“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
That quote is one of Warren Buffett’s most famous sayings, and speaks to the importance of looking far, far ahead when making investment decisions.
That’s partly important because it ensures that you’re really searching for quality companies (and, if you’re following in Buffett’s footsteps, good values as well). But it also speaks to the importance of ignoring fads and quick trades that individual investors tend to get burned on.
In taking the great Warren Buffett’s advice, and in respect to his favorite holding period being “forever,” I’d like to look at three top stocks that you can buy, and then forget about forever!
3 Top Stocks That I’ll NEVER Sell: AT&T Inc. (T)
The first top stock idea is AT&T (T), one the largest telecommunication companies in the U.S. However, it’s not necessarily AT&T’s leading wireless U.S. presence that’s so appealing as a buy-and-hold-forever investment, but rather everything else.
The Internet of Things is booming, with the “potential to add $10 trillion to $15 trillion in global GDP over the next 20 years” as essentially everything gets connected to the internet. Of the many companies and industries to reap the rewards of this growth, AT&T has one of the greatest opportunities.
For AT&T, those “things” will connect to its mobile network, broadband network, hot spots, etc. In other words, AT&T will collect fees as IP and mobile data traffic soars, with Cisco estimating that mobile data consumption will increase at a 57% compound annualized rate in the five years from 2014 until 2019.
What separates AT&T from other telecommunication companies is the broad services it offers combined with its scale. It is the only nationwide carrier with operations outside the U.S., in Mexico and Latin America. These are largely unpenetrated regions, with AT&T’s Mexican ops small and its Latin American presence virtually nonexistent outside of video.
It’s this presence in three regions combined with immense growth opportunities, a stock trading at 12x next year’s earnings with a 5.7% dividend, and a storied history that makes AT&T so great.
3 Top Stocks That I’ll NEVER Sell: Walgreens Boots Alliance Inc (WBA)
A hundred years from now, there still will be doctors, people still will get sick and prescription drugs will still be a necessity.
However, investing in drug developers long-term is dangerous, as pipeline development, patent protection and changes to the healthcare system are such big unknown factors.
Therefore, why not invest in prescription drug development, consumer need and retail all in one with Walgreens Boots Alliance (WBA)?
Walgreen is a company that’s over 100 years old, proving that it can stand the test of time. Its recent acquisition, Alliance Boots, has an equally meaningful history, being in business for about 100 years. While Walgreen is known as a U.S. company, with headquarters in Chicago, it operates in 25 countries with 340 distribution centers and 180,000 pharmacies. Walgreens even has hospitals and health centers in many markets.
Therefore, to say that Walgreens is the perfect play on global healthcare would be an understatement. With the stock more than 13% off its 52-week high, and significant revenue and profit growth expected long-term, now looks to be a good time to buy WBA for the long haul.
3 Top Stocks That I’ll NEVER Sell: American Express (AXP)
American Express (AXP) is a company that’s just as renowned as Walgreen and AT&T, and is a diversified company in the equally large financial industry.
While the financial industry in itself is rather fragmented, what makes AXP appealing is the sense of status it has built for customers worldwide. American Express has the wealthiest customers that spend the most and has a storied history of exclusivity.
With that said, much of why AXP makes this list comes down to price, with the Costco (COST) loss being fully baked into its stock price and then some. American Express’ stock price is nearly 20% off its 52-week high, and that puts AmEx stock trading at just 13.5 times this year’s earnings.
Albeit, American Express is one of those companies whose credentials likely translate to longevity, but it’s not big enough to where there are no opportunities for growth left. The company does bill $1 trillion annually and has over 112 million total customers, meaning it is large.
However, there are a lot more potential customers, with great growth in the middle class expected over the next decade and beyond. For example, India has an estimated 50 million people that fall in the middle class, and that number is expected to surpass 580 million by 2025.
As a result, AmEx has growth opportunities in the years ahead to support a great brand. That’s why investors should like AXP stock in any group of top stocks.
As of this writing, Brian Nichols was long AXP and T, and planned to buy WBA.