It is not wrong to have strict criteria when selecting companies to invest in the long term. After all, if you plan to park your money for years and still enjoy a good night’s sleep, these companies must have certain key attributes that make them attractive for long-term investments. Not many companies arrive, but for those that do, it is worth taking a second look at them.
Some aspects I look for are companies that have a strong competitive advantage and are market leaders in their respective sectors. Ideally, they should have a long history of growing their revenue, net income and cash flows, in addition to having a good clue for future growth. Finally, they must be resilient to crises like the current COVID-19 pandemic.
After filtering out a lot of companies, here are three stocks that you can buy and keep with confidence forever.
Image source: Getty Images.
PayPal
PayPal (NASDAQ: PYPL) is a major player in the online payments and money transfer industry. The pandemic has accelerated the shift to online communications, work and home studies and has also led more people to use e-commerce and online payments as blockages continue. The company is a big beneficiary of this change, as it experienced the biggest growth in the total volume of payments and revenue in its history in the third quarter.
The total volume of payments grew 36% year-over-year, to US $ 247 billion, raising net revenue by 25% year-on-year, to US $ 5.5 billion. There was an increase in new net active accounts in the quarter, an increase of 55% year on year to 15.2 million. Before this stellar performance, PayPal had already shown steady and consistent growth over the years. Net revenue grew from $ 9.2 billion in 2015 to $ 17.8 billion in 2019, while net income doubled from $ 1.2 billion to $ 2.5 billion in the same period.
The company is not standing still, but continues to advance in strategic initiatives to increase its reach. It has expanded its “buy now, pay later” service in the United States and the United Kingdom, thereby helping merchants to capture more transactions without additional risk, while allowing customers to make purchases in interest-free installments. PayPal also launched its Venmo Credit Card in partnership with Visa (NYSE: V) and announced a new check cashing feature for customers of its digital wallet, making the service more convenient and uncomplicated for them.
Nike
One of the largest footwear and sportswear companies in the world, Nike (NYSE: NKE), proved to be extremely resistant during this pandemic. The company is known for its innovative footwear such as Vaporfly and Alphafly Next% that improve athletes’ performance during a competition. For its fiscal earnings for the first half of 2021, the company reported a surprising 4% increase in revenue year on year, to $ 21.8 billion, while net profit increased 12% year on year to $ 2.8 billion . Noteworthy was Nike’s digital sales momentum, where digital sales increased 84% year-over-year, with three-digit year-over-year increases recorded in North America. Nike’s digital strategy is bearing fruit and promises a long path of continued growth for the business.
The company is not slowing down the launch of its products, even with the devastation of the pandemic. Nike CEO John Donahoe spoke about the new launches of LeBron XVIII and Kyrie 7 during the quarter, which met with an enthusiastic response. And Nike’s latest launch, the Mercurial Vapor 14 boot, promises to allow athletes to make sharp turns without losing their balance.
Nike recently increased its quarterly dividends by 12% year over year to $ 0.275 per share, making this the 19th consecutive year of dividend increases. This movement brings him closer and closer to becoming a Dividend Aristocrat.
Tractor Supply Company
Tractor Supply Company (NASDAQ: TSCO), the largest rural lifestyle retailer in the United States, with a total of 1,904 stores in 49 states, continued to show strong growth despite the slowdown. Net sales in the third quarter of 2020 increased 31.4% year on year, while sales from comparable stores increased 26.8% year on year. Net profit increased 56% year on year, as the pandemic caused more customers to focus on caring for their homes, land and animals, increasing demand for the company’s products.
Even before the crisis, the Tractor Supply Company was growing steadily. From 2015 to 2019, sales increased steadily each year, from $ 6.2 billion to $ 8.4 billion, while net income rose from $ 410.4 million to $ 562.3 million. Declared dividends also increased in conjunction with net income, from $ 0.76 in 2015 to $ 1.36 in 2019. The company has a strong track record of growing the number of stores, around a 10% growth rate annual compound over the past 20 years.
The company’s “Life Out Here” strategy focuses on five pillars: customers, digitalization, execution, team members and total shareholder return. This strategy promises to continue to drive the growth of the company, as it establishes itself as a reference point for rural and agricultural equipment. Operating in a highly fragmented market, Tractor Supply Company sees a total addressable market opportunity of $ 110 billion, of which it has only 10% market share, which implies significant scope for further capture of market share. In addition, the company also identified opportunities for new store growth to eventually reach 2,500 stores.