It's been proved time and time again that long-haul investing outperforms short-term trading, but not every stock is perfect for a forever portfolio. We asked some of our top contributors for their suggestions, and they came back with these three stocks. Read on to learn more about these companies and whether they might be right for your long-term portfolio.
Dan Caplinger: One of the most important traits of a hold-forever stock is for the company to offer a product for which there's a high barrier to entry for potential new players in the industry. That's definitely the case with Boeing (NYSE: BA), which has a comfortable duopoly with Airbus in serving airlines and other buyers with needs for the large commercial aircraft in which it specializes. Boeing has captured at least its fair share of the boom in airplane demand in recent years, and it would be extremely difficult for new competitors to break into its shared dominance of the industry with Airbus.
Boeing is also poised to deal with changing times in the future. Exposure to the space and defense sectors gives Boeing much-needed diversification as well as opportunities to try out new innovations that it can then use to enhance products in the commercial aircraft arena. As technology develops, Boeing should remain at the forefront of its industry in adopting that technology and integrating it into its production. Although the cyclical nature of the industry will ensure plenty of ups and downs along the way, as a stock to hold forever, Boeing has compelling things going for it.
Todd Campbell: Forever-style portfolios can benefit from investing in stalwarts, but fast-growing companies such as Regeneron Pharmaceuticals (NASDAQ: REGN) could also be ideal for forever portfolios.
Since winning approval in 2011 for Eylea, a treatment for wet age-related macular degeneration (AMD), sales of Eylea have climbed to over $4 billion per year, and Regeneron Pharmaceuticals' shares are up a market trouncing 567%.
Aging baby boomers should continue to support the AMD market, but Eylea isn't the only one reason to own this stock for the long haul. Last summer, the FDA approved Regeneron Pharmaceuticals' cholesterol-combating drug, Praluent. Sales of Praluent are clocking in at only about a $50 million pace right now, but a study that's evaluating Praluent's ability to lower cardiovascular mortality should have data available in 2017, and if that data is positive, then Praluent could become a blockbuster.
Regeneron Pharmaceuticals could also have two other billion-dollar drugs making their way through the FDA right now. Sarilumab, a rheumatoid arthritis drug that outperformed the multibillion-dollar blockbuster Humira in late-stage trials, has an FDA decision date of Oct. 30. And Dupilumab recently delivered impressive results in eczema patients, while a filing for FDA approval is on deck.
Overall, Regeneron Pharmaceuticals is establishing itself as the "next big" biotech, and that has me thinking this company will eventually rate must-own status.
Andres Cardenal: The most important aspect to consider when making a long-term commitment to a company is arguably sustainable competitive strength. You want to have full confidence in the company's ability to keep the competition at bay and continue producing growing sales and cash flows for investors over years and even decades to come. When it comes to competitive strength in sports clothing and shoes, Nike (NYSE: NKE) comes second to none.
The company has invested massive amounts of money in sponsoring the most renowned athletes in the world across multiple sports disciplines, and memorable marketing campaigns have made of the Nike swoosh one of the most recognizable logos in the world. In fact, Nike refers to marketing as "demand creation expense" on its income statement, reflecting how the money being spent today comes back to the business with interest via growing sales and earnings over the long term.
Nike is delivering vigorous growth for a company that big. Total constant-currency sales grew 14% year over year last quarter, and demand looks particularly strong in key international markets. Sales in constant currency grew 27% in Greater China and 29% in central and eastern Europe during the quarter, indicating that the company still has significant room for global expansion going forward.