Finding the best stocks to buy for the next 10 years probably isn’t on most folks’ radar these days. After all, the market is making new all-time highs seemingly every other day and is poised to deliver more-than-solid returns in 2014.
However, long-term investors know that the key to successful investing is to ignore day-to-day and year-to-year market moves and focus on longer periods when hunting down the best stocks to buy.
After all, stocks get bounced around by all sorts of issues outside a company’s control, from geopolitical crises to recession overseas. What really separates good investments from the bad and the ugly is how a stock performs over a decade or more. A well-managed company in the right industry will prove itself over time. Just ask Warren Buffett, whose preferred holding period is “forever.”
As we head into the end of 2014, it’s a perfect time to look at the best stocks to buy for the long haul. These are names that will benefit from powerful secular trends, as well as their own strengths within their respective industries. Hey, buy-and-hold can indeed work if you’re patient. Look at a long-term chart of the stock market and you’ll see that despite some painful crashes, the line always moves up as it moves to the right.
Then, of course, there’s always the unexpected, which is why it’s important to focus on market leaders and broad social, political and environmental trends when looking for stocks to buy. Sure, something might come along to trip great companies up, but secular trends will always pick them up in the long run.
If you can remain patient for a decade or more, look to this list of the 10 best stocks to buy for the next 10 years (and beyond):
Best Stocks to Buy for the Next 10 Years – HCP, Inc. (HCP)
Industry: Healthcare Facilities
The baby boomers have been the proverbial pig through the python for decades now, changing and influencing everything from politics to fashion to investing for decades. And they’re not done yet.
Indeed, that cohort of roughly 77 million people born between 1946 and 1964 have just begun hitting retirement. That means old age and infirmity will start to hit a huge chunk of baby boomers over the next 10 to 20 years — and that’s a theme that will carry several of the companies on our list of the best stocks to buy.
As one of the nation’s largest operators of healthcare facilities, from hospitals to elder care, HCP, Inc. (HCP) is uniquely poised to benefit from this inexorable demographic change.
Even better, as a real estate insurance trust (REIT), HCP pays a generous and dependable dividend. HCP currently yields 5% and has paid uninterrupted dividends since 1985, making it one of InvestorPlace’s Dependable Dividend Stocks.
Best Stocks to Buy for the Next 10 Years – Monsanto Company (MON)
One of the largest demographics trends of the next 10 years — to say nothing of the next century — isn’t just population growth. Sure, that’s a big one, but complicating the impact are rapidly rising living standards across Latin America, Asia and Africa.
That’s putting tremendous pressure on the global food supply, and with essentially all of the world’s arable land already under cultivation, the only solution is to grow more food with the land we’ve got.
That’s where Monsanto Company (MON) comes in. The agriculture company develops pest- and weather-resistant seeds for everything from wheat to sorghum to alfalfa. And by tinkering with traits, Monsanto can tailor seeds to increase yields or possible growing conditions.
That’ll be vital in feeding the growing world for decades to come, making Monsanto among the best stocks to buy for the long-term.
Best Stocks to Buy for the Next 10 Years – Merck & Co., Inc. (MRK)
The aging of the baby boomers has far-reaching effects on a long list of industries, from healthcare to housing … and of course the pharmaceutical industry is in store for a shakeup too.
Pressure on the healthcare services is just starting to ramp up. After all, the oldest boomers are just 68. The youngest are 50. That’s not too young, however, to need an ever-larger regimen of medications.
The aging of the baby boomers is a tailwind for the entire pharmaceuticals industry, but Merck & Co., Inc. (MRK), a member of the Dow Jones Industrial Average, has some attractive advantages these days. For one thing, it has a couple dozen drugs under development. Second, many of these drugs — suvorexant for insomnia and osteoporosis drug odanacatib — show promise for use by aging baby boomers.
Best Stocks to Buy for the Next 10 Years – Potash Corp./Saskatchewan (USA) (POT)
Getting back to the theme of population growth and rising standards of living, it doesn’t matter how good your seeds are if the soil isn’t nutrient-rich. It’s also critical to make increasingly scarce arable land as productive as possible.
For that, farmers need fertilizer, a specialty of Potash Corp./Saskatchewan (USA) (POT). In addition to mining and processing potash for use as a fertilizer, the company produces feed supplements and a wide range of other chemical products.
POT stock has had a tough few years of late thanks to sluggish global growth and a supply glut, but both population and economic growth over the next decade will eventually pull it out of that funk. Heck, over the last 10 years, POT has destroyed the S&P 500, gaining more than 300%.
Best Stocks to Buy for the Next 10 Years – Flowserve Corp (FLS)
Industry: Industrial Machinery
Food and land aren’t the only resources coming under pressure from population growth and rising living standards. Indeed, before food, shelter and clothing comes water, and the world is getting thirstier than ever.
Flowserve (FLS) is one of the best stocks poised to benefit from secular growth in water infrastructure. Specializing in everything from pumps to valves to monitoring and controls, FLS has an enviable growth rate. Indeed, Wall Street expects FLS earnings to grow more than 12% annually over the next five years. Meanwhile, the broader market is forecast to grow at not quite 10%.
A long history of market-beating performance and the markings of a high-quality stock — return on equity stands at nearly 30% — further make the case for FLS over the next decade or more.
Best Stocks to Buy for the Next 10 Years – Stryker Corporation (SYK)
Industry: Medical Equipment
Pity the poor baby boomers. They’re starting to fall apart. With age comes all sorts of orthopedic problems, as joints wear out or get damaged by disease.
Thankfully, medical technology does a better job than ever of keeping folks ambulatory in their senior years.
Stryker (SYK) is the largest manufacturer of artificial hips and knees, among other products, putting in in prime position to benefit from the increasing decrepitude of the boomer generation.
Indeed, it already has to a large measure. A decade ago, SYK had revenue of a bit more than $4 billion. That figure will top $10 billion by the end of 2015.
The glacial and inexorable push of the baby boomers has made SYK a serious market outperformer over the past 10 years … and will continue to make it one of the best stocks.
Best Stocks to Buy for the Next 10 Years – Nike Inc (NKE)
Industry: Footwear and Apparel
Great brands withstand the march of time. Once you build a reputation for quality and loyalty, it takes a hell of a lot to alienate consumers or the market.
Just look at Nike Inc (NKE). The footwear and apparel giant has had its ups and downs over the years, but in the buy-and-hold marathon, it’s always been winner.
Pick a time frame and you’ll see that NKE pretty much always beats the broader market — often by a huge margin. Over the past 10 years, for example, NKE gained roughly 370% vs. a 68% rise for the S&P 500.
True, past performance is not indicative of future returns, but NKE’s consistently excellent merchandise and marketing makes it a good bet that the next decade will look a lot like the past.
Best Stocks to Buy for the Next 10 Years – Patterson Companies, Inc. (PDCO)
Industry: Dental Equipment
OK, this is last time we’ll cite the aging of the 80 million-strong baby boomers as an investing theme, but we can’t leave it alone until we mention dental care. More than hips, knees and elbows, teeth do not wear well over the long haul, and that makes dentistry a growth area.
Patterson Companies, Inc. (PDCO), a maker of dental equipment, is expected to enjoy superior growth over next half-decade at least. Indeed, the Street sees compound annual earnings growth of more than 11%.
Additionally, as a relatively small company — the market cap of about $5 billion makes PDCO a midcap stock at best — sets the company up for outsized growth, since it doesn’t have to build on an already big base.
Best Stocks to Buy for the Next 10 Years – Walt Disney Co (DIS)
Industry: Media and Entertainment
Lots of media and entertainment companies will benefit from the exponential growth of digital content over the next decade, but Walt Disney Co (DIS) stands out if only because it has its hands in so many facets of the industry.
It produces movies and television programs, owns ESPN — the most valuable franchise in TV — runs a growing interactive business and, of course, the ever-popular theme parks and resorts. Most importantly, however, is that after buying Lucasfilm in 2012, DIS now owns the Star Wars franchise, which it has only just begun to leverage.
A stream of hit Star Wars movies alone could easily move the needle on DIS stock, especially since Disney can handle pretty much all of the ancillary products in-house.
Best Stocks to Buy for the Next 10 Years – Apple Inc. (AAPL)
Industry: Consumer Electronics
True, Apple is so large now that the days of really outstanding growth are likely behind it. No, there’s no law that says a company can’t have a market cap of $1 trillion, but it would require some really stunning earnings growth to justify such a price.
If there’s any company that can get there over the next 10 years, it’s Apple Inc. (AAPL). The iPhone juggernaut shows no end of slowing down, and as long as Apple can successfully refresh that lineup, the gadget will continue to print cash.
Of course for truly outsized returns, AAPL would need a revolutionary product like the first iPod. Some fear that the company lost its ability to create such gadgets after the passing of Steve Jobs, but do you really want to bet against it?
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.