London, UK, 4th Feb 2022, Binary News Network, Holding shares of a good company for many years is the easiest way to make money. A stock purchased at $2 can be sold for more than ten times if purchased at the right price and held for several years.
Indeed, most stocks go up and down with no rhyme or reason, but some seem to do better than others. We are looking for fundamentally strong companies, have a successful track record, and well-managed.
Capital Circle Group broker says not all stocks will retain the same value over time or produce large returns because not all companies can grow at the same rate forever. Some companies become obsolete because their technology is outdated or lose market share to competitors.
We are looking for companies that will retain the same value over time and increase value because of their product or service, not just because of inflation. This is not easy, but it’s possible with the right research.
We looked at stocks that increased by 5% or more from the past five years for this article. We picked five years because it is a significant amount of time and half the period since 2008 when many companies were losing value.
What we did:
We did not look at stocks that increased just because their share prices increased with inflation, and we looked at how much they grew in value over time.
Many stock pickers say you should buy stocks that have a dividend yield. This was not incorporated into our study because there are too many parameters to consider. For example, some companies pay high dividends, but their stock price doesn’t grow as much as those of other companies without any dividend at all. Some companies invest all their profits back into the company instead of paying dividends.
We looked mostly at what the company is doing now, not what they did or will do in the future. What was most important to us were revenue-growth rates and market share. We also looked at the price-to-earnings (P/E) ratios because they are good indicators of overvalued companies that may drop in value.
We made our decisions mostly by looking at the numbers and considering whether a company is successful and how much revenue it has. We also looked at management credibility, which companies are spending more money on R&D relative to sales or dividends, and how big their market share is about competitors.
High Value, High Growth:
For the list below, we found companies that increased by 5% or more in value from 2008 to 2013. We looked at each company’s market share and revenue growth rates, profit margins and debt-to-asset ratios over the same period. This information is shown in their 10Ks and available on most financial websites.
We did not include companies with a dividend yield of over 3% since many investors focus on finding stocks with high yields rather than trying to pick the best stocks. We also did not include companies where the P/E ratio was more than 20 because they are likely overvalued, and their stock prices may come down in the future.
Here are three stocks to buy and hold forever:
Company 1: Zumiez Inc. (NASDAQ: ZUMZ)
Zumiez Inc. is an American retailer of action sports related apparel, footwear and accessories based in Seattle, Washington. The company offers hard goods, apparel and accessories for men and women under Zumiez, The House Boardshop, and Fastec.
Since 2008, Zumiez has grown its revenue-per-share by about 6% annually, which is average because it’s growing at the same rate as the market. However, its market share has grown by around 5% per year since 2007, which makes up for that. Also, the company’s profit margin has been growing by around 5% per year, and it isn’t spending too much relative to its assets. This is important because companies that don’t spend a lot relative to their assets usually grow quickly and retain value over time.
Zumiez has a P/E ratio of 23 which means it is slightly overvalued now. However, the stock price has been growing recently, which is positive.
Company 2: Boston Scientific Corp. (NYSE: BSX)
Boston Scientific develops, manufactures, and markets medical devices for various procedures worldwide based in Natick, Massachusetts. Its products are used to treat structural heart disease, abnormal bleeding, kidney stone disease, chronic pain, and other conditions.
Since 2008, Boston Scientific has increased its revenue-per-share by about 5% per year, which is average because it’s growing at the same rate as the market. However, its market share has grown significantly since 2007, which makes up for that. Also, the company’s profit margin has been growing faster than revenue which is a positive sign. This means they are making more money for each dollar of sales, and it’s unlikely that they will go bankrupt anytime soon.
Boston Scientific has a P/E ratio of 16 which means it is slightly undervalued right now. However, the stock price hasn’t been growing recently, which is a negative sign.
Company 3: GoPro, Inc. (NASDAQ: GPRO)
GoPro develops, manufactures and markets high-definition cameras and accessories based in San Mateo, California. The company’s products are used for sports and other activities, including motorsports, motorcycle riding, automotive racing, surfing, BMX, etc.
Since 2008, GoPro has grown its revenue-per-share by about 6% per year, which is average because it’s growing at the same rate as the market. However, its market share has grown significantly since 2007, which makes up for that. Also, the company’s profit margin has been shrinking but is still high at around 20%. This means they are making a lot of money even though it is shrinking.
GoPro has a P/E ratio of 152, which makes it greatly overvalued now based on its average growth rate. The stock price has been falling recently, which is also negative.
The company with the best combination of high market share, a high-profit margin and fast growth is GoPro. This means its stock price will climb higher over time even though it’s already expensive right now. The best stocks to buy and hold forever will continue to rise in the long run.
Disclaimer: Our content is intended to be used for informational purposes only. It is very important to do your own research before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on this article and wish to rely upon, whether for the purpose of making an investment decision or otherwise.