Long-term investment has proven to outperform short-term trading, but that does not mean that all stocks deserve a place in put-it-and-forget-it portfolios. Many of today's winners will not have what it takes to thrive for decades, so it is crucial to your homework and focuses only on the companies that are best positioned for long-term success. To help you find the best long-term stocks you can buy, we asked three Motley Fool contributors to scour their universes. Read on to find out why they think American Tower (NYSE: AMT) Canopy Growth (NYSE: CGC) and Alphabet (NASDAQ: GOOG ) (NASDAQ: GOOGL) are top stocks that long-term investors should get off of.
Riding the wave of global internet growth with … real estate?
Tyler Crowe (American Tower): It's incredibly difficult to invest in growth stocks over a multi-decade period because so few companies are able to maintain their competitive advantages for so long. However, two things tend to remain constant over time: improving living standards in emerging markets and real estate.
As mobile data rates become faster, data transmission requires a denser network of communication equipment. Therefore, the American Tower benefits from the fact that several tenants rent space for their equipment on tower sites. This gives plenty of room to grow in more mature markets like the US and Germany when going from 4G to 5G, as well as longer runways in emerging markets like Nigeria and India when going from 3G to 4G to 5G. According to management, smartphone data usage will grow 31% annually throughout the world through at least 2023.
For investors in American Tower, this has shown tremendous growth. Over the past decade, its free cash flow has grown by more than 15% annually. The company is also making a big impression in emerging markets in India, Latin America and Africa, where it could enter the ground floor of exponential growth in data use over the next few decades.
Whether cell towers will remain the go-ahead method for communications equipment for the next half century remains to be seen, but it seems a reasonable effort today, making American Tower a very compelling growth material for such a long time horizon.
Todd Campbell (Canopy Growth): It can be a great time to add Canopy Growth, Canada's largest cannabis company, to long-term portfolios. Why? Because shares in Canopy Growth – the largest pot holdings by revenue, market capital and cash in the balance sheet – have fallen to levels that can make it hard to buy, given global legalization trends and estimates that the global marijuana market may be worth $ 200. according to Stifel, an investment research firm.
Canopy Growth reported the latest quarterly results on August 14, and this update was especially important because it is the first since Canopy's board forced marijuana pioneer Bruce Linton out of his C-suite. Fortunately, Canopy Growth's economy shows that it is still a dominant player. Net revenues were $ 90.5 million, up 249% from a year earlier, and cannabis leisure income was $ 50.4 million. Holding the neck and neck of top competitor Aurora Cannabis (NYSE: ACB) who reported preliminary quarterly net sales of $ 100 million to $ 107 million CA on August 6.
Under Linton, Canopy Growth announced in January that it will invest up to $ 150 million to create a New York hemp industrial park aimed at the US cannabidiol (CBD) market. He followed up with an innovative agreement in April to exchange $ 300 million for an option to acquire Acreage Holdings (OTC: ACRGF) after federal legalization of marijuana in the United States. If Canopy Growth exercises its option, Acreage Holdings investors will collect 0.58 shares of Canopy Growth for each share of Acreage Holdings they own.
Linton's aggressive investments and a policy of rewarding employees with substantial, profit-zapping stock options may be why he lost his job. But he has positioned Canopy nicely to leverage this billion-dollar market. Canopy's is still on track to launch cannabidiol-based products in the United States later this year, and marijuana consumables that are edibles in Canada are expected to roll out in December. Given that they represent tremendous market opportunities, it may be smart to buy Canopy Growth shares for long-term portfolios while on sale.
The tech giant who can't stop
Travis Hoium (Alphabet): There aren't many companies I want to own in the next 50 years given the disruption happening in the economy today. Production is under pressure, energy is changing, and retail is turning heads. However, a company that has the upper hand in almost every business it goes into is Alphabet, the search giant that now does everything from email to web hosting.
You can see the rapid growth of Alphabet's business over the last decade and $ 35 billion of net revenue it earned over the past year. What does not show is how much power the tech giant has to grow the business and stave off upstarts that could be the competition.
Alphabet has used its dominant position in the search to enter email, maps, mobile and PC operating systems, voice recognition software, and many other products. The slow crawl of products that Google is doing that is taking it more and more into people's lives also comes with data that makes search and other technology better. There is a feedback loop that is getting bigger and bigger every year.
I don't think there's an end in sight that technology and software are becoming more and more entrenched in our lives. The alphabet will continue to play a major role in that transition, and it has been proven to have the ability to turn the technology into massive profits. It's the kind of business I want to own over the next 50 years.