In a way, investing is like baking. When baking, you mix the ingredients, pour them into a pan, put the pan in the oven and wait. If you do these things right, you should have something delicious. If you invest in the right mix of stocks and wait long enough for them to grow, you can end up with a sizable portfolio.
When it comes to both baking and pickling, the quality of your result depends heavily on the ingredients used and an appropriate amount of time. Do you want $1 million in retirement? Here are three stocks you can buy now and hold for decades.
1. Amazon
Two characteristics make it much more likely that a stock will be a big winner in the long run. Firstly, it should have a strong moat. Second, it should be optional (multiple growth opportunities). Amazon (NASDAQ:AMZN) has both qualities in abundance.
Arguably the biggest advantage for Amazon is its network effect: the more customers and suppliers use its e-commerce platform, the more valuable its platform becomes. However, this isn’t Amazon’s only moat. His brand is a gold mine in itself. Amazon benefits from economies of scale throughout its operations. And customers using the Amazon Web Services (AWS) cloud platform incur significant switching costs.
The company is now so large that it is unlikely to achieve the same levels of growth as it has in the past over the next few decades. But Amazon should still generate exceptional long-term returns thanks to its diverse growth opportunities.
There’s still plenty of room for Amazon’s online shopping business to expand, as e-commerce accounted for just 15.4% of total U.S. retail sales last year. AWS’s growth prospects remain impressive as companies deploy artificial intelligence (AI) applications in the cloud. Also, don’t underestimate Amazon’s ability to expand into new markets.
2. MercadoLibre
Free market (NASDAQ:MELI) has a lot in common with Amazon. The e-commerce platform also has a strong moat. This also applies to the company’s fintech business. However, perhaps the most compelling reason to buy the stock is its focus on the Latin American market.
The total gross domestic product (GDP) of countries in the region is over $5 trillion. E-commerce penetration in Latin America is lower than in the US. And as MercadoLibre correctly noted in a recent investor presentation: “[F]Financial services are ripe for disruption.”
MercadoLibre is uniquely positioned to capitalize on the opportunities in Latin America. The company operates the largest e-commerce platform in the region, with a compound annual gross merchandise volume growth rate of 28% since 2016. The company’s logistics network is the widest in the Latin American market. Its fintech business is the market leader in Argentina, Chile and Mexico and the second largest in Brazil in terms of monthly active users.
Additionally, MercadoLibre has a booming advertising business. The company currently ranks third in digital advertising market share in Latin America.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (NASDAQ:VRTX) is already a large biopharmaceutical company with a market cap of nearly $104 billion. I expect it to get much bigger in the next decade and beyond.
The drugmaker has achieved tremendous success with its cystic fibrosis (CF) therapies. However, Vertex’s best CF treatment to date may be waiting in the wings: The company plans to seek regulatory approval for its vanzacaftor triple-drug combination in mid-2024.
Vertex has already received regulatory approvals in the US and UK for what is likely to be its next blockbuster – Casgevy. This gene editing therapy offers a functional cure for both sickle cell anemia and transfusion-dependent beta-thalassemia.
But what I’m most excited about is the rest of the Vertex pipeline. The biotech company expects to soon file for U.S. approval for the non-opioid painkiller suzetrigine (VX-548). The company recently moved inaxaplin into late-stage testing for the treatment of APOL1-mediated kidney disease, which could represent a larger market opportunity than CF. And Vertex is advancing clinical trials for therapies that have the potential to cure type 1 diabetes.
Should you invest $1,000 in Amazon now?
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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. Keith Speights has positions at Amazon, MercadoLibre and Vertex Pharmaceuticals. The Motley Fool holds positions in and recommends Amazon, MercadoLibre, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
Would you like to have a million dollars in retirement? 3 stocks you can buy now and hold for decades. was originally published by The Motley Fool