One of my favorite investment strategies when seeking forever stocks is to look to past trends that turned stale. Think of some of the hottest sectors in the past five years that saw massive investor interest before falling back to Earth. Cannabis stocks, pandemic stocks, streaming stocks, even electric vehicle (EV) stocks. All had their heyday, buffeted by a record bull run, but collectively traded at a fraction of their past pricing.
The trick is to identify past winners in an emerging sector that were too early. Cannabis stocks rose on potential legalization that’s taking longer than expected to pan out. Streaming and pandemic stocks fell after we “returned to normal,” though many remote work and socialization trends remain. Even EV stocks are slumping as demand flatlines and economic pressure squeezes profit margins.
But is there any doubt that there’s a future in cannabis legalization? Or that EVs and their electric infrastructure will be a global transportation staple in the next decade? In most cases, though they trade well below past valuation, market whiplash pushed the worst-of-the-worst out of the scene. Those remaining prove they have the financial strength to tread water until the long-term trend reignites, but are priced at a point that’s hard to ignore.
That gap is where the best stocks to buy and hold lie. The companies on this list represent a unique slice of a future trend, but market exuberance is gone. They’ve been through a financial crucible, and stacking these stocks today is the way to build a portfolio of true forever stocks.
Rocket Lab USA (RKLB)
Rocket Lab USA (NASDAQ:RKLB) is a space company positioned to capture a potentially massive industry. With the broad space sector worth up to $1 trillion in the future, finding forever stocks starts in space.
In its recent quarterly report, Rocket Lab showcased impressive achievements, including a notable 12% year-over-year revenue growth and a substantial $40 million increase in its contract backlog. What’s particularly promising is Rocket Lab’s improved technical outlook, with its Neutron rocket project nearing completion. This project incorporates structural enhancements that enhance launching economics by enabling post-launch barge landings. Additionally, Rocket Lab secured 10 new launch orders for the year, encompassing both corporate and government contracts, indicating a robust demand for its services.
A critical strategic move by Rocket Lab is its expansion into hypersonic flight through modified rockets known as HASTE. Hypersonic flight has long been a challenging goal for aerospace engineers, with many past attempts ending in failure. Rocket Lab distinguishes itself by retrofitting existing technology rather than embarking on costly and uncertain research and development of new platforms. This approach positions the company for better financial prospects and minimizes the risks associated with ambitious projects in the aerospace industry.
Forever Stocks: Nintendo (NTDOY, NTDOF)
A pivotal factor indicating short-term success for this forever stock is its vast intellectual property portfolio. Take, for instance, Super Mario Bros., which generated an impressive $1.36 billion in box office sales this year. While a single success like the Super Mario Bros. movie may not be a game-changer on its own, it highlights a crucial point. Nintendo possesses an extensive array of intellectual properties that remain largely untapped by the film industry. As the popularity of superhero content wanes, Nintendo’s potential to license its rich catalog of characters and concepts becomes increasingly enticing to studios.
However, the real headline for Nintendo revolves around persistent rumors. Notably, industry giants like Google (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) are reportedly engaged in high-level talks regarding partnerships or potential acquisitions of Nintendo. In September, there were rumors of a partnership between Nintendo and Google to develop a next-generation virtual reality gaming headset. Later the same month, leaked emails hinted at Microsoft’s consideration of a complete acquisition of the Japanese gaming company.
While these rumors are not confirmed and could potentially amount to nothing, the level of interest from such prominent players, combined with Nintendo’s strong licensing opportunities and popular gaming products, positions it as a forever stock in a well-rounded portfolio.
Medtronic (NYSE:MDT) takes the lead as a top choice among forever stocks to buy and hold. As a medical device manufacturer, MDT holds the status of a blue-chip company while presenting substantial growth potential. Its commitment to artificial intelligence and automation initiatives amplify this potential, aligning with enduring healthcare trends.
Notably, private equity giant Carlyle Group (NASDAQ:CG) is expressing interest in acquiring a majority stake in two of Medtronic’s subsidiaries for a potential sum of up to $7 billion. This development underscores the medical device industry’s promising future, catching astute investors’ attention.
Today, Medtronic is navigating the post-pandemic landscape, benefiting from the resurgence in surgery rates due to the gradual clearance of backlogged non-urgent procedures. In its most recent earnings report, the company surprised with its revenue performance, attributed to consistent demand and its ability to adapt to evolving economic conditions.
However, Medtronic’s appeal extends beyond basic demand dynamics. The company is at the forefront of AI-powered healthcare, having partnered with AI giant Nvidia (NASDAQ:NVDA) earlier this year. This collaboration aims to enhance diagnostics and elevate patient outcomes, exemplifying just one facet of Medtronic’s commitment to next-generation medical devices. With the healthcare industry projected to grow at a steady rate of 5% annually through 2030, Medtronic’s strategic initiatives position it as a frontrunner in the field.
Forever Stocks: Tilray Brands (TLRY)
Tilray Brands (NASDAQ:TLRY) is one of the few winners of the cannabis stock craze, but its recent operational pivot sets it apart as a forever stock.
In August, Tilray solidified its presence in the craft brewing sector by acquiring eight brands from Anheuser-Busch (NYSE:BUD). This strategic move swiftly elevated Tilray, a cannabis company, to the position of the fifth-largest craft brewer in the United States. Notably, the craft beer market demonstrated robust growth, outpacing the overall beer sales rate by 8x in 2021.
While this acquisition opens doors to new revenue streams, its true value to Tilray lies in the logistical advantages it provides. Beyond the brands themselves, Tilray gained access to well-established distribution networks and robust marketing capabilities. These assets are poised to complement and enhance the company’s core cannabis operations significantly. Illustrating the potential of this move, Tilray’s CEO expressed, “Upon legalization (in the U.S.) one day, we will infuse these drinks with THC, with CBD, but we’ll have the distribution, and we’ll have the brands when and if legalization does happen.” This strategic positioning positions Tilray favorably to capitalize on future opportunities in the cannabis market. Likewise, it cements Tilray’s position as a true forever stock.
ChargePoint Holdings (CHPT)
ChargePoint Holdings’ (NYSE:CHPT) position in the electric vehicle (EV) space set it up as a definitive forever stock. Currently, ChargePoint owns and operates 46% of the national EV charging stations, with further expansion expected as the EV market continues to grow.
Industry experts forecast a quadrupling of demand for charging stations by 2027, offering significant growth opportunities for ChargePoint’s solutions. The company has demonstrated its financial strength, enabling it to weather short-term volatility. In its recent earnings report, ChargePoint reported an impressive 60% year-over-year (YOY) growth in sales, with gross margins increasing from 15% to 23% compared to the previous year. Moreover, the company maintains a healthy cash reserve, providing flexibility for expansion and serving as a cushion against unforeseen industry challenges.
ChargePoint’s enduring value derives from its early entry into the widespread development of EV charging infrastructure. Its portfolio spans a diverse range of locations, including highway gas stations, parking facilities, corporate buildings, airports, and more. This diversity and extensive penetration solidify its position as a key player and ensure its long-term relevance in the EV industry.
Forever Stocks: Crispr Therapeutics (CRSP)
Crispr Therapeutics (NASDAQ:CRSP), a pioneering company in the field of gene editing, is strategically positioned to lead the way in the healthcare revolution. With its innovative CRISPR technology, the company has unlocked the potential to modify genes with unprecedented precision and efficiency.
One of CRISPR Therapeutics’ key strengths lies in its robust pipeline of gene-editing therapies targeting a wide range of genetic diseases, including sickle cell anemia and beta-thalassemia. These therapies have demonstrated promising results in clinical trials, paving the way for potential breakthrough treatments.
Furthermore, the company has forged strategic partnerships with industry giants like Vertex Pharmaceuticals, solidifying its position in the gene-editing landscape. These collaborations provide access to resources, expertise, and a broader reach to expedite the development and commercialization of gene therapies.
With its cutting-edge technology, strong pipeline, and strategic alliances, CRISPR Therapeutics is well-equipped to lead the charge in revolutionizing the field of gene editing and improving the lives of individuals affected by genetic disorders. Likewise, it stands as a forever stock that capitalizes on healthcare’s future.
SharkNinja (NYSE:SN) is unique among these forever stocks as the company isn’t necessarily on the forefront of emerging tech or trends. Still, this consumer discretionary company stands out as a forever stock on the strength of its hidden potential.
The company has demonstrated robust sales performance, with a 20% annual increase in sales since 2008. This consistent growth trajectory reflects a keen understanding of consumer needs and effective financial management. Recent financial reports highlight a remarkable 34% earnings growth and a 15% year-over-year increase in sales.
However, what makes SharkNinja stand out as one of the best long-term stock options is its fundamental undervaluation. Research firm Jefferies has set a fair per-share price for SharkNinja at $67, indicating a substantial 55% upside potential. Consensus estimates from analysts also support a Buy rating, with a target price of around $60, representing a 40% increase from the current price. While SharkNinja may continue to ride a bullish wave in the short term, its long-term potential lies in its resilience and popularity among consumers, making it a definitive stock to buy and hold.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.