There are a few stocks in my portfolio that I have in the "never sell" category. Now, "never" doesn't necessarily mean "never," as directional shakeups or other unforeseen events could cause me to change my stance on a business. But, as of right now, there's no way I'm selling Mastercard (MA 0.07%), Visa (V -0.23%), Costco Wholesale (COST 1.01%), or Adobe (ADBE 0.87%).
These four companies form the bedrock of my portfolio, and I'm excited to own them well into the future. In fact, a couple of them look like fantastic buys right now.
Mastercard and Visa
It's hard to talk about one of these companies without the other. Both operate in payment processing and have extremely similar business models. However, they differ when it comes to the geographic balance of their revenue streams. Mastercard is much more of a global company: 69% of its gross dollar volume came from outside of the U.S. By contrast,Visa is more balanced, with the U.S. accounting for just under 50% of its payment volumes.
As such, they will have differing levels of success based on what various economies are doing around the globe, which is why I choose to own both. That way, I'll be positioned to benefit regardless of which parts of the world economy are performing better.
I like both Visa and Mastercard so much because of their highly profitable "tollbooth" model. Because each takes a slice of every transaction processed on its network, they play important roles in most of our daily lives. If either of these two disappeared tomorrow, the world financial system would be in a difficult spot.
Adding to the buy thesis here, each stock is trading near the lower end of its historical valuation range.
MA PE Ratio data by YCharts.
Costco
Have you ever seen what a Costco parking lot looks like? Its warehouse stores are popular shopping destinations with full stalls, and the retailer boasts an incredibly loyal membership base. Furthermore, if you're a Costco shopper, you know how easy it is to go in with a plan to buy a handful of things and then leave with a massive bill.
My personal experiences with this warehouse retailer echo those of many others. As a result, I don't think Costco will be a stock I will ever sell. However, I'd be a bit wary about buying it right now.
COST PE Ratio data by YCharts
It trades at 43 times earnings -- a high valuation to pay for any company, let alone a retailer. As a result, I probably wouldn't add to my Costco position right now. However, if its earnings ratio drops back into the mid-30s, I would consider it. While that would still be an expensive valuation, often, you have to pay a premium to buy the best companies, and Costco is certainly one of them.
Adobe
Adobe's suite of design software is used by practically anyone who needs to modify digital images. In business, the arts, and educational settings, its tools are the industry standard.
But just because Adobe has made it to the top doesn't mean it's standing still. Right now, it's rolling out its generative AI product, Adobe Firefly, which allows users to edit images based on simple text inputs. This can also be incorporated into a marketing email or website design to keep images fresh each time a customer arrives, making this product incredibly useful.
ADBE PE Ratio data by YCharts.
Adobe is also another one of those "best in class" stocks that is never cheap -- and it currently trades above its recent average valuation levels. But given the promise of its AI technologies, I wouldn't hesitate to buy the stock right here. Based on how deeply integrated Adobe's products are into the daily life of creative professionals, I can't see a scenario when I'd consider selling Adobe shares.
