You should only buy stocks you intend to never sell. That doesn’t mean you won’t sell them. It just means the company you’re investing in is one you want to own for a lifetime. After all, if the business keeps growing and rewarding you by generating good returns, why would you want to sell it?
Only if things change for the worse should you think about selling. And I’m not talking about the stock price going down. Stocks rise and fall all the time. Ignore that. Instead, focus on the business. If it remains operationally sound and your investment thesis is still intact, then the lower share price is an excellent time to buy more shares.
Below are three stocks that have had their ups and downs. And every downturn has only been a great time to buy more stock because it was on its way higher to the next level. These are growth stocks to buy and hold forever.
Costco (COST)
Warehouse club Costco (NASDAQ:COST) tops the list of stocks to buy and never sell. It has been a tremendous investment virtually any time you bought shares but especially when its stock dipped lower.
During the Great Recession of the late-2000s, Costco lost half its value. But beginning in March 2009, the warehouse club mounted a comeback that would go on for 12 years and generate total returns far above 1,100%. Another brief detour south in 2021 was only a prelude to another 150% run higher. And it lost 20% of its value last year but is now up 50% over the past 12 months.
After hitting an all-time high last month, Costco stock has pulled back 8%. That makes it another great chance to buy in before it starts the next leg of its journey higher. The warehouse club’s low-margin business gets hurt in high inflation, high-interest rate environments like we’re in but can make up in volume what it loses on each individual sale. Indeed, the warehouse club’s earnings have tripled over the past decade.
There is a lever Costco is waiting to pull that will see an immediate effect on its top and bottom lines. An increase in membership prices typically happens every five or six years. We’re way past that threshold now and the retailer will pull that lever soon. The influx of revenue it causes will flow through its financial statements without losing any momentum and should spark the next big rally.
JPMorgan Chase (JPM)
It hasn’t been all that different for the second stock you should buy and never, ever sell, JPMorgan Chase (NYSE:JPM). The banking behemoth has enjoyed similar returns as Costco, generating over 800% growth for investors since the financial crisis. There’s no reason that shouldn’t continue into the future.
JPMorgan is the bank of last resort that even the federal government turns to to save the economy. During last year’s regional banking crisis, the government asked CEO Jamie Dimon to “step up” and have the financial giant prevent the dominoes from falling. JPMorgan subsequently bought most of First Republic’s assets, including $92 billion in deposits.
The bank virtually turns to gold everything it touches. It is a leading investment and commercial banking center, it is the largest credit card issuer and the bank is the premier asset and wealth manager. It had nearly $4 trillion in assets under management (AUM) at the end of 2023.
JPMorgan is also one company that can thrive in today’s high-rate environment. That’s because it pushes up net interest income, which pushed earnings last year to over $89 billion, a 32% leap from the year-ago period. At almost $200 a share, JPM stock is a buy-once-cry-once investment, but one that you’ll hold onto for a lifetime.
Waste Management (WM)
There are few services as essential as garbage collection, which is why Waste Management (NYSE:WM) is the third stock to buy and never sell. Aside from literally being a life-or-death services provider, the company is a cash generating machine. Waste Management stock has generated even better returns than JPMorgan Chase over the past decade and a half with over 900% in total returns.
Waste Management collects trash for over 21 million North American customers. It also operates hundreds of landfills, transfer centers and recycling centers. As the largest garbage collector, it generated $20.4 billion dollars in revenue last year at an adjusted profit of $2.5 billion.
Waste Management stock pays a dividend that yields a respectable 1.5% annually. The trash hauler has raised the payout at a compound annual growth rate of 7.2% for the past decade. Because it has grown its free cash flow (FCF) at a healthy 4.4% annually (and at an even healthier 7.2% rate over the last five years), its dividend is sustainable. Sporting a 62% FCF payout ratio, Waste Management has plenty of cash available for future dividend increases.
The company is a surprisingly environmentally friendly one, too. It operates over 130 landfill gas-to-energy plants and it will be investing between $2.8 billion and $2.9 billion in recycling and renewable energy platforms between 2022 to 2026. You might hesitate to call it a green stock but Waste Management will turn your portfolio green by holding onto it for a lifetime.
On the date of publication, Rich Duprey did not hold (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.
