When we own portions of outstanding businesses with outstandingmanagements, our favorite holding period is forever.-- Warren Buffett, 1988 Berkshire Hathaway shareholder letter
When choosing stocks that you can hold for a lifetime, it's probably best to steer clear of flashy upstarts and focus instead on tried-and-true companies that have enduring competitive advantages. The thing is, you don't have to sacrifice growth with this approach. While Berkshire Hathaway (NYSE: BRK-B) (NYSE: BRK-A) and Walt Disney (NYSE: DIS) own enduring assets that should deliver strong results for a long time, it's very difficult to imagine the world without Amazon.com (NASDAQ: AMZN), which continues to discover new markets to conquer and still is growing like a start-up.
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Legendary investor Warren Buffett has spent the roughly 50 years building an impressive collection of companies under one corporate umbrella. Buffett built Berkshier on insurance companies that send massive amounts of capital back to headquarters every year for him to allocate as he sees fit. Let's just say that investing in Berkshire Hathaway is about the closest thing you can get to owning Fort Knox.
Berkshire Hathaway's operations span manufacturing, railroads, utilities, energy, services and retail, and finance companies. In total, the company employs 377,291 people across all its companies, which are all independently operated, with Buffett leaving managers to do their thing. Some of the ones you're likely to know by name are Dairy Queen, Pampered Chef, Fruit of the Loom, Benjamin Moore paint, and GEICO.
There's also a $200 billion portfolio of stocks with big stakes in Apple, Bank of America, Wells Fargo, and Coca Cola. Buffett is always on the prowl for the next jewel to add to the collection, and he's got a lot of cash to work with at the moment. At the end of last quarter, there was over $100 billion of cash and short-term securities on Berkshire's balance sheet, which gives Buffett plenty of ammunition when the right opportunity presents itself.
Timeless entertainment brands
After three years of stagnation in its stock price, Disney shares are beginning to look appealing. The forward price-to-earnings (PE) ratio is a modest 15 times next year's earnings estimates, and the House of Mouse is about to enter one of the most transformative and pivotal years in its history.
The pending deal to acquire Twenty-First Century Fox's entertainment assets will put Disney in a great position to strengthen Hulu -- the streaming service it will own 60% of once the deal closes. The deal brings a fresh round of exclusive content under Disney's control, as well as talented television and movie executives that will join Disney's already well-stocked ranks.
The House of Mouse also is getting a digital upgrade. Disney already has launched the ESPN+ app earlier this year and surprised analysts by achieving 1 million subscribers within six months. Disney+ will launch late next year and could gain millions of subscribers over the next 10 years. That's because Disney+ will be the only place to watch exclusive Star Wars, Marvel, and Pixar content, not to mention the treasured collection of classic animated films and cartoons in Disney's library.
Beyond these initiatives, Disney has an impressive slate of new movies up for release next year, including live-action versions of The Lion King, Dumbo, and Aladdin. Those were all hits as animated movies, and they promise to deliver strong results for the company once again. The ability to keep monetizing timeless entertainment properties at the box office and at theme parks around the world is a testament to the enduring value of the Disney brand.
The magic touch of Amazon
A $10,000 investment in Amazon stock just 10 years ago would be worth $325,000 today, and there's still so much opportunity for the online juggernaut to keep growing. The company is stretching its tentacles into everything.
It started with selling books in the 1990s, and now the online retailer is the largest cloud provider in the world, with 52% market share. The consistency with which Amazon churns out 20% (or higher) revenue growth is not only an impressive feat, but speaks to the long-term trajectory of the business.
As much as Amazon has grown over the years, e-commerce sales still make up less than 10% of total retail sales in the U.S. But the growth thesis is not just dependent on e-commerce growth -- it's also about market-share gains. For example, Amazon is on track to become the leading seller of footwear and apparel in the U.S., according to research from Wells Fargo. The online retailer is currently second to Walmart, but that won't last long.
Customers are hooked on Amazon thanks to Prime subscriptions and all of the devices, like Echo and Fire TV sticks, that the company sells to its customers to keep them focused on where they need to shop. There's also Amazon's no-hassle customer service.
Amazon grew revenue 29% year over year in the last quarter, and retail e-commerce is expected to reach $4.9 trillion by 2021, which still will only make up 17.5% of total retail sales. That doesn't include Amazon's booming cloud business, mobile payments, advertising, business services, or whatever else Amazon wants to conquer next.
Keep this in mind
I'm not sure you can say any stock really is worth holding forever. Things can change in the business world, but if you're looking for stocks that'll let you sleep well at night for years to come, these three are about as close as it gets.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. John Ballard has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), and Walt Disney. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.