhile, membership renewal rates in the U.S. and Canada, where the bulk of Costco's stores are located, were just shy of 93% as of the first quarter of the company's fiscal 2023.  

Costco's history of steady growth and profitability have delivered robust investor returns over the years, both in the form of share price returns and dividends. The stock is up about 200% over the trailing five-year period, while the company's dividend, which yields about 1% at the time of this writing, has risen 80% in that same window. Investors looking for a tried-and-true value stock to beef up their portfolio in the current environment and well beyond would do well to consider this stalwart.