If you've spent much time reading our musings here at The Motley Fool, you'll know we believe stocks are by far the most effective long-term wealth-creation tool ever conceived.
As Warren Buffett (who just happens to know a thing or two about creating long-term wealth) once famously stated, "Our favorite holding period is forever."
Unfortunately, over the past few decades, the world has largely stopped measuring holding periods for stocks in years, let alone "forever." Instead, many folks seem to prefer placing undue focus on short-term investments to make a quick buck, and too many investors simply aren't exhibiting the patience necessary to realize the true power of long-term compounding gains.
In an effort to get us back on track, then, here are three great stocks to buy and hold for the next 20 years.
First up, I'm going to step out on a limb and say at-home carbonation specialist SodaStream is one of the most promising stocks to buy, with tremendous upside over the next two decades.
To be sure, while SodaStream faces intense competition from the likes of Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP), remember I noted just last week this comparatively small company has effectively put the larger beverage behemoths between a rock and a hard place.
How? On one hand, SodaStream is aiming to increase its own sales by more than 80% by 2016, as consumers are finally taking notice of the convenience, cost savings, and environmentally friendly nature of its carbonation systems. In fact, there's every reason to believe they can do so, considering the company managed to increase first-quarter revenue by 34% year over year, while gas refill and syrup sales rose 101% and 119% from the year-ago period, respectively. All told, SodaStream has made a regular habit of crushing earnings estimates for the past several quarters.
On the other hand, as fellow Fool Rick Munarriz pointed out, for Pepsi or Coke to acquire SodaSteam would sabotage the existing bottle-dependent business models of the beverage industry giants. What's more, for them to buy SodaStream to simply shut down a competitor would only validate the trend and damage their brands.
SodaStream, then, remains nicely poised to continue growing for the foreseeable future, as it aims to ultimately more than quintuple its market share in the U.S. to 10%. It'll take some time to steal that market share from the big boys, but that's why I'm offering SodaStream as the first of three great stocks to buy for investors willing to wait to be handsomely rewarded over the next two decades.
Next, I think Google should also have little trouble generating solid returns for investors over the next 20 years.
After all, as fellow Fool Brian Stoffel noted last month, Google's valuation is historically low despite its $870 price per share, and Google has stood largely unchallenged in the Web search market segment for the past decade. More specifically, Google has maintained at least an 80% market share in search since 2007, despite even the best efforts of tech giant Microsoft, with its own revamped search engine and recent "Bing it on" ad campaigns.
Add to that the fact that Google boasts dozens of irons in the fire with huge potential -- including its unrivaled Maps program, autonomous cars, a mobile revolution powered by its Android operating system, and the coming commercial release of Google Glass -- and it becomes nearly impossible to envision a scenario 20 years from now that doesn't include Google as an integral part of our lives.
Berkshire Hathaway (NYSE:BRK-B)
Finally, in any serious list of incredible businesses built with a long-term focus, you'd be hard-pressed to find a reason not to include the one Warren Buffett has arguably morphed into the most successful financial holding company of all time.
After all, excluding Berkshire's now-completed purchase of a 50% stake in Heinz and its recent announcement to acquire Las Vegas-based NV Energy (which will operate as a subsidiary of Berkshire's MidAmerican), Berkshire is currently composed of an unrivaled group of 56 diverse businesses, including Burlington Northern Santa Fe, Geico, General Re, Dairy Queen, The Pampered Chef, See's Candies, Shaw Industries, Marmon, Lubrizol, Iscar, NetJets, and dozens of others.
That's not to mention Berkshire's more than $73 billion equities portfolio, to which investors all over the world continuously look for solid ideas for stocks to buy. At the end of 2012, Berkshire's portfolio notably included a 13.7% stake in American Express, 8.7% ownership of Wells Fargo, 8.9% of all outstanding Coca-Cola shares, and a 5.5% stake in IBM.
In the end, if Berkshire's not one of the most compelling stocks to buy for the next 20 years, I don't know what is.