Buying a stock with the intention of never selling it, or perhaps only selling it in a few decades, requires a level of conviction that most investments simply don’t warrant. It’s not enough to believe that a business is doing well today, or that its management team right now is doing an effective job.
What’s necessary is a rock-solid business model that’s already withstood different turns of the market and different economic regimes. Here are three stocks that I’m comfortable buying today and holding until retirement at the very earliest.
1. Vertex Pharmaceuticals
While I don’t own Vertex Pharmaceuticals (NASDAQ: VRTX), I’d be willing to buy it right now and then hold it forever if I had capital to spare.
Investing in Vertex means getting exposure to the upside from its research and development (R&D) programs, which is largely true for most pharmaceutical companies. The thing that makes Vertex different is that it has a lock on the market for cystic fibrosis (CF) therapies as a result of improving those therapies again and again over the course of years.
Rather than allow its market share to be eaten by generic medicines, the company is constantly advancing its candidates through clinical trials such that it has a new drug for CF coming out on a regular basis. Most of its CF medicines are now combinations of its previously commercialized medications, some of which are paired with newer molecules that are more effective. In the first quarter, sales of those drugs brought in nearly $2.7 billion, up 13% from a year prior.
Because other drugmakers lack a presence in the CF market, it’s essentially Vertex’s home territory. With such a deep understanding of CF, and plenty of medicines bringing in steady revenue from patients who need them on a perpetual basis, the business thus has extra income to devote to riskier forays into other markets.
And that process serves as an insurance policy to guarantee the future growth of the business, which is another reason to be bullish.
2. Costco Wholesale
Costco Wholesale (NASDAQ: COST) makes up a large proportion of my portfolio, and…
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