Finding stocks that return 50 to 100 times your original investment requires two steps.
First, identify those companies with the type of business model that should adapt to changing business conditions and survive tumultuous change for a very long time.
You want to own the types of businesses you can own forever and never spend a minute worrying about what the stock price did on any given day.
These tend to go in and out of favor, and creative destruction has always played a significant role in technology.
A look at the current list of 100-year-old companies is instructive on the type of businesses that fit well in a forever portfolio that could deliver 100-to-1 returns.
You will see utilities, The Coca-Cola Co. (NYSE: KO), General Mills Inc. (NYSE: GIS), Colgate Palmolive Co. (NYSE: CP), and other companies that make things people need every day.
Find those companies providing basic needs and have management talented enough to make the acquisitions and roll out the new products needed to keep the company growing for decades.
Now comes the hard part. You have to do nothing for a very long time. Maybe even forever.
Forever Stock to Buy No. 3: AT&T Inc.
AT&T Inc. (NYSE: T) has to be on the list of forever stocks to buy.
The company’s already well over 100 years old, and it has adapted and survived through every radical change is its 135-year-old history.
We have gone from party lines to high speed, high bandwidth internet, and AT&T has continually been a market leader.
Today, AT&T offers wireless communications, local exchange services, long-distance services, data/broadband, and Internet services, video services, telecommunications equipment, managed networking, and wholesale services.
It owns Cricket Mobile, DIRECTV, and Warner Media in addition to the core communications business. If it involves phones, computers, or entertainment, AT&T is involved in the business in some fashion.
Much as buyers of the stock in 1920 had no idea what American telephone and telegraph would look like in 2020, we don’t know what it will look like in 2120…
But it’s safe to assume that the company will be around in some form. Forever portfolio investors can buy the stock and reinvest the 6.9% dividend until you need the retirement income.
Buy the stock. If there is a crash, buy more.
Never sell a single share.
Forever Stock to Buy No. 2: Brookfield Asset Management
Brookfield Asset Management Inc. (NYSE: BAM) has been called the toll keeper of the 21st century.
Through its various investment vehicles, BAM owns energy plants: both traditional and renewable. It owns airports, railroads, and pipelines. The company also owns every imaginable type of real estate all over the world…
Brookfield buys long-lived assets that require some money to be spent on the front end. Then it collects streams of cash in the form of rentals, tolls, and fees for as long as the asset survives.
Brookfield will have powerful tailwinds from some of the most influential trends in the world today. These include renewable energy, data centers, 5G, and the continuing trend toward private investments.
Brookfield not only makes money from the assets it owns; the company also collects fees for managing assets for others through the funds they offer.
Last year, the company bought one of the world’s best credit investment firms, Oaktree Capital. That firm’s success as a distressed debt investor could lead to a profit surge if the pandemic continues to weigh on the global economy.
If it makes the world go around, Brookfield owns some of it and charges a fee to manage the assets for someone else.
Buy the stock. If there is a crash, buy more. Never sell a single share.
Forever Stock to Buy No. 1
Johnson & Johnson (NYSE: JNJ) makes everything that has anything to do with healthcare…
From the Band-Aids in your bathroom closets, all the way up to cutting edge biotech and sophisticated medical devices… Johnson & Johnson is involved.
No matter what happens in the world, people are going to get headaches and take Tylenol. Little kids will have boo-boos that need Band-Aids.
People will get more severe diseases and need pharmaceuticals. Surgery will get more sophisticated, so the need for medical devices will always be a growth market. There will be a demand for every level of healthcare, and Johnson & Johnson will help meet those needs…
Johnson & Johnson is not sitting on its laurels, either. The company spent $11.4 billion, or 14% of sales, on research and development last year.
JNJ has 21 late-stage clinical drug trials underway or in the FDA filing review process. It should launch at least seven novel drugs by the end of 2021.
And it’s hard at work on a coronavirus vaccine right now as well…
Buy the stock. If there is a crash, buy more. Never sell a single share.
— Money Morning Staff
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Source: Money Morning