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The best way to get rich via the stock market is to buy into solid and growing businesses and then to hang on — for years, if not decades. Yes, you might have doubled or tripled your money in a stock like Netflix or Costco, but if you sold your shares after that, you may have missed out on multiplying the value of your investment by 10 or even 20 times.
Here, then, are three companies to consider investing in — and hanging onto for many years. Insane riches are not guaranteed, but you’ll stand a good chance of doing quite well over the long haul.
Image source: Getty Images.
1. Meta Platforms
Don’t think you don’t know Meta Platforms (NASDAQ: FB) — it’s your old friend Facebook, sporting a new moniker to reflect its scope beyond the massive social network, including the Instagram platform, the WhatsApp messaging service, and its Oculus VR virtual reality technology — and perhaps even including cryptocurrency operations.
The company has grown into a $900-billion-plus business, and despite its massive size, it’s still growing briskly: In its third quarter, reported in late October, the company posted year-over-year revenue growth of 35%. Monthly active users only grew by 6%, but that seems kind of reasonable when you consider that it has close to three billion of them — in a world with close to eight billion people, more than one billion of whom live in poverty.
The company is bullish about expanding — and monetizing — video offerings across its social platforms, and its other endeavors seem promising, too, such as its augmented and virtual reality ones. Better still, the stock is rather attractively priced, recently with a price-to-earnings (P/E) ratio in the mid-20s, well below its five-year average near 31.
2. Microsoft
Microsoft (NASDAQ: MSFT) is also a compelling long-term proposition for your portfolio. Whatever you associate Microsoft with, there are probably some valuable assets you’re forgetting about: It encompasses the super-dominant Windows operating system, for starters, and also the very widely used Office 365 suite of productivity software. Its Azure platform is a major player in the cloud-computing universe, recently growing its revenue 45% year over year. (Microsoft’s overall revenue grew by 22% year over year in its first quarter of fiscal 2022.) Meanwhile, Microsoft also includes Surface devices, Xbox gaming systems, and more — even Skype and LinkedIn.
The company even pays a dividend, which not all fast-growing tech companies do. Its recent dividend yield of 0.74% may seem meager, but note that it’s been growing at an annual rate of 10% over the past five years. The company has also been rewarding shareholders by buying back shares. As the company noted, “Microsoft returned $10.9 billion to shareholders in the form of share repurchases and dividends in the first quarter of fiscal year 2022, an increase of 14% compared to the first quarter of fiscal year 2021.”
Microsoft shares don’t seem quite as attractively valued as those of Meta Platforms, so you might consider adding the company to your watchlist, waiting for a pullback. Or buy into the company in increments.
Image source: Getty Images.
3. Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is the parent company of Google, and it recently carried a market value near $2 trillion. Despite that massive size, the company can still grow at a good clip: In its third quarter, revenue popped 41% over year-earlier levels, with net income surging 68%.
Like Meta Platforms and Microsoft, Alphabet also owns a handful of diverse and extremely profitable businesses. There’s the Google search engine, of course, which generates much of the company’s revenue via advertising. Alphabet also owns the widely used Android mobile operating system, along with YouTube and a growing cloud computing service, not to mention the Google Play store, smart thermostat maker Nest, and Fitbit, among other things. Alphabet is also a longtime developer of artificial intelligence technology, which it uses in its search engine and elsewhere.
With a recent P/E value near 29, below its five-year average of 34, Alphabet seems attractively valued at recent levels — especially for long-term investors.
Any or all of these three growing giants should help you build the wealth you need by retirement, so consider them for your long-term portfolio. Aim to hold them for at least five years, but 10 or 20 years might prove much more profitable. Keep up with them over the years, though, of course, to make sure their futures still look very promising and profitable.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Selena Maranjian owns Alphabet (A shares), Alphabet (C shares), Costco Wholesale, Meta Platforms, Inc., Microsoft, and Netflix. The Motley Fool owns and recommends Alphabet (A shares), Alphabet (C shares), Costco Wholesale, Meta Platforms, Inc., Microsoft, and Netflix. The Motley Fool has a disclosure policy.
