Study after study shows that a long-term buy-and-hold investing strategy works best. A long-term investment is generally defined as any position in a stock that is held for a year or longer. While the stock market can decline by 20% or more in a single year, which was the case in 2022, equities almost always rise over the long term. For example, the U.S. stock market has posted an average annual return of 8% or more during 20-year periods. Over 30 years, the average annual return is closer to 9%, for a total return of 1,300%. The math is clear. The longer one stays invested, the better their returns are likely to be.
However, staying invested through market downturns, economic shocks, global recessions, and wars can be difficult. As humans, we are prone to getting nervous and frightened, and that can lead to us hitting the “sell” button too early, costing us dearly in the long run. Remaining calm and being patient are often the most important attributes of an investor. Here are the top seven “millionaire-maker” long-term stocks to buy for 2023.
|BRK-A, BRK-B||Berkshire Hathaway||$466,259.97, $308.30|
|GOOG, GOOGL||Alphabet||$91.78, $91.12|
Few stocks have returned as much value to shareholders as consumer electronics giant Apple (NASDAQ:AAPL). The Silicon Valley company’s share price has gained 202% in the last five years, 625% in the past decade, and 79,000% since its initial public offering (IPO) in 1983. Long-term, it is difficult to find a stock that has performed better than Apple. And the good news for investors is that Apple is currently on sale, having declined 21% over the last 12 months to currently trade at $134 a share.
Many of the world’s most successful investors have made Apple a core position in their portfolio, including Warren Buffett, the most successful investor of all time. Buffett’s holding company, Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B), currently owns $123.34 billion worth of Apple stock, making it the biggest position in the portfolio. Buffett himself has been buying AAPL stock over the last year as the price has slumped.
With continued new product innovations, including rumors of a touchscreen Mac computer and virtual reality headset, Apple looks set to outperform for many years to come.
Chipmaker Nvidia (NASDAQ:NVDA) has been battered and bruised in the last year. The Santa Clara, California-based company’s stock price has fallen 35% over the last 12 months, which is close to the drop in the Nasdaq index over the same time period. However, NVDA stock remains up nearly 200% in the last five years and has gained 5,350% over the last 10 years. As long-term investments go, Nvidia has been a winner for its shareholders.
There is every reason to believe that Nvidia will continue its outperformance. The company’s microchips and semiconductors are at the cutting edge of technological innovations that include artificial intelligence and self-driving cars. And its products continue to dominate in the video game space. With supply chain bottlenecks and demand recovering, there are signs that NVDA stock may have bottomed in recent weeks. So far into 2023, the share price has increased by 18% to now trade at just under $170 a share.
Don’t count out e-commerce giant Amazon (NASDAQ:AMZN) either as a going concern or an investment. The Seattle-based company has produced long-term gains for investors that few other stocks can match. AMZN stock had climbed higher by nearly 600% in the last 10 years and is up nearly 110,000% since its 1997 IPO when it began trading for less than $1 a share. While the share price has been knocked lower by nearly 40% in the last 12 months, indications point to short-term issues that shouldn’t weigh down the stock over the long term.
Specifically, Amazon overbuilt, over-hired, and over-extended itself during the pandemic when the world was isolated at home and forced to shop online. The company is now working to course correct, laying off nearly 20,000 staff, closing fulfillment centers around the world, and delaying the launch of several projects. If chief executive Andy Jassy and his team can right the ship, there is every reason to believe that AMZN stock will continue growing into the future.
Berkshire Hathaway (BRK-A, BRK-B)
We mentioned that Apple is Warren Buffett’s most widely held position and that AAPL stock has delivered huge gains to Berkshire Hathaway. However, Berkshire itself is no slouch as an investment. In fact, the stock has been a juggernaut for long-term buy-and-hold investors for decades. Berkshire Hathaway’s Class A stock has doubled twice in the past decade. Since 1990, the stock has grown more than eight million percent.
That kind of growth is mind-boggling. So too, is the current $480,000 share price of the Class A stock, which has never split. The Class A shares have gotten so hefty that stock exchanges have had to be reconfigured to enable them to continue trading on their bourse. Berkshire’s Class B stock, which trades at a ratio of 1/1,500th of the Class A stock, is more reasonably priced at $317 per share currently. Any way you slice it, Warren Buffett’s Berkshire Hathaway has proven to be a stupendous long-term investment.
Probably the least well-known stock on this list is Dexcom (NASDAQ:DXCM). The San Diego-based medical device company makes continuous glucose monitoring systems for people who have Diabetes. And its glucose monitoring systems have become the standard in the U.S. and many other countries around the world. This has led to big gains in DXCM stock over the long term. Consider that the company’s share price has increased 675% in the last five years and gained more than 2,800% over the past 10 years. Since going public in 2005, the stock has been up more than 4,000%.
The current share price of $108 looks expensive, with a price-earnings ratio of more than 200. However, analysts remain bullish on DXCM stock, with a median price target on the shares of $130, suggesting a further 20% upside from current levels. Dexcom continues to benefit from its focus on treating Diabetes and its market-leading position when it comes to innovative glucose monitoring systems. The company continues to bring new Diabetes management products to market and is forecasting that it will grow 32.9% in each of the next five years. This is a stock built for the long term.
Alphabet (GOOG, GOOGL)
Any investor who got in on Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) IPO nearly 20 years ago is sitting pretty today. That’s because GOOGL stock has risen more than 3,250% since the tech giant made its market debut in August 2004. More recently, the share price has gained 60% in the past five years. In the last 12 months, Alphabet has undertaken a 20-for-1 stock split that has made the shares much more affordable. A 33% decline in the share price has also helped make the stock cheap at its current level of $91. The price-earnings ratio of 18 is the lowest it has been in more than a decade.
Investors looking for a best-in-class tech company should give serious consideration to buying GOOGL stock while it’s on sale. With the online advertising market recovering and the Federal Reserve’s interest rate hikes nearing their conclusion, the outlook for Alphabet and its share price is brightening. Plus, Alphabet continues to grow its market share in sectors ranging from smartphones and artificial intelligence to cloud computing and wearable tech. The company’s balance sheet is fortified for an economic downturn, and Alphabet continues to generate huge amounts of cash, primarily from digital advertisements. This is a stock built for the long term.
Big box retailer Costco’s (NASDAQ:COST) stock seems to outperform in any type of market. COST stock has been flat over the last year, up 153% in the last five years, and has gained nearly 400% during the past decade. Since the year 2000, the Seattle-based company’s share price has risen 1,000%. This is a testament to Costco’s strong business model, durable competitive advantage, and the near cult-like devotion of its customers who pay an annual membership fee to shop at the warehouse club.
Costco’s same-store sales growth has remained consistently strong throughout the pandemic and economic reopening; the company is expanding into new service areas that include travel, home improvement, and business services, and its membership renewal rate is above 95%, the industry gold standard. Costco’s net sales in its most recent fiscal year, which ended October 2022, totaled $222.7 billion, up 16% from the previous year and an all-time record for the company. No wonder Yahoo Finance named Costco its 2022 “Company of the Year.” Investors with a long time horizon should definitely consider a position in COST stock.
On the date of publication, Joel Baglole held long positions in AAPL, NVDA and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Artificial Intelligence, Cloud, Consumer Discretionary, E-Commerce, Financial, Healthcare, Retail, Semiconductor, Software, Technology