Long-Term Investment Strategy: Identifying Three Potential Stocks for Permanent Ownership in 2025
In the realm of investing, there's an intriguing aspect of the stock market that might surprise you. Contrary to popular belief, putting in countless hours of work and trading every single day may not guarantee successful returns. In fact, research suggests that most day traders underperform those who invest in index funds passively. That's a pretty disappointing scenario: working tirelessly for decades only to be outperformed by someone who invests once a year!
Personally, I'd choose the life of relaxation over one filled with constant screen watching and stressful trading sessions. Imagine yourself lounging on a beach, watching your investments grow through a mix of buy-and-hold stocks and index funds – investments you trust will yield strong returns over the long term.
Let me share three such investments I believe should be part of your 'forever' portfolio, purchases you can make in 2025 and happily hold on to for the remainder of your life.
Alphabet: the Pinnacle of Tech Dominance
The first stock on my top three list is Alphabet (GOOGL 1.62%). With an unmatched global reach, this technology giant serves more than seven billion people through its seven main services, boasting more than two billion users. Its diverse portfolio stretches beyond Google Search – you'll find YouTube, Google Cloud, and a heap of other services contributing to its profits.
Despite competitors investing billions to shake up Google Search's market share, the tech giant has managed to maintain its dominance at around 90%. Why? Alphabet's innovation-driven culture and its focus on long-term investments in AI research, quantum computing, and self-driving cars make it a force to be reckoned with for decades to come.
Today, you can pick up Alphabet shares at a price-to-earnings ratio (P/E) lower than the S&P 500 index average of 30. With a P/E of 26 and a forward P/E of 22, this market leader is presenting an enticing opportunity for long-term investors seeking double-digit earnings growth.
American Express: a Timeless Investment
Looking for investment durability? American Express is a safe bet. Founded in 1850, this company has weathered financial storms and still stands strong – trust it to stick around even after we're long gone. American Express has positioned itself as one of the world's leading premium and travel credit card companies.
Last quarter (Q3 2024), management reported adding 3.3 million new credit cards to its network. American Express's existing cardbase now tallies over 145.5 million worldwide. By leveraging its scale, American Express manages to cater to the wealthier segment, drawing in customers with luxury perks they find hard to duplicate elsewhere.
American Express's P/E of 22 is also below the market average. With management poised to drive earnings per share (EPS) growth by at least 10% annually, now is a great time to hop on the American Express bandwagon.
LVMH: Enduring Luxury Spending
Lastly, we arrive at LVMH (LVMUY -1.45%). A luxury conglomerate, LVMH owns coveted brands like Louis Vuitton, Dior, and Tiffany's. While some may view such indulgences as pricey unnecessities, the lure of status symbols in human nature ensures that luxury spending will persist. The expansion of luxury leather goods to new markets, particularly in East Asia, has bolstered LVMH's success.
However, current challenges like China's slowdown may put a temporary dampener on luxury spending. While it's probably still in flux, the smart investor will use this as an opportunity to buy LVMH shares at a discount. With a well-nurtured portfolio of luxury brands and a solid global market presence, LVMH is poised for long-term growth.
Just remember that while investing in these stocks might be a good way to build wealth, it should not be relied upon as a sole income source or investment strategy. Always research extensively, consult with financial advisors, and diversify your portfolio to minimize risk.
In the context of building a 'forever' portfolio, one might consider investing in Alphabet, which has a diverse portfolio and an innovative culture, as well as a lower P/E ratio compared to the S&P 500 index. (money, finance, investing)
Furthermore, American Express's longevity, strong position in the premium credit card market, and expected EPS growth make it an attractive investment option for those seeking financial stability. (money, finance, investing)
