If you’re reading this article, it’s likely because you’re in the market for stocks that you can buy and hold forever. That’s certainly much better than looking for stocks to day-trade, where you only hold them for a day or less, not giving the companies a chance to grow and build wealth for you.
Bear in mind, though, that it’s better to buy to hold — meaning that you buy stocks intending to hold on for the long haul, but you monitor them over time, and sell if and when that seems best. The term “buy and hold” suggests buying and forgetting, which is rarely a good idea. Holding “forever,” meanwhile, may be overly ambitious. Many of us will need or want to sell after a decade or two — for retirement income, possibly.
Still, here are three companies worth considering for your long-term, buy-to-hold portfolio.
1. Take-Two Interactive Software
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Take-Two Interactive Software (NASDAQ: TTWO), with a recent market value near $27 billion, is a major player in a growing industry — video games. The folks at Grand View Research estimated the global video game market at around $217 billion in 2022, growing by more than 13% annually through 2030. Take-Two has been growing so well that it was recently added to the Nasdaq 100 index of the 100 largest non-financial companies on the Nasdaq stock exchange.
With a forward-looking price-to-earnings (P/E) ratio of 46, well above its five-year average of 29, the stock doesn’t appear to be trading at bargain levels, but it’s not quite fair to compare the company today with its five-year-ago self. That’s because it made a massive $13 billion acquisition of Zynga in 2022 — a company with hits such as Farmville, Words with Friends, CSR 2, and Zynga Poker that’s helping Take-Two grow its mobile offerings. That big buy, along with other issues such as delays and cancellations, has the company with significant debt and posting losses instead of gains.
But there’s reason to be optimistic: There are high expectations for the upcoming Grand Theft Auto VI, which arrives in 2025. It’s a reasonable assumption that video games will continue to proliferate, and that Take-Two will keep earning a big piece of that pie. If you’re intrigued, take a closer look — and perhaps add the stock to your watch list if you’re not ready to buy soon.
2. Starbucks
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Starbucks (NASDAQ: SBUX) is another promising investment, with a recent market value of $107 billion and a forward P/E of 24, well below the five-year average of 30. Since 1971, Starbucks has grown into a caffeinated titan, with more than 38,000 locations worldwide.
It’s still growing, too, posting 11% year-over-year revenue growth in its fourth quarter — to a record-breaking $9.4 billion. Customers are loyal, too, with the company’s U.S. Starbucks Rewards Membership 90-day-active ranks increasing by 14% year over year to 32.6 million. More than 800 new stores were opened in the quarter, too, roughly half of which are company-owned and half franchised.
While many growing companies pay little or no dividends, Starbucks’ recent dividend yield was a hefty 2.45%, and that payout has grown at an annual average rate of about 10% over the past five years. Starbucks is likely to keep growing for the foreseeable future, in part thanks to its powerful brand — ranked No. 1 among restaurants for several years in a row now, even ahead of McDonald’s.
3. Tractor Supply
Tractor Supply Company (NASDAQ: TSCO) may not be a familiar name to you, but it’s been around since 1938, and recently boasted close to 2,200 stores in 49 states, more than 50,000 employees, and a market value topping $24 billion. As you might guess, it began serving farmers and other rural customers, but it’s now ringing up profits in more populated areas. In its third quarter, it even generated more than $1 billion in eCommerce sales.
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That third quarter also featured overall revenue up 4.3% year over year and net profit margins rising nearly 9%. Management has tempered expectations, though, noting that demand has been weak lately. The company isn’t alone in that, though — peers have also experienced weakness.
For investors, some pessimism is already build into the recent stock price, which is down some 11% from its 52-week high. The stock’s forward P/E, recently at 20.6, is below its five-year average of 22.2. Tractor Supply isn’t priced at a bargain level, but it seems fairly priced and the company has a solid track record of growing over time. Oh, and it’s a dividend payer, too, recently yielding 1.9%.
These are just three of many attractively priced companies out there that are likely to keep growing over the long haul, rewarding shareholders in the process. Dig deeper into any that interest you, and remember to keep up with their progress, just in case their prospects take a turn for the worse. Don’t put off saving and investing for your future.
