There are some stocks that are perfect for short term holding and then there are others that can be held on for a longer period of time. The term “long term” is defined here as minimum of 20 years. If you have bought these stocks now, you can be rest assured that you will hold on to them at least for the next 20 years. If you are entering the stock market with long term gains as your sole objective, these stocks are your best bets.
Ability to stand through adversities
MasterCard (MA, Financial) is a financial services company that specialises in payment processing. It is the second ranked company in this field, next only to Visa (V, Financial). MasterCard has the uncanny knack of adjusting to all kinds of environments and converting every challenge into an opportunity. This is how it achieved some big breakthroughs in emerging markets located all over. The potential lying in these lesser known markets were exploited fully by MasterCard and it is well on its way to penetrate deeper into markets that do not have proper facilities for online payment processing as well. This is one of the stocks that you can hold on to, for another 20 years at least, because MasterCard would have adapted to all kinds of new technologies in the payment processing platform by then. As of now, MasterCard does not face threats from any emerging technological idea or development in this field. Even when innovative breakthroughs get introduced in the future, MasterCard, with its enduring spirit, would have figured out a way to squeeze in into that as well. Stock movement in the last few months, as shown below, indicate that the company’s share prices climbed during the last quarter of 2014.
Planned business moves and smart acquisitions
One of the stocks from the pharmaceutical sector that is looking good for another 20 years at least is Pfizer (PFE, Financial).The past decade was not so great for the company as one of its major drug, Lipitor, was involved in patent controversies. Taking a cue from its losses, Pfizer has resurrected its business to a great extent and is doing all what it can so that its bottom line is not impacted. It has divested its stake in lots of businesses, cut down jobs, has raised its prices to protect its margins and developed a new business model with just three sectors being the prime focus – GIP (Global Innovative Pharmaceuticals), VOC (vaccines, oncology and consumer healthcare) and GEP (Global established pharmaceuticals). Acquisitions are being made in all these sectors in order to have a stable future ahead. Recently Pfizer acquired the vaccine business of Baxter International (BAX, Financial) just last year and this will go a long way in strengthening its VOC line of business.
Pfizer is also on the verge of getting approval for its drugs, palbociclib (to treat breast cancer) and bococizumab (to treat cholesterol). When approved, these drugs would more than combat the losses suffered by Pfizer due to Lipitor. A well-planned business strategy and innovation of newer and better drugs makes Pfizer a stock that will come good in the long term. The price movement of the stock for the last few months is seen below:
Leaving behind a legacy
If there is one company that will stand tall for the next 20 years and even more, in spite of its founders not being there, it is Berkshire Hathaway (BRK.A, BRK.B). The main reason for Berkshire’s success is the choice of investments that its founder, Warren Buffet made. He chose his companies wisely, due to which, his company is easily the most successful holding company in the world today as it owns the best businesses in all the categories. Berkshire has appointed the right people at the right jobs and hence is probably one of the most autonomous holding companies in the world today. Cleverly chosen businesses, super talented management, extremely high business ethics and an enviable corporate culture are some of the factors that make Berkshire Hathaway a must buy for investors who are interested in very long term returns. The trend of its share price movements for the last few months is seen below:
Conclusion
A stock that generates long term return is the first preference for any investor looking for stable returns. These stocks are in the midst of an aggressive business growth that will come in handy for them for many decades in the future. These stocks are focussed on improving their profits, which will then be distributed to shareholders in the form of dividends. Hence these are the stocks to own if you are looking for maximum value for your money.
