7 Stocks To Never Sell

Some companies occupy such an insurmountable foothold in an industry that you should never sell them by virtue of the fact they will always have the upper hand on their competition in some way. Warren Buffett calls it their “moat” – and it’s a principle foundation of his investing philosophy.

But which of these companies should you buy – and what is their advantage that makes them so special? 

Alphabet Inc. (GOOG)

For most companies, a small competitive advantage is all it takes to set them apart from their rivals; but when it comes to Alphabet’s Google (GOOG) segment, the search engine’s pre-eminence in the space lends it some hulking superiority: Google’s moat isn’t just wide and deep – it has destroyer class battleships patrolling its waters 24 hours a day. 

Take, for instance, Google’s huge services wing; it has over 100 adjacent offerings to its core search function – Google Finance, Google Chrome, Adsense and Google Docs, to name but a few – and provides the majority of these free of cost.

It also delivers these on a “one-stop shop” basis, making it easy for customers to sign up and even easier to remain loyal.

Furthermore, Google’s technology infrastructure is almost incomparable; there’s no other company that could match it without an enormous injection of time and money – and even then not be guaranteed to come to its equal. Replicating Google’s network of data centers alone would be an almost insurmountable task, and building it from the ground essentially impossible.

Taken together, these two competitive moats make Alphabet’s dominant position in the market impossible to breach. In fact, Google’s huge market share – which is itself a result of these competitive advantages – is also another kind of moat too. Just another reason you should buy Alphabet, and never sell.

Medtronic plc (MDT)

The US medical device industry is huge – research suggests the sector is worth $156 billion to the American economy, with predictions that the market will grow even higher to $208 billion by 2023. 

This is good news for anyone owning medical device stock, especially shareholders in the American-Irish outfit Medtronic, a leading medical technology solutions provider. 

Medtronic (MDT) is a massive company employing over 100,000 people.

The firm is at the cutting-edge of the device manufacturing space, and the business saw its profits grow 30% the past year.

And while medical devices aren’t new, they’ve never been so important to global health as they are now. Buying this, or indeed many other biomedical devices company, is a sure-fire way to bet on the success of this rapidly developing market.  

These device companies can make thousands of dollars on a single implant. Now multiply all the implants across all the patients undergoing surgery globally. Medtronic has a customer base as far as the eye can see, and it has a highly lucrative business model as such.

Source: Unsplash

Amazon.com, Inc. (AMZN) 

Amazon (AMZN) has no realistic rival in the domestic North America online retailing space.

Sure, it faces global competition from the likes of China’s Alibaba Group (BABA) and regional players such as MercadoLibre (MELI) in Latin America, but its e-commerce operations in the US are essentially bullet proof.

That said, Amazon’s interests are expanding. Its cloud computing offering, Amazon Web Services, is growing, and now controls 31% of that entire market.

But given the firm’s aggressive business practices – some suggestions claim it operates like a tech giant with the culture of a freshly formed start-up – that will probably only mean it comes to dominate that sector just like it did many others.

With a possible stock split on the horizon, and all the upsides that a move like that offers investors, now might be a good time to snap up on Amazon shares – and hold them just to see what happens.

Johnson & Johnson (JNJ)

Everyone likes a Dividend Aristocrat, but how about a Dividend King? Well, that’s what you get with Johnson & Johnson (JNJ) – a megalith of a company with 59 consecutive years of unbroken dividend increases. 

For income investors, JNJ is an easy decision; but what if you’re a capital gains type of shareholder, looking for some quality price again and a market return on your investment?

Again, Johnson & Johnson is an ideal fit.

The business is up 35% the last five years, and 8% the previous twelve months – and while that might not seem too exciting, for a firm operating in the Consumer Staples Product Industry it isn’t bad at all.

But you get more than just a solid dividend and reasonable price growth with JNJ. The company is a household name, and its brand recognition moat is one of the strongest in the world.

Most households will contain multiple products made by JNJ, and its business model is practically recession-proof. Johnson & Johnson is a stock for the long-term, and another one definitely not to sell.

Berkshire Hathaway Inc. (BRK.B)

Buying shares in Warren Buffett’s Berkshire Hathaway (BRK.B) investment fund is an excellent way to get exposure to the trading decisions of one of the stock market’s greatest ever minds.

And while many investors would follow a high-profile Wall Street trading house by buying shares in a tracker ETF, purchasing Berkshire’s stock direct mitigates the burden of typical ETF fees such as trading commissions and expense ratios.

Plus, with the experience of Warren Buffett and his team running the show, shareholders get the added benefit of knowing they’re backing a proven investment strategist; Berkshire’s Class B common stock is up over 22% already this year – and any incentive to sell the company just isn’t really there.

The diverse mix of businesses in this portfolio – all vetted by the Oracle of Omaha’s strict moat-bearing standard – mean it should keep on rewarding investors for many years to come.

Match Group, Inc. (MTCH) 

It’s official – online dating is a growth industry. And with Bumble’s multiple billion dollar IPO earlier this year, there’s obviously a taste for it on Wall Street.

Market leader Match Group is one of the companies riding this secular trend in online relationships, and has seen its own stock price grow almost 40% the last year. One reason: it holds 25% market share when it comes to online dating.

While there’s dating, there will always be money in firms that bring people together. With an expected 490 million annual users seeking hookups by 2025, any kind of match-making stock looks like a guaranteed long-term hold for the foreseeable future.

Waste Management, Inc. (WM)

Utilities have always been considered the investment of choice for those looking for the “steady-and-safe” money making route. 

And they don’t come much more steady than the waste management industry – which makes the appropriately named Waste Management, Inc. company an ideal buy.

With its defensive moat and its 61% market share, this boring-but-big business is another stock to just buy, hold, and forget about ever selling. 

 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.