You don’t make money when you buy stocks. And you don’t make money when you sell stocks. You make money by waiting.
— Mohnish Pabrai, businessman, investor, and philanthropist
It’s not easy to pick which stocks in my portfolio are my favorites, as each holds its own kind of promise. But I’ve chosen three because they’ve made me a lot of money over many years, while I simply waited. Better still, they have room to grow further, so I plan to keep waiting for many more years.
1. Intuitive Surgical
Intuitive Surgical (NASDAQ: ISRG) is an early entrant in the robotic surgical equipment market with its da Vinci systems, which generally cost more than $1 million apiece. Check out some of the highlights it shared in January from its fourth quarter:
Worldwide da Vinci procedures increased approximately 19% compared with the fourth quarter of 2020, driven primarily by growth in U.S. general surgical procedures and growth in markets outside the U.S.
The company shipped 385 da Vinci surgical systems, an increase of 18% compared with 326 in the fourth quarter of 2020.
The installed base of da Vinci systems grew to 6,730 as of Dec. 31, 2021, an increase of 12% compared with 5,989 at the end of the fourth quarter of 2020.
Fourth-quarter 2021 revenue of $1.55 billion increased 17% year over year.
In addition, 2021 saw some 1.5 million procedures performed with the company’s systems, bringing total procedures performed so far to more than 10 million.
Intuitive Surgical has grown rapidly in recent years, at an average annual rate of 16.7% over the past decade. But management recently suggested that its growth might slow due to rising costs, supply chain issues, and fewer upgrades to its devices.
Still, I like the stock’s prospects as a long-term holding. Even if sales of its machines slow, it reaps considerable recurring revenue from sales related to its thousands of installed machines because they will keep needing supplies and servicing.
Relatively few people will likely scratch their heads at my choice of Apple (NASDAQ: AAPL) as one of my favorite stocks. I love Apple’s business model, which involves building a sticky ecosystem of products, so that if you have one or two of its products, you’ll likely buy more, partly because they all interact with one another so well. The ecosystem includes smartphones, smart watches, desktop computers, laptops, tablets, a music streaming service, an app store, a TV streaming service, and much more.
The company’s strong brand and massive installed base give it more advantages: If it wants to debut new products or services (such as, perhaps, healthcare offerings or gaming systems), many people will seriously consider them.
Over the last decade, Apple’s stock has averaged 24% annual gains (with dividends reinvested), and the growth stock’s future still looks bright as it keeps improving and updating its offerings, while introducing new ones.
3. Berkshire Hathaway
Finally, there’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), helped for more than 50 years by Warren Buffett. Its long-term history, averaging annual growth of 20% over five decades, is incredible.
But it’s not likely to grow that briskly in the future since it has already grown so big. Also, its chief businesses include energy, insurance, and transportation, and those are not the typical fields of growth stocks, as consumers aren’t likely to be persuaded to spend much more on insurance or electricity than they did last year.
Still, Berkshire Hathaway has a lot going on, in the form of dozens of companies owned outright (such as GEICO, Benjamin Moore, See’s Candies, Fruit of the Loom, Clayton Homes, the McLane trucking company, and the entire BNSF railroad) as well as major stock stakes in major companies. For example, Berkshire owns roughly 20% of American Express, nearly 13% of Bank of America, and more than 5% of Apple.
With Buffett now 91 years old, some wonder about Berkshire’s future, but I don’t. He has carefully planned for it, having informed his board of directors about his selected successor in managing the company’s many businesses and having put in place two investing lieutenants years ago, who are already managing many billions of dollars for the company.
Besides, Berkshire will remain a major multifaceted business, operating in lots of industries that are likely to stay healthy for a long time: energy, insurance, transportation, jewelry, housing, furniture, candy, paint, and so on. The company is sitting on more than $100 billion in cash, too, with more always rolling in from its businesses. So expect it to keep buying additional productive businesses — or, one day, to start paying a dividend.
These are just three of my favorite companies. Think about which companies are your favorites, and see how much of your portfolio you have invested in them. Ideally, you’ll have most of your money in your favorite investment ideas.
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American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Selena Maranjian owns American Express, Apple, Berkshire Hathaway (B shares), and Intuitive Surgical. The Motley Fool owns and recommends Apple, Berkshire Hathaway (B shares), and Intuitive Surgical. The Motley Fool recommends the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.