Getting wealthy in the stock market could be as easy as owning a few pieces of the most powerful companies around the world and letting them compound for years on end. But you cannot pick just any stock in the market; most will not cut it over long periods.
Sometimes if it is broken, do not fix it. Some businesses have been compounding for years and are still going strong in today’s market. If you are wanting to put your hard-earned money into stocks and still sleep well at night while owning them, listen up. Here are three winners that you may want to consider.
1. Berkshire Hathaway
Investing in holding firm Berkshire Hathaway means trusting your dollars with the investing legends like Warren Buffett and Charlie Munger, who still manage the company to this day. Berkshire has built a large portfolio of private companies, including Duracell, Fruit of the Loom, Geico and has stakes in public companies such as Apple, American Express and Coca-Cola.
Berkshire has for years steadily seen growth its book of value (which is the total value of the firm’s assets minus its debt obligations) and the value of its shares has followed. with time, the stock has produced immense riches for investors, returning over 20% returns each year from 1964 all the way to 2018. With over $144 billion in short-term investments and cash on the firm’s balance sheet, Warren Buffett is ready for the company’s next Apple-like opportunity.
Paint and coatings maker Sherwin-Williams sells over one-in-four cans of paint throughout North America. Its products are sold under various brand names in many retail stores and in its name-brand stores. Whether you are a homeowner remodeling or just slapping a yearly coat of stain on your deck, or a contractor with some commercial projects, you are purchasing Sherwin-Williams’ products over and over again.
Sherwin-Williams makes almost $0.17 of free cash flow on each dollar in revenue and sends most of it back to its shareholders through dividends. Also, the business is a Dividend Aristocrat with about 43 consecutive yearly payout increases, and the stock has returned over 85,000% during its lifetime. The company has grown revenue an avg. of 9% yearly over the last decade, so there is potential for continued growth in this proven compounder.
3. Home Depot
Homeowners are undoubtedly familiar with Home Depot, where they have probably spent weekends purchasing appliances, garden plants or tools for countless home projects to be completed. The company’s brand power, product selection and large store footprint have helped it continue to grow in the face of competition from online e-commerce businesses like Amazon. Revenue has increased an avg. of 7% over the last decade.
The stock has been a winner for a long time now, minting millionaires who have made even smaller investments in its IPO and had held them over the years. But Home Depot’s success story may not be over just yet. The company’s trailing 1 year revenue is around $147 billion, and Bank of America calculates the market’s total value in home improvement to be around $767 billion with a lot of room to grow to over $1 trillion in the future. Home Depot should see more growth opportunities to take more market share and benefit from the increased home-improvement consumer spending moving forward.