Smart investing means staying patient. Indeed, numerous studies agree: The longer someone stays invested in the stock market, the greater their returns. With that in mind, let's take a closer look at two fantastic buy-and-hold candidates and explore why long-term investors should seriously consider them.
AmazonThe first no-brainer stock I want to highlight is Amazon. There are dozens of reasons to own this iconic company, but let's focus a bit on a few key financial metrics that explain why Amazon is a great stock to own for the long term. First, Amazon is enormous. Its annual revenue is over $600 billion, trailing only Walmart in terms of revenue generated by an American company. Second, despite its massive size, Amazon is growing impressively. Its revenue is growing at around 10% year over year, meaning that, at its current size, Amazon is adding about $60 billion per year in new sales.
Third, Amazon is on the cutting edge of some of the world's most exciting new technologies. The company's cloud unit, Amazon Web Services (AWS), is generating much of that new annual revenue, as it is growing at a faster clip than the rest of the company -- roughly 19% year over year. In addition, Amazon is a pioneer in the robotics industry -- with over 750,000 robots working day and night in its fulfillment centers. Finally, the company has many artificial intelligence (AI) initiatives, including using generative AI to streamline its e-commerce business and its ubiquitous voice-powered echo devices.
In summary, Amazon's large and growing sales figures show that the company continues to find new ways to serve its existing customers and attract new ones. Over the next decade, Amazon remains a no-brainer stock to own thanks to its combination of proven businesses and innovative new ventures.
Meta PlatformsThe next no-brainer stock to own is Meta Platforms. The reason Meta is such an obvious pick is that the company delivers on the most important factor for any stock: It drives shareholder value. What I mean is that Meta generates a ton of free cash flow -- which is the lifeblood of any great stock. Think of a garden hose. When the spigot is fully open, water comes flying out at a rapid pace. The more the valve is closed, the less water makes it out the other end of the hose.
In the case of a company, the valve represents operating expenses and capital spending, and the water represents free cash flow -- it's what's left over after employee salaries, taxes, capital expenditures, and many other costs have been subtracted from revenue. What's so great about Meta is that the company generates a ton of free cash flow. Moreover, its total keeps on growing larger. Over the last 10 years, Meta has increased its free cash flow from about $3 billion to almost $50 billion. That's astounding. Bear in mind that many large companies you've heard of don't generate $50 billion in sales, let alone free cash flow.
Simply put, Meta's free cash flow makes it a stock market juggernaut. With so much free cash flow at its disposal, the company can return value to its shareholders in any number of ways, including paying dividends, repurchasing shares, or making acquisitions. In short, it gives Meta's management many ways to increase its share price. And that's something that should make investors happy for many years to come.
