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If you had to buy-and-hold just 5 stocks now for the next 10-20 years what would they be?
Personally I am not interested in 'trading' but am after stocks which you can 'buy and forget' (within reason), therefore the following criteria might be worth considering:
- Great company that's going to be around for generations
- Wide 'competitive moat' - high barriers to entry
- History of increasing dividends over time
- Excellent management
For the purposes of this exercise I believe current valuations should be excluded as a factor to buy or not to buy. This is such a long-term decision that current valuations are not so relevant, plus I would likely average in over a period of 12-18 months, thereby reducing the impact of any over/under valuation there might be right now.
Interested to hear people's thoughts!
Many thanks....
Answers
EthanR answered 6 months ago …
I'm not smart enough to give you five stocks like that, but I think that a company like Johnson N Johnson or Proctor and Gamble will fit the bill. These aren't companies that will zoom up like a biotech, but they should give you long and steady growth with nicely increasing dividends. Those two companies are in the personal care sector, and seem to survive all the great recessions.
Another sector that comes to mind, although I won't recommend a specific stock, is tobacco. But many people don't like to invest in that sector because of the health/moral implications.
ChaosNantuko answered 5 months ago …
I just did a stock screen using the following criteria;
5 year averages of ROE, ROIC, ROA greater then 20%.
Dividend yield high as possible
5 year dividend yield growth high as possible
Revenue Grew over last year
Price is over $10.
Of the 28 results, 15 were traded on the NASDAQ or NYSE. The rest were OTCBB or OTCOTHER (probably foreign). The most promising seem to be:
CPSI - "Computer Programs and Systems, Inc. (CPSI) is a healthcare information technology company that designs, develops, markets, installs and supports computerized information technology systems to meet the demands of small and midsize hospitals. The Company is a single-source vendor providing software and hardware products, complemented by data conversion, complete installation and extensive support. Its integrated, enterprise-wide system automates the management of clinical and financial data across the primary functional areas of a hospital. In addition, it provides services that enable its customers to outsource certain data-related business processes. It provides fully integrated, enterprise-wide, Health Insurance Portability and Accountability Act (HIPAA) compliant medical information systems and services that collect, process, retain and report data in the primary functional areas of a hospital, from patient care to clinical processing to administration and accounting"
Sounds like a company that will be around for the long term.
FAST - "Fastenal Company (Fastenal) sells industrial and construction supplies in a wholesale and retail fashion. As of December 31, 2008, the Company had 2,311 store locations located in the United States (50 states), Puerto Rico, Canada (eight provinces), Mexico (14 states), Singapore, China and the Netherlands. The Company operated 14 distribution centers in North America as of December 31, 2008, from which the Company distributed products to its store locations and in-plant locations. As of December 31, 2008, its industrial and construction supplies were grouped into 10 product lines: fasteners, tools, cutting tools, hydraulics and pneumatics, material handling, janitorial supplies, electrical supplies, welding supplies, safety supplies and metals. "
Given its multinational nature, its probably safe, although not my industry of choice.
LDR - "Landauer, Inc. (Landauer) is a provider of analytical services to determine occupational and environmental radiation exposure. The Company provides radiation dosimetry services to hospitals, medical and dental offices, universities, national laboratories and other industries, in which radiation poses a potential threat to employees. Landauer's services include the manufacture of various types of radiation detection monitors, the distribution and collection of the monitors to and from clients, and the analysis and reporting of exposure findings. These services are provided to approximately 1.6 million individuals in the United States, Japan, France, the United Kingdom, Brazil, Canada, China, Australia, Mexico and other countries. "
Also healthcare, so fairly stable. Multinational, so safe to say they'll stay around for a while.
BHP - "BHP Billiton Limited is a diversified natural resources company. The Company has businesses producing alumina and aluminum, copper, energy (thermal) coal, iron ore, nickel, manganese, metallurgical coal, oil and gas and uranium, as well as gold, zinc, lead, silver and diamonds. The Company operates in nine customer sector groups (CSGs): petroleum, aluminum, base metals, diamonds and specialty products, stainless steel materials, iron ore; manganese, metallurgical coal, and energy coal. In July 2008, the Company completed the acquisition of Anglo Potash Ltd"
Its been around for over 20 years, so unlikely to fail. Multinational, giving it some stability. I feel personally that many natural resources are underpriced because there is less demand for nat. resources during a recession, so it has good potential for growth.
And finally, I'd go with an ETF on a foreign nation such as FXI. You get heavy diversification, and exposure to a market that is likely to grow quickly now and into the future. FXI won't fail, and while it doesn't exactly match your parameters, for a long term play, i think ETFs are one of the best ways to go.
MONEYTREE answered 5 months ago …
I would agree with ETHANR on the J n J. I would aslo say IBM , they have some of the coolest and the most amazing technology i have ever seen coming out in 5 years or so, a small handheld device that you can scan on the tag of clothes at a store and this device tells you if it will fit you or not and tell what clothes will fit you, but they are a great solid company with growth and a possible dividend increase later down the road. Cisco systems is another company that is the best at what they do and one day may have a dividend, and the internet is only going to get better and is not going anywhere. One more i would say is GE, they are a great consumer product company, they have been around for years and with all the healthcare technology investments they are doing even with possibly the new smartgrid technology, all that down the road has to turn into a return on there revenue, and that will take years, but thats what your looking for, I would at least be in a few different sectors, but tech is always going to produce some of the coolest things of the future that we all do not know, Also when you are investing for that kind of time period and you dont want to deal with them until years later, you should always go with the leading company in that sector or possibly number 2, because these companys dont have to usually be worried about being bought out by someone, and they usually have a leg up on there peers, just something to keep in mind for long terms picks
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