The most successful investors identify strong stocks and own them for the long run. That's hard to do with many companies because volatile business models can make it dangerous to hold onto shares without paying close attention to short-term performance. With Visa (NYSE: V), Starbucks (NASDAQ: SBUX), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), however, consistent strength in the way that each company operates its business and makes steady advances to maintain its leadership role makes them great prospects for buy-and-hold investors.
An increasing amount of people are making payments using methods other than cash, and Visa has done a better job than any of its rivals capitalizing on the trend toward electronic payments. The credit card pioneer has done a fantastic job of finding opportunities for growth, with consistent double-digit gains in key metrics like payment volume and the number of transactions it processes. Smart strategic moves like the reintegration of its Visa Europe division give Visa a more seamless worldwide reach, while technological advances like the rollout of Visa Checkout has made the purchase process a more painless experience for customers.
Even with its past growth, Visa still has a lot of potential gains ahead of it. Many developing economies across the globe still use cash for the majority of their transactions, and these locations have the potential to skip past the credit and debit card stage of payment networks and move directly to mobile-enabled solutions. Shareholders are also benefiting from a big buyback program that has resulted in substantial declines in outstanding shares, helping to bolster per-share earnings metrics. All those positive trends could add up to much bigger gains for shareholders over the decades.
Starbucks has become a colossus in the coffee industry, with a global reach that goes beyond even its ubiquitous store network. The company has used the power of its brand to gain a foothold in the high-margin retail grocery business, and it has also used technology to transform its customer experience by enabling mobile payment and ordering. That has made the long lines for which Starbucks is famous a bit easier to handle, and its customer loyalty program has also rewarded repeat customers in a way that encourages future business.
Starbucks hasn't been entirely immune to the challenges facing the retail and restaurant industries, and traffic gains have largely disappeared in recent months. Yet the company has pushed back aggressively against that trend by closing less profitable locations and pursuing its buyout of Chinese joint venture partners. The net effect should be renewed growth, and other initiatives to bolster its popularity worldwide should similarly help Starbucks overcome the pressures of having largely saturated its domestic market.
Alphabet moves forward
Finally, Alphabet has made its case for a future that could be far greater in scope than investors had thought just a few short years ago. The parent company of Google is still best known for its internet search engine, and that division has worked hard to expand its reach with forays into the fast-growing artificial intelligence and virtual reality spaces. Meanwhile, the massive amounts of data that Google has accumulated could have undiscovered profit potential for the company.
Meanwhile, Alphabet has its own businesses outside Google, many of which have little to do with the internet. The company's life sciences business is looking at products like glucose-sensing contact lenses for monitoring blood sugar levels, while its Calico unit is aiming at extending lifespans through longevity research. With shareholders owning a piece of these businesses as well, Alphabet offers exposure not just to its proven concepts but also to whatever the future may bring.
Long-term investors need to own stocks of companies that can adapt and grow, and Alphabet, Starbucks, and Visa all have plenty of runway left for future growth. If you're looking for stocks you can buy and hold for decades, these three companies are a great place to start.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dan Caplinger owns shares of Starbucks. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Starbucks, and Visa. The Motley Fool has a disclosure policy.