Time is an asset when investing in the stock market, so finding the best forever stocks can lead to higher long-term gains. After all, investing icon Warren Buffet once famously said, “our favorite holding period is forever.”
Holding on to stocks for the long haul provides several advantages. For one, you’re not affected by the day-to-day price swings and get to sit back while the compounding effect reigns and works its magic. Moreover, overtrading can drive up fees and transaction costs or result in underperformance.
The task then comes down to finding these ‘forever hold’ stocks for generational wealth. My philosophy here is simple: focus on the fundamentals of the business. That is, the company’s growth opportunities and consistent top — and bottom-line growth. These elements serve as good indicators of a stock’s future performance.
On that note, here’s a look at three forever stocks to buy for the long haul.
Walmart (WMT)
In the era of e-commerce dominance, Walmart (NYSE:WMT) is one of the top forever stocks on the market. The retail giant, known for its affordable products, has seen its stock rise 33% this year. Despite trading at a premium, several signs point to stronger gains ahead. The company relies on two key growth drivers: attracting wealthy customers and its e-commerce business.
Amidst rising inflation, Walmart drew in several high-income earners looking to stretch their dollars. In its recent earnings report, the company stated sales in grocery and merchandise were primarily driven by high-income households. Whether this is a long-term trend remains to be seen, but Walmart is revamping its stores to retain its wealthy customer base.
A second tailwind for long-term growth is Walmart’s growing e-commerce business. Despite intense competition in the space, sales in this segment grew 21% in the previous quarter. The company is making active efforts to sustain this growth. Walmart recently signed a deal with Roblox (NASDAQ:RBLX) to sell its physical products to users in the virtual realm.
Looking at the financials, total revenue was up 6% from the prior year, and earnings per share (EPS) was up 200% from last year. In the next quarter, Walmart anticipates a 4.5% increase in net sales and operating income. The impressive financials and growth opportunities make a strong bullish case for WMT stock’s wealth-generating potential.
Amazon (AMZN)
2024 is shaping to be a solid year for Amazon (NASDAQ:AMZN). The company joined the $2 trillion club last month. Its stock is up 22% this year. However, Amazon’s long-term prospects appear even stronger,r making AMZN a strong contender as a forever-hold stock for generational wealth.
Looking at its current performance, Amazon leads the charge in two major areas: e-commerce and cloud computing. Amazon Web Services (AWS), the company’s cloud computing business, holds a 31% market share. Amazon is leveraging AI to enhance its offering and has introduced several AI cloud innovations to cater to its wide customer base.
Amazon’s e-commerce business is also seeing a major boost from AI. The technology helped improve delivery speed and efficiency, leading to a new delivery record this year. In March, nearly 60% of its Prime orders were delivered within the same or the next day at the top 60 metropolitan locations.
As Amazon continues developing its AI-driven enhancements, it will catapult its cloud and e-commerce business to new heights. Building on its optimistic growth prospects, Amazon anticipates stronger growth with a 7% to 11% increase in net sales in the second quarter.
Shopify (SHOP)
The third pick on this forever stocks list is Shopify (NYSE:SHOP). Unlike Amazon, which sells directly to consumers, Shopify allows businesses to set up storefronts on its platform. Since its inception, the company has found plenty of success, attracting high-profile brands such as Nike (NYSE:NKE) and Red Bull. This has enabled the company to lead the e-commerce segment with a 23% market share.
Looking ahead, SHOP’s growth potential alludes to its wealth-generating solid capabilities. One driver of this growth is Shopify’s successful partnerships. The company recently signed a deal with Target (NYSE:TGT) to enable Shopify’s merchants to join Target’s third-party marketplace, Target Plus. As part of the deal, merchants on SHOP’s platform can sell their goods in Target’s physical stores. This will enhance brand visibility for existing brands while enticing companies to join Shopify’s platform.
On the e-commerce front, Shopify’s growth will be amplified by AI. The company plans to integrate AI at the heart of its platform and introduce a range of AI tools to provide a seamless shopping experience. As Shopify continues to develop its AI innovations, its market position will only strengthen.
In its recent earnings, Shopify reported a 23% rise in revenue year over year (YoY) and a 33% increase in gross profit. For the second quarter, Shopify expects revenue growth in the high teens.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.