I am turning 38 next month. No, the milestone doesn't find me staring at the mirror and swearing at my own aging mortality; I'm cool with the graying process. However, sadly, I have come to grips with the fact that my wife isn't going to throw me a birthday bash at the local Chuck E. Cheese's.
It's true. It's time I grow up. In fact, I probably have a good deal of catching up to do on that front. It wasn't until earlier this month that I thumbed through our Rule Your Retirement newsletter for the first time. Asset allocation models? Retirement planning strategies? Savings calculators? Robert Brokamp's newsletter covers a lot of the stuff that I know I should be boning up on -- as well as things I had no idea that I should be thinking about as the burning candles begin to pile up on the annual celebratory cake.
So I donned my thinking cap and challenged my inner stockpicker to come up with a handful of stocks that I would feel comfortable holding for the next 20 years. You should try it sometime. It forces you to think about which companies you think will still be around in a few decades, as well as their prospects for growth.
I settled on four stocks. It wasn't easy. I just put myself in a position that would make Rip Van Winkle's slumber seem like a mere catnap. If in a blink, 20 years should lap me by, which four companies would I like to own?
Wal-Mart (NYSE:WMT) -- Oh, sure, as if the world's leading retailer would be such a radical choice. Then again, there was a time when Howard Johnson's was the country's largest restaurant chain and Sears (NASDAQ:SHLD) the top retailer. Sure, the company rings up more than 140 million customers in any given week and tallied up $285 billion in sales and $10 billion in profits last year. I still say it will continue to appreciate over time. In fact, because the stock is trading essentially where it was five years ago, it's even a historical bargain right now. Earnings have doubled in that time and sales are up by 73%. While the company's squeaky-clean image has come under attack lately due to its hiring practices and its gargantuan expansion plans, at the very heart of Wal-Mart is a company built lean to deliver unbeatable prices. Paying less will never fall prey to fickle fashion.
Google (NASDAQ:GOOG) -- OK, now I'm really throwing you for a loop. How can a company that has only been around for 10 years be a lock to be around for the next 20? Well, the more you learn about Google, the more likely you are to see things my way. On the surface, it seems to be a horrifying sight. Roughly 98% of the company's revenue is derived from online advertising. The stock is trading at nearly 40 times next year's earnings. What if someone develops a better search engine? Well, let's see. Do I think that overall Internet usage on a global basis will rise over the next two decades? Yes. Do I think that a company that is able to lure more than $1 billion in marketing budgets from sponsors every quarter -- attracting especially the small companies that never had access to traditional targeted advertising -- matters and should be given the same kind of break for survivability as ad-dependant media companies? Certainly.
Google didn't simply build a great search engine. It perfected the art of monetizing page views and has done so with inspiring margins. In its first three quarters as a public company, Google has blown past estimates. Three months ago, Google was trading at 50 times next year's profit estimates. So why has the stock risen by 20% in that time while trading now at just 39 times Wall Street's targets? Yes, those projections have had to be revised higher -- from $4.38 a share to $6.51 a stub. That may sound aggressive, but they have still fallen short of reality so far. While the market may eventually come to grasp Google's true earnings potential, I think it will outlive most of its naysayers.
Disney (NYSE:DIS) -- A safe pick? Don't be so sure. Its animation studio has been surpassed by computer-rendering upstarts Pixar (NASDAQ:PIXR) and DreamWorks Animation (NYSE:DWA). Last year dissension ran so high that its CEO was almost voted off the company's board. The Weinstein brothers, who gave Disney Hollywood credibility, are bolting later this year. So why is Disney such a great long-term stock? And wasn't this the same company that was on the brink of buckling under in the early 1980s? Disney still owns the best brand in family entertainment. It runs the world's most popular theme parks. Its ESPN network is the top dog in sports programming. Do you think that family, fun, and athletics are going away anytime soon? I didn't think so. While I can point to the revival at ABC as another plus for Disney, we all know how things go -- the network will rise and fall many times over before 2025 rolls around. In sum, Disney works. Leisure and entertainment are globally contagious and even if Disney stumbles, like Afleet Alex at the Preakness this past weekend, it's very likely to recover quickly and still win the race.
Apple Computer (NASDAQ:AAPL) -- I have no idea whether the iPod will still be around in 20 years. It may have made Apple trendy again in investing circles, but this pick has nothing to do with the company's recent success in digital music. In fact, I feel better about Apple's stock performance in the long run than in the near term. That's because Apple is a survivor. Even as its personal computer business lost market share, the company found a way to matter as a niche player. Even though its computer business is booming again thanks to iPod users migrating back to the Mac platform, that's certainly not the best reason to place Apple shares under your pillow. Simply put, the company oozes innovation. Personal computers and MP3 players are commodities for the most part, yet Apple has been able to make its Macs and iPods distinctive -- and proprietary. While that also means that Apple sometimes lets its ego get the better of it when the going is good, it's still an amazing company that is likely to find niches worth differentiating in the future.
I can definitely see Wal-Mart, Google, Disney, and Apple slapping on their name tags at a 20-year reunion come 2025. While others may attend, these will be the ones with the fancy cars, the hot dates, and -- drats! -- the ones who got to spend their 38th birthday at Chuck E. Cheese's.
Wondering where to go next?
- Kick the tires of our Rule Your Retirement newsletter service -- on us.
- Learn more about why your golden years can translate into golden wealth.
- There are ways for you to ruin your retirement.
Pixar is a recommendation of the Motley Fool Stock Advisor newsletter.
Longtime Fool contributor Rick Munarriz has his own 20-year reunion to attend later this year. He owns shares in Disney and Pixar. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
