Investors naturally want to own the best companies in their portfolio – stocks that are available at good (or at least reasonable) prices – and then hold them for many years and watch their value grow. But of course finding it is never easy.
To help you, below are five solid investments to keep an eye on and consider buying – at the right price. See which ones pique your interest. (Note that one of these is an exchange-traded fund, which trades like stocks.)
Below you will find their performance records. They are usually impressive, but remember that past performance is no guarantee of future results.
|
Possess |
Average annual return over 5 years |
Average annual return over 10 years |
Average annual return over 15 years |
|---|---|---|---|
|
Costco Wholesale (NASDAQ: COST) |
25.5% |
22.7% |
20.5% |
|
Paycom software (NYSE: PAYC) |
(4.8%) |
25.8% |
N/A |
|
Amazon (NASDAQ: AMZN) |
16% |
28.6% |
27.7% |
|
Intuitive surgery (NASDAQ: ISRG) |
21.9% |
25.1% |
20.7% |
|
Vanguard Information Technology ETF (NYSEMKT: VGT) |
23.3% |
21.8% |
19.1% |
Source: Morningstar.com as of October 17, 2024.
Here’s a closer look at each:
Retail giant Costco’s market cap recently hit $390 billion. Unlike many other companies, the company manages to strike a profitable balance between serving its employees, shareholders and customers well – through competitive compensation and benefits respectively; solid returns, including dividends; and low prices, with markups usually limited to 13% to 14%. The company recently had 891 warehouse stores, of which 614 (or 69%) were in the US.
Costco pays a quarterly dividend that recently yielded just 0.5%, but also pays out hefty “special” dividends on an irregular basis. The most recent of these were a $15 per share distribution in 2023 and a $10 per share distribution in 2020. Unfortunately, the stock does not appear attractively priced at a forward price-to-earnings (P/E) ratio. of 50.1, well above the five-year average of 37.5. So if you don’t have it yet, maybe just add it to your watchlist.
Paycom has a more attractive valuation. For example, its forward price-to-earnings ratio of 18 is well below the five-year average of almost 44. The country only recently started paying a dividend that yields about 0.9% at the current share price.
This software-as-a-service company helps companies manage payroll and human resources. The company has taken a hit lately, partly due to cannibalization: its newer self-service platform Beti is pulling some customers away from its other services.
That shouldn’t be a long-term problem, though, as the company remains quite profitable with a solid balance sheet and no debt. Sales increased by 9% year-on-year in the second quarter.
Amazon needs no introduction: there may be a few boxes with its logo on your porch right now. The stock is attractively priced with a forward price-to-earnings ratio of 31.6, well below the five-year average of 53.4.
Amazon is one of the ‘Magnificent Seven’ stocks and is a major player in much more than just its massive online marketplace. For example, it owns Amazon Web Services, a leading cloud computing platform that is growing faster than its e-commerce site. Despite its enormous size, the company is still growing its revenue at a respectable pace and is looking to expand into areas like healthcare. The company does not pay dividends.
Speaking of healthcare, Intuitive Surgical is the leading maker of robotic surgical systems. As of June, more than 15 million procedures had been performed using da Vinci surgical systems, with more than 9,800 installed in hospitals and healthcare facilities around the world.
In the third quarter, procedure volume grew 18% year-over-year, while revenue increased 17%. A large part of the turnover comes back through service contracts and the sale of supplies and disposable accessories used during operations. It is reasonable to expect continued growth in the coming years.
With a forward price-to-earnings ratio of 62.9 – well above the five-year average of 52.7 – Intuitive’s stock isn’t a bargain right now. So you might just want to keep an eye on it and hope for a relapse. It recently had a market capitalization of $168 billion and pays no dividends.
Finally, there is the Vanguard Information Technology ETF. The portfolio includes more than 300 stocks, but about 44% of the value is in just three of them: Apple, NvidiaAnd Microsoft. Many of us aren’t expert stock analysts, so if you’re not sure which tech stocks to pick, investing in this impressive ETF will quickly spread your money across large chunks of it.
Take a look at one of these investments that interest you. Once you learn more, you might want to put money into some of them, or put them on your watchlist.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Selena Maranjian holds positions at Amazon, Apple, Costco Wholesale, Intuitive Surgical, Microsoft, Nvidia and Paycom Software. The Motley Fool holds positions in and recommends Amazon, Apple, Costco Wholesale, Intuitive Surgical, Microsoft, Nvidia, and Paycom Software. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
5 Monster Stocks to Hold for the Next 5 to 25 Years was originally published by The Motley Fool
