3 Top Stocks to Buy for the Long Haul

One of the advantages individual investors have is the length of time their stocks are held. Research shows that trading in and out of stocks is detrimental to returns. Timing the market is difficult and many investors make the mistake of buying when the market is up and selling when the market is down. Buying great companies and holding them for many years is likely to result in better returns for shareholders.

The question for investors is which stocks make those great long-term investments. There are three companies in particular I think have competitive advantages and growth opportunities to make them top choices for long-term investors.

Apple

Apple (AAPL -0.35%) is best known for its popular devices like the iPhone, iPad, and Mac computers. However, the company has been methodically building an ecosystem of software and subscriptions that has two benefits to the business results.

Once a customer has a few Apple products and is pulled into Apple's world of software and subscriptions (which the company calls its services segment), they're more likely to continue to buy Apple products because there are switching costs in terms of time spent to start using other software, apps, and subscriptions.

Second, the services part of the business is growing impressively and bringing high-margin revenue to Apple. In the most recently reported quarter, Apple's third quarter of 2023, services revenue came in at $21 billion, up 8% year over year and accounting for 26% of total revenue.

Services is now Apple's second-largest segment, after its iPhone sales. This higher-margin services revenue has helped Apple improve its gross margin by 14% over the past five years.

MercadoLibre

MercadoLibre (MELI 3.09%) may not be a household name in the U.S., but in many parts of Latin America, it is the leader in e-commerce and fintech. With its MercadoLibre Marketplace, the company brings online shopping to many countries including Argentina, Brazil, and Mexico. 

In Q2 of 2023, MercadoLibre's e-commerce marketplace grew its gross merchandise volume (GMV) by 47% after adjusting for currency exchange rates. This was led by GMV in Argentina, which grew 119%, and Mexico, which increased by 34%. GMV is the total value of all the transactions that take place on the platform, so it's a good indicator of how well the e-commerce business is performing. These results show there's still plenty of growth for this business to capture.

MercadoLibre also has a fast-growing fintech platform called MercadoPago. While the e-commerce business can be measured by TPV, the fintech business uses a metric called total payment transactions. This is the number of all transactions paid for using MercadoPago. Total payment transactions were up 69% in Q2 of 2023, demonstrating the demand in Latin America for digital payments. 

The ever-increasing popularity of the e-commerce and fintech businesses contributed to MercadoLibre's Q2 2023 revenue growth of 32% as well as its 112% increase in earnings per share. As the leader in the emerging Latin American market, there should be plenty of growth yet to come for MercadoLibre.

Disney

Few companies have struggled more over the last five years than Disney (DIS -0.04%). Between the launch of its successful but cash-burning Disney+ streaming service, the COVID-19 pandemic, and its high-profile CEO changes, Disney has seen its share of turmoil. The result has been a stock that's down 58% from its early-2021 high.

Despite these challenges, the most recently reported quarter showed some bright spots that could give investors some hope that better days are ahead. First of all, operating losses for Disney's direct-to-consumer business improved by $550 million, helped by improved results at Disney+. Management stated that its new ad-supported tier is working so well that it's raising prices on its ad-free tier in an effort to push subscribers to the ad-supported tier. 

While the media business should see continued improvement, the parks and experiences side of the business is back on the right track after going through the pandemic shutdowns. Through the first nine months of 2023, parks and experiences revenue was up by 17% and operating income grew by 20% over the same time frame in 2022. These strong results are especially helpful to Disney's profitability. Despite representing only about one-third of overall revenue, the parks and experiences segment accounts for 60% of operating income.