There is nothing wrong with strict criteria when choosing a company to invest in for a long time. After all, if you plan to save money for many years and still get a good night’s sleep, these companies should have certain key attributes that make them attractive for long-term investment. Not many companies have been promoted, but for those companies that do this, it is necessary to re-examine them.
What I am looking for are companies with strong competitive advantages and market leaders in their respective industries. Ideally, they should have long-term growth revenue, net profit and cash flow records, while also providing a good channel for future growth. Finally, they should show resilience to crises such as the current COVID-1
After filtering out a bunch of companies, you can buy and hold these three stocks with confidence.
Paypal (Nasdaq stock code: PYPL) It is a major player in the online payment and remittance industry. The pandemic has accelerated the shift to online communication and working and studying at home, and as the lockdown continues, it has prompted more people to use e-commerce and online payments. The company is the main beneficiary of this shift, as it experienced the strongest growth in total payments and revenue in the third quarter.
Total payments increased 36% year-on-year to US$247 billion, and net income increased 25% year-on-year to US$5.5 billion. Net new active accounts surged during the quarter, up 55% year-on-year to 15.2 million. Before achieving such outstanding performance, PayPal has shown steady and steady growth for many years. Net income increased from USD 9.2 billion in 2015 to USD 17.8 billion in 2019, while net income doubled from USD 1.2 billion to USD 2.5 billion in the same period.
The company did not stand still, but continued to advance strategic initiatives to expand its scope of influence. It expands the “Buy Now, Pay Later” service in the U.S. and U.K. to help merchants capture more transactions without additional risk, while enabling customers to pay in installments without interest. PayPal has also cooperated with the following companies to launch the Venmo credit card visa (New York Stock Exchange: V) It also announced a new check cashing function for its digital wallet customers, making the service more convenient and worry-free for them.
One of the largest sports footwear and apparel companies in the world, Nike (New York Stock Exchange: OF)Shows obvious resilience in this pandemic. The company is known for its innovative footwear, such as Vaporfly and Alphafly Next%, which can improve the performance of athletes in competitions. For revenue in the first half of fiscal 2021, the company reported a surprisingly 4% year-on-year increase in revenue to 21.8 billion U.S. dollars, while net income increased 12% year-on-year to 2.8 billion U.S. dollars. It is worth noting that Nike’s digital sales momentum, in which digital sales increased by 84% year-on-year, the year-on-year growth in North America reached triple digits. Nike’s digital strategy is achieving results and is expected to achieve substantial and sustained growth in the business.
Even if the epidemic rages, the company will not slow down its product launch. Nike CEO John Donahoe talked about the new releases of LeBron XVIII and Kyrie 7 this quarter, and received a enthusiastic response. Nike’s latest Mercurial Vapor 14 boots are expected to enable athletes to make sharp turns without losing their balance.
Nike recently increased its quarterly dividend by 12% year-on-year to $0.275 per share, which enabled the company to achieve dividend growth for the 19th consecutive year. This move makes it closer and closer to becoming a dividend aristocrat.
Tractor Supply Company
Tractor Supply Company (Nasdaq stock code: TSCO)As the largest rural lifestyle retailer in the United States, despite the economic downturn, it has 1,904 stores in 49 states. Net sales in the third quarter of 2020 increased by 31.4% year-on-year, while sales at comparable stores increased by 26.8% year-on-year. As the pandemic caused more customers to focus on the care of houses, land, and animals, thereby driving demand for the company’s products, net income increased by 56% year-on-year.
Even before the crisis, tractor supply companies had grown steadily. From 2015 to 2019, sales have grown endlessly every year, from 6.2 billion US dollars to 8.4 billion US dollars, while net income increased from 410.4 million US dollars to 562.3 million US dollars. The declared dividend also increased in tandem with net income, from US$0.76 in 2015 to US$1.36 in 2019. The company has a good track record in store growth, with a compound annual growth rate of approximately 10% over the past 20 years.
The company’s “live here” strategy focuses on five pillars: customers, digitalization, execution, team members and total shareholder returns. This strategy is expected to continue to promote the development of the company as the company firmly positions itself as an ideal choice for rural and agricultural equipment. Tractor Supply Company operates in a highly fragmented market. It is estimated that the total solvable market opportunity is US$110 billion, of which it only accounts for 10% of the market share, which means there is a huge room for further market share. In addition, the company also found opportunities for new store growth, which eventually brought the number of stores to 2500.