A smart investment strategy is to identify stocks that are great now and intend to hold them forever. This forces you to discard some businesses that are incredibly risky or dependent on a single event. These companies should also demonstrate resilience and be leaders in their industries. And they should beat the markets like the strength of the past can be an indicator of future success.
Three stocks I’m sure I can buy now, hold forever, and crush the market Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL), Taiwan Semiconductor Manufacturing(NYSE: TSM)and MercadoLibre(NASDAQ: MELI). All three of these companies are leaders in their respective industries, and I think they are great buys now for long-term gains.
Image source: Getty Images.
Alphabet is better known for some of the brands below it, such as Google, YouTube, and the Android operating system. But the backbone of the company is still Google Search.
Earlier this year, there was a lot of uncertainty surrounding Google Search. Companies like OpenAI tested their first AI browser, the Justice Department tried to break up Alphabet over its search monopoly, and investors were unsure whether Google Search would remain relevant in the age of generative AI. After a few months, almost all of these concerns were dispelled.
The presiding judge in the antitrust case rejected the Justice Department’s dissolution offer and forced Alphabet to make several concessions, but did not infringe on Alphabet. OpenAI’s AI browser was opened and it was unbeatable. In fact, it was built on top of Alphabet’s Chromium platform. Finally, Google Search has seamlessly integrated generative AI through its AI search reviews, bridging the gap between traditional search and generative AI.
All of that added up to Alphabet’s third quarter, which saw revenue rise 16% year-over-year to $102 billion. USD, while diluted earnings per share (EPS) increased 33% to USD 2.87. Alphabet is a resilient business built to thrive in the age of artificial intelligence and beyond, so it’s a buy now and hold forever.
Taiwan Semiconductor’s dominance has never been more questionable than Alphabet’s. It is the world’s leading chip foundry and produces chips for almost every AI computing device in operation. It has reached this point by offering state-of-the-art technology with high yields, making it an unbeatable partner. It is also a neutral country as all competitors use TSMC as their main chip supplier.
This puts Taiwan Semiconductor in an enviable position, and with chip demand only going to increase over the next decade, it has a great opportunity to capture the lion’s share of that growth. It’s already reporting impressive growth, with third-quarter revenue up 41% to $33.1 billion.
An investment in Taiwan Semiconductor is a bet that we’ll be using more advanced chips in larger quantities in the future, which seems like an extremely safe gamble.
The last one is MercadoLibre, which many have announced Amazon Latin America. While this is partially true, it also includes elements PayPalfor its payment processing ecosystem.
Latin America is a huge and growing region with a much larger population than the US. This makes it a potential goldmine when it comes to e-commerce development. MercadoLibre is the most popular shopping platform and has built a payment processing infrastructure system that essentially locks every Latin American user into their platform. A level of dominance many American companies can only dream of, and it has built an almost impenetrable moat in the region.
Even so, stocks tend to react negatively when international competitors decide to get involved. As Amazon begins to expand its presence in the region, some investors are concerned that MercadoLibre’s business could be hurt. However, MercadoLibre is still posting impressive revenue growth.
MELI revenue (quarterly growth) data according to YCharts
I think it will be fine in the long run, as this is not the first time Amazon has stepped up its efforts in Latin America. MercadoLibre is a great stock to buy and hold forever as it bets on the long-term prosperity of an emerging economic region.
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Keithen Drury has positions at Alphabet, Amazon, MercadoLibre, PayPal and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Amazon, MercadoLibre, PayPal and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: Long 2027 January $42.50 PayPal calls and short 2025 in december $75 calls on PayPal. The Motley Fool has a disclosure policy.
“3 Stocks to Buy Now and Hold Forever” was originally published by The Motley Fool.
