3 beautiful shares that I will “never” sell

By | March 30, 2024

When I buy a stock, I try to remind myself that I’m buying a small part of a company and that I plan to hold my shares for the long term. Warren Buffett once said that his favorite investment period is forever. While that’s ambitious above all, it’s an important reminder that success in investing comes from identifying great companies and then growing them over decades.

While some stocks in my portfolio have a lot more to prove to stay there forever, there are some that I can’t imagine selling. These companies have a long track record and competitive advantages that should pave the way for a bright future. As the saying goes, ‘Never say never’. But with these stocks, I’m as close to never selling as it’s possible to get.

Costco

Every time I struggle to find parking or stand in the long (but efficient) line to check out, I ask myself why I don’t own more Costco Wholesale (NASDAQ: COST) stock. While most of my fellow shoppers probably don’t have the same thoughts, we’re all here to take advantage of the large quantities and low prices. History shows that this business model has been wildly successful, with Costco stock gaining more than 81,000% since its IPO.

Costco ended its second quarter of fiscal 2024 (ending February 2024) as the third-largest global retailer and the 12th-largest company in the Fortune 500, with 874 locations worldwide. The membership model works well. More than 92% of Costco members are renewing their memberships, and the company has raked in nearly $5 billion in membership fees over the past twelve months.

The low prices keep customers coming in, and because Costco sells fewer items than its competitors and turns over its inventory very quickly, it can sometimes even sell items before they are due. This improves cash flow and reduces costs.

Amazon

If there’s any retailer that comes to mind other than Costco, it has to be that one Amazon (NASDAQ: AMZN). I don’t think I’m the only one who shops there almost anywhere else. Over the past twelve months, Amazon shares are up 82%. However, during the 2022 market downturn, the company fell nearly 50% as it struggled to get its finances back in order after the massive distribution expansion necessitated by the pandemic surge in orders.

Amazon is certainly back on track and ready to accelerate its growth again. In 2023, Amazon’s revenue grew 12%, but its more impressive results were lower on the income statement. The operating result increased by 202% and the net result grew by 1,226%. These results were driven by a recovery in the e-commerce sector, which was finally turning the corner after the problems of 2022. It’s also worth remembering that Amazon Web Services (AWS) remains the leader in cloud infrastructure, with revenue growing 13% in 2023.

Apple

Giant in the field of consumer electronics Apple (NASDAQ: AAPL) has been in the news for all the wrong reasons lately. The stock is increasingly under the microscope of federal antitrust investigations and is down 12% in the past three months. This news is certainly worth watching, but it will take years to materialize and the fairly modest decline in Apple’s share price suggests that the market’s concerns are less serious than some headlines indicate.

Taking a step back, it’s important to remember that Apple is still a ubiquitous brand around the world, and especially in the United States. Known for its iPhone and other consumer electronics, Apple is slowly becoming a software company. Apple now has an installed base of more than 2.2 billion devices.

This creates an ecosystem of apps and subscription services that provide the company with a high-margin revenue stream. In the most recently reported quarter, services revenue (where all subscription products are reported) grew 11% to $23 billion. This represents 19% of total sales, compared to 18% the year before.

Why I ‘never’ sell

Are there scenarios where I could sell these companies? Certainly, everything is possible. However, these three companies have such a competitive advantage and are still growing so impressively at their large scale, that it’s hard to imagine a scenario in which they wouldn’t earn a place in my portfolio. Investing can be as simple or complicated as you want. In my opinion, buying and owning these three stocks is about as easy as investing can be.

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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. Jeff Santoro has positions in Amazon, Apple and Costco Wholesale. The Motley Fool holds positions in and recommends Amazon, Apple, and Costco Wholesale. The Motley Fool has a disclosure policy.

3 Great Stocks I’ll “Never” Sell was originally published by The Motley Fool

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