In the long run, there is no better return on your investments than the stock market. Despite undergoing several important fixes, including the dot-com bubble in the early 2000s, the 2007-2009 Great Recession and the coronavirus crash, the benchmark S&P 500 delivered an average annual total return (ie including dividends) of 10.9% over the 40-year period. In other words, it takes less than seven years for investors to double their money.
But as investors, we are also aware that no two shares are the same. Companies that can offer breakthrough innovations or disrupt high-value industries may have a portfolio for market gains. These are the types of companies that investors should want to keep for 10 years, if not more.
If you have cash on hand and are looking to add potential industry deregulators to your portfolio, here are four to buy and maintain for the next decade.
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Square
The Money War is well underway. In the coming years, we are likely to see a continuous shift towards plastic and digital payments. No matter what path companies and consumers choose, Square (NYSE: SQ) can benefit.
Most people are familiar with Square because of the point-of-sale devices it provides for small retailers. Between 2012 and 2019, the gross payment volume (GPV) running through Square’s network catapulted from $ 6.5 billion to $ 106.2 billion (an annual growth rate of 49%). Interestingly, the company has become more adept at attracting large traders in recent quarters. As it is a fee-based operating segment, the establishments that generate the most annual GVP should be a great advantage for the company.
An even more impressive growth driver for Square is its digital payment platform, Cash App. Between late 2017 and mid-2020, Cash App’s monthly active user count more than quadrupled to 30 million. People are using the Cash App to make payments, initiate bank transfers and invest. Cash App has become especially popular for Bitcoin exchange too.
In terms of fintech shares, Square can lead the group at annual growth rates over the next 10 years.
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Intuitive Surgical
Another industry disruptor about to grow is the developer of robotic surgical system Intuitive Surgical (NASDAQ: ISRG). Intuitive’s primary revenue generator, the da Vinci surgical system, is used in place of traditional laparoscopic surgery for selected soft tissue procedures.
Since 2000, the company has installed nearly 6,000 of its Da Vinci surgical systems in hospitals and surgical centers around the world. This probably doesn’t seem like much, but it’s more than all of the company’s competitors combined. Intuitive Surgical has built an invaluable relationship within the medical community and its competitive advantage seems virtually insurmountable.
Its operational model is also built to improve over time. As more da Vinci systems are installed, the company will generate a greater percentage of its sales with the instruments and accessories sold in each procedure, as well as with the regular maintenance of these systems. Both segments generate considerably more succulent margins than selling expensive, but expensive to build, da Vinci systems.
The company has a great track to expand in thoracic, colorectal and soft tissue procedures in general. It is also introducing new devices (for example, the minimally invasive lung biopsy Ion). Intuitive Surgical therefore appears to be an unstoppable force in the healthcare space.
Image source: Getty Images.
NextEra Energy
When you think of disruption, inventories from electricity companies are unlikely to come to mind. However, the largest electricity utility of all, NextEra Energy (NYSE: SEN), is changing the game for the entire industry.
Long dependent on fossil fuels to create electricity, NextEra was the first major utility company to truly embrace renewable energy sources. Today, no US utility generates more solar or wind capacity than NextEra. While these renewable energy investments are not cheap – the company expects to spend up to $ 55 billion on new infrastructure investments between 2020 and 2022 – they make up for substantially lower electricity generation costs and a long-term growth rate at the top single digits. Electric utilities the size of NextEra just don’t grow 7% to 9% per year.
NextEra’s shareholders also enjoy the predictability of the utilities sector. With few exceptions, demand for basic necessities, such as electricity, is relatively constant, regardless of the performance of the United States economy. This means highly predictable cash flow and sustainable profits.
Let this be a lesson not to judge a book by its cover. Utility stocks are tedious, but they can still cause disruptions.
Image source: Getty Images.
Etsy
Upsetting the retail space is not easy with giants like Amazon and Walmart throwing your weight around. But consumers love Etsyin (NASDAQ: ETSY) exclusive online market.
Etsy stands out in a very crowded retail space, thanks to the emphasis it places on small business and personal connections. The Etsy market is home to small businesses that want to personalize products or go further for consumers.
While the company undeniably benefited from the coronavirus pandemic, its sales trajectory has been pointing up for years. Gross merchandise sales effectively doubled during the first nine months of 2020, with net profit more than tripling to $ 200.7 million. Best of all, existing customers have substantially increased their purchasing activity, which is Etsy’s key to sustainably higher profits.
Etsy is also investing heavily in segments that generate revenue with high margins. For example, it recently introduced video listings and redesigned its Etsy Ads infrastructure to provide marketers with more actionable data.
Consider Etsy the online platform with the local appeal that customers value.