Some companies see their stock prices explode higher, only to watch them crash and burn at the first sign of trouble. Others peter out before ever lifting off. The best stocks, however, can safeguard and grow your money for the rest of your life.
Read on to learn about three exceptional businesses that are proven wealth creators. All of them are well positioned to richly reward their investors for many years to come.
1. Berkshire Hathaway
Warren Buffett built Berkshire Hathaway (BRK.A 0.64%) (BRK.B 0.54%) to be nearly indestructible. That's just one of the many reasons the mega-conglomerate is likely to continue to deliver wealth-building gains to its shareholders well after the legendary investor steps down from his longtime role as CEO.
Berkshire owns a vast collection of assets, including more than 60 operating companies. These businesses span a broad array of industries, such as insurance, utilities, manufacturing, and retail, among others. It's this high level of diversification that helps Berkshire thrive during nearly all manner of economic environments, thereby limiting the risks for its investors.
Better still, these highly profitable businesses generate an enormous amount of free cash flow, which Buffett and his lieutenants deploy with masterful skill. Berkshire is always on the hunt for new companies to acquire, as well as attractively priced stocks to buy.
He and his investment team have built long-term stakes in top-tier businesses such as Apple, Coca-Cola, and American Express, which have collectively earned billions of dollars of profit for Berkshire and its shareholders.
Importantly, Buffett has helped Berkshire's board of directors identify worthy replacements for him in both the operational and investment roles that he currently serves. This should ensure that the company's culture and core competencies remain intact well into the future. It's also why Buffett confidently asserted in his recent shareholder letter, "At Berkshire, there will be no finish line."
2. Walt Disney
Like Berkshire, Walt Disney (DIS -0.45%) is a terrific business that provides its investors with the wealth-preserving benefits of diversification. The entertainment titan owns an irreplaceable collection of assets that have delivered strong returns to its long-term shareholders -- and likely will continue to do so for decades to come.
Disney's sprawling empire spans theme parks, cruise ships, movie and TV studios, streaming services, and a massive global product-licensing operation. This gives Disney many ways to monetize its beloved brands, characters, and story lines. The diversity also provides the ability to endure, and eventually benefit from, technological change.
Disney is transitioning from cable-bundle content distribution to a streaming-based approach. More than 230 million people already subscribe to one of its streaming services, which include Disney+, ESPN+, and Hulu.
It has invested heavily in new shows to fuel its streaming growth, which has weighed on its profits in recent years. But CEO Bob Iger is prioritizing financial discipline now that the streaming services have achieved greater scale, which should help to improve the company's profitability in the coming years.
Investors who buy Disney shares today can position themselves to profit alongside the entertainment leader.
3. Amazon
Amazon (AMZN -1.14%) also gives its shareholders many ways to win. The retail and cloud-computing company stands to profit from several powerful megatrends.
As a dominant e-commerce marketplace, Amazon is set to benefit from the long-term growth of online retail perhaps more than any other company. That's an enviable position to be in, with e-commerce sales projected to surpass $7 trillion by 2025, up from roughly $5.7 trillion in 2022, according to eMarketer.
Incredibly, Amazon might have an even larger profit opportunity in the rapidly expanding cloud computing market. Grand View Research expects the cloud industry to generate more than $1.5 trillion in annual revenue by 2030, up from $484 billion in 2022.
Although these projected sales are less than that of the e-commerce market, cloud services tend to enjoy far higher margins. For example, Amazon Web Services (AWS) typically earns operating margins of 20% or more, compared with less than 5% for Amazon's retail division.
Investors should also not overlook Amazon's booming advertising business, which is widely believed to be one of the most profitable segments of the company, if not the most profitable. Third-party sellers rely on Amazon's ad tools to cost-effectively market their products to the retail behemoth's enormous user base.
By helping these merchants earn strong returns on their marketing investments, Amazon is quickly gaining share in a digital ad market that is expected to grow to over $835 billion by 2026, up from $567 billion in 2022, according to Statista.
With these powerful tailwinds propelling its growth, Amazon is well positioned to create lasting wealth for its investors.
