KEY POINTS
- The idea of buying and holding good value stocks has been redeemed in just the past few weeks.
- Not every profit growth opportunity will be evident to you as a consumer. Look for behind-the-scenes potential.
- Some company brands, like Disney, are so powerful they can outlast temporary turbulence.
Sometimes the obvious pick makes the most sense, if you're willing to leave it alone and let it simmer for a while.
Have your investing efforts so far been less than you'd hoped for? Then here's a next-level idea to embrace: Less can be more. That is to say, simplified stock-picking and longer holding periods often bear more fruit than constantly hunting for what looks like the next hot ticker.
With that as the backdrop, here's a rundown of three investments you really can't go wrong with -- as long as you're willing to leave them alone for years and let them do their thing.
Image source: Getty Images.
Walt Disney
The Walt Disney Company (DIS0.13%) is an oldie but a goodie: a brand name that's come to be associated with all types of quality entertainment.
But not everybody necessarily sees Disney's potential as an investment these days. As it turns out, there's been a bit of infighting within the company, from top management all the way down to the front-line employee ranks; "the happiest place on earth" may not be the happiest place to work. It would also be naive to believe the company's growth plans for Disney+ weren't, in retrospect, a little too aggressive. Its recently announcedad-supported versionof the streaming service tacitly suggests subscriber interest is waning well before the 2024 goal of between 230 million and 260 million Disney+ subscribers is met.
That line of thinking, however, is too narrow and too short-term in nature.
See, an investment in Walt Disney is an investment in a brand that's bigger than any one CEO, any one product, and any one era. That's not to suggest investors should simply ignore new stumbling blocks that surface from time to time. This is a resilient company, however, with a tradition of success that its employees (at all levels) make a point of maintaining. Any near-term weakness is always a great buying opportunity.
Amazon
It's another painfully obvious pick. Amazon(AMZN0.69%) is not only one of the world's most recognized companies but one of the world's very biggest. The stock is also one of the world's best-performing, rallying about 1,600% over the course of the past 10 years and still regularly reaching new record highs. Selling virtually everything to as many people as possible, it seems, is a great business model.NASDAQ: AMZNAmazon.com, Inc.Today's Change(0.69%) US$22.48Current PriceUS$3,295.47KEY DATA POINTSMarket Cap$1,677BDay's RangeUS$3,245.00 - US$3,307.3752wk RangeUS$2,671.45 - US$3,773.08Volume4,180Avg Vol4,036,604P/E (ttm)49.98
The funny thing is, the company has only scratched the surface of the market that will drive the bulk of its future growth.
As big as Amazon's online marketplace is, e-commerce isn't a particularly profitable endeavor. Markups on merchandise are modest, and once picking, packing, and shipping costs are added, there's just not a lot of profit left to put in your pocket. Of last year's North American consumer sales of $279.8 billion, only $7.3 billion -- or 2.6% -- was turned into operating income. Amazon's international e-commerce efforts were unprofitable in 2021.
It just doesn't matter. The company's fast-growing cloud computing arm (Amazon Web Services, or AWS) may only account for 13% of last year's top line of $469.8 billion, but this high-margin segment grew its 2021 operating income 37% to account for more than 74% of the company total. And there's plenty morecloud computingbusiness to be won. Market research company Technavio estimates the cloud computing market will grow at an average annualized pace of 17% through 2025, led by North America's growth.
The point is, the market may be underestimating just how much profit growth awaits Amazon.
Berkshire Hathaway
Finally, if you're really ready to get rich, consider delegating your stock-picking duties to the proven team managing Berkshire Hathaway(BRK.A1.92%) (BRK.B1.81%).
If you're not familiar with it, Berkshire Hathaway is Warren Buffett's proverbial baby. Initially a textile company, it evolved into a holding company of sorts, then a conglomerate, and now looks more like a mutual fund than anything else.
That in itself isn't the reason anyone would want to own a piece of the company, of course. The big draw here is the fact that Buffett's proven value-minded, long-term approach to stock-picking is still (for the most part) being employed by the managers he's been training for years now.
Not everyone agrees that Buffett's value-oriented, buy-and-hold shtick remains relevant in the modern market environment. They'll also point to the fact that Berkshire Hathaway shares underperformed the S&P 500 during the pandemic as proof of their claim ... a period when the growth stocks Buffett typically avoids were soaring.
Take a closer look at how Berkshire and the broad market have fared as of late, though.
Data byYCharts.
Simply put, Buffett has been vindicated. Berkshire shares were catapulted higher beginning late last year, seemingly at the expense of most other stocks that had, until then, been soaring. That move renewed Berkshire's usual leadership of stocks as a whole. More than that, though, the move reminds us that all too often there's a price for chasing hot tickers, even if the price is a missed opportunity to own other stocks.$Walt Disney(DIS)$ $Amazon.com(AMZN)$ $Berkshire Hathaway(BRK.A)$
source：The Motley Fool
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