This month, we Fools are discussing our top two stock holdings. Today I'll address the reasons I bought my stocks, how they came to become my largest holdings, why I continue to hold them, and whether I still like the stocks for investors today.

Caterpillar (NYSE:CAT)
Roughly one-third of the world's population lived in urban areas in 1950, and more than half of us currently inhabit cities. By 2030, cities and towns of the developing world will make up 80% of urban humanity. Urbanization is fueling demand for the building blocks of modern society. As a result, we'll need more natural resources, like metals and materials, to build everything from power lines to buildings. And, in order to build out infrastructure, earthmoving and construction will be required.

I bought Caterpillar and metals and mining conglomerate BHP Billiton (NYSE:BBL) to potentially profit from this trend. I bought Caterpillar, in particular, for both its product and geographic diversification. As the world's largest manufacturer of earthmoving, construction, and mining equipment, the company derives nearly 60% of sales internationally.

Emerging markets account for a decent slice of Caterpillar's sales today, and they'll likely become a much larger part of revenues over the long term. Caterpillar will benefit from a continued rebound in the U.S. housing market, and its purchase of mining equipment maker Bucyrus sets it up nicely for growth long term.

I bought both Caterpillar and BHP Billiton in the midst of the financial crisis, as the construction and building industry was coming to a screeching halt. From the time I bought Caterpillar in 2009, it's grown more than 33% on average annually and has become one of my largest holdings. While I expect Caterpillar to experience short-term headwinds, especially as growth in developing markets slows and demand for commodities cools off, I'm in it for the long haul. And I still like the stock for investors looking to get in today.

Oracle (NYSE:ORCL)
The first tech stock I ever bought was Applied Materials (NASDAQ:AMAT). I had just graduated from college, was living in Northern California, and had a close friend who worked at the Silicon Valley semiconductor equipment maker. I had a bit of success with Applied stock and thought I'd dabble into more tech stocks.

I bought Oracle in 1998. The world's second largest software company and the leading provider of software for information management, Oracle's competitive advantages are its recurring revenue business model, high customer retention, and synergies from acquisitions.

Oracle's solid long-term track record is largely thanks to founder and CEO Larry Ellison. He adheres to a philosophy of being either No. 1 or No. 2 in a market. If the company can't achieve that, it'll either exit the market altogether or leverage its strong balance sheet to acquire a company that will help it get to a market-leading position.

As a result, Oracle has completed billions of dollars in acquisitions during the past few years. The company continually receives criticism for its spending spree. But I think most of the acquisitions have dovetailed nicely into the rest of the company's products, augmented profits, and increased shareholder value.

For example, last month, Oracle announced it would acquire communications tech firm Acme Packet (NYSE:APKT), a leader in next-generation networks. With this acquisition, Oracle will complete a missing link of its overall solutions. Because the company offers an entire solution suite, it's likely the newly acquired customers will add even more of Oracle's software and services.

I rode Oracle through the tech bubble, suffered through the tech bust, and have held on to it ever since. While the stock has brought on a few headaches over the years, I believed in its long-term prospects. And I like the direction Oracle seems to be heading in. From the time I bought the stock nearly 15 years ago, it's returned 17% on average annually. It pays to buy and hold, even when holding is tough to do.

Foolish bottom line
In addition to being leaders in their respective fields, these industry titans enjoy enormous scale and true staying power. Both Caterpillar and Oracle remain companies that I like for investors today and that I intend to hold for many years.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.