ROCKVILLE, Md. — Chinese philosopher Lao Tzu wrote, “If you do not change direction, you may end up where you are heading.” That’s advice for investing as much as it is advice for life.
Netflix (NASDAQ:NFLX) CEO Reed Hastings got the memo on this. Yes, the pricing change and “apology” were a PR disaster. Yes, the dual interface is inconvenient for customers and simply a way to spin off and sell Qwikster as soon as possible. But at least Hastings didn’t just content himself with riding Netflix into the ground.
Unfortunately, as AOL (NYSE:AOL) has painfully proven to us during the past few years, recognizing the expiration date on your first great idea does not guarantee you a second act. There are serious doubts about how Netflix can find its way in the streaming video space.
If you’re looking for long-term investments in this market, then, which picks are keeping up with the time? What stocks can you rely on to evolve and lead the market a decade from now, rather than get left behind?
Here are three such investments for the buy-and-hold crowd to consider:
Crude oil is the lifeblood of the global economy, and though demand waxes and wanes in the short term, the long-term trend is clearly upward. Consider that global energy use is expected to jump 53% by 2035, largely driven by strong demand from places like India and China, according to the U.S. Energy Information Administration.
That means the companies with the biggest oil fields will see the biggest profit as demand soars and supplies dwindle. And it doesn’t get any bigger than Exxon Mobil (NYSE:XOM).
Lest you think Exxon is contenting itself with its current stockpile of oil reserves, a few weeks ago we learned of a massive deal with Russia’s state-owned energy giant Rosneft Corp. The joint venture will hunt for oil in the Arctic Ocean that could tap into 2.2 billion to 7.2 billion barrels of new reserves.
On top of that, its $41 billion deal to buy natural gas giant XTO Energy was driven by the assumption that, eventually, crude oil will fall out of favor. Natural gas has been becoming increasingly favored because it is a cleaner-burning fossil fuel and because of massive shale gas fields in the Northeast United States.
Any way you slice it, Exxon is a leader in global energy production and is likely to stay there. Throw in a 2.5% dividend as a kicker, and this is a very good long-term buy.
Recession or not, the world is going cashless. In the U.S., half of all Americans refuse to carry change — donating it or even throwing coins away. More folks are paying bills online, and mobile payments are pushing us even farther away from hard currency.
That makes payment processor MasterCard (NYSE:MA) a screaming buy. Because as the cashless revolution sets in, this stock will continue to connect consumers’ bank accounts and merchants’ cash registers — and collect a small fee for the service.
The biggest growth is yet to come. Even in the United States, which is leading the cashless craze, 40% of all transactions still are done with cash or paper checks. Oh yeah, and in case you haven’t noticed, consumer spending is hurting right now — meaning there are fewer transactions in general as folks tighten the purse strings.
Yet MasterCard is up more than 60% in 2011 and at an all-time high — topping even pre-Lehman Brothers levels from 2008. The stock is up 150% since March 9, 2009, and up 450% in the past five years.
Now imagine what will happen as the company’s push into emerging markets pays off. Both Visa (NYSE:V) and MasterCard are expanding in countries without developed banking systems to cash in on a massive pool of potential customers who soon will be making digital payments. The percentage of debit/credit card transactions performed outside the United States already accounts for half or more of total card transactions worldwide — and that percentage will only grow.
Throw in MasterCard partnering with mobile and e-commerce payment methods to evolve beyond plastic, and you can see why MasterCard will remain dominant for years to come.
Amazon (NASDAQ:AMZN) continues to defy its dot-com compatriots that have failed to adapt to a decade of evolution in cyberspace. According to comScore, in June 2011, Amazon was visited by 282 million people — or 20.4% of the world’s online population. Think about that: 1 in 5 folks with an Internet connection visit the site each month!
Amazon is in many ways more influential than brick-and-mortar giant Wal-Mart (NYSE:WMT), reaching more customers and leading the e-commerce charge that is redefining retail.
On top of that, you have the Kindle — a previous source of tremendous profits and an intriguing area of potential in the years to come. If you believe all the reports, it’ll be a capable 7-inch slate with a hugely competitive price and stripped-down functionality to provide an entry-level alternative to the Apple (NASDAQ:AAPL) iPad.
The company refuses to slow down the innovation, either. It is redesigning the Amazon.com homepage for the first time in a decade. It is launching a “Netflix for e-books” that will allow Kindle users to rent new releases. It has forged into streaming video with Amazon Prime.
This clearly is a company that is not slowing down.
More impressive is the fact Jeff Bezos has been able to keep his company from becoming complacent for the better part of two decades. Steve Jobs is lionized on Wall Street for his innovation and guiding hand, but Amazon’s CEO deserves a lot of credit for his role in reshaping consumer tech, too.
The trouble with Amazon is that unlike energy or aging seniors, the personal tech trends of the future are much more difficult to predict. But Amazon has an excellent track record so far — and gains of 32% year to date in 2011 versus a flat market indicate Wall Street is pretty optimistic about the future, too.
Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks named here. Write him at email@example.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.