Most investors know the potential benefits of leaving winning stocks alone. Although the stock price can only fall to zero, there is no hard limit on how high the stock price can rise. Growth in long-term winners can often dwarf losses elsewhere in the portfolio.
Billionaire investor Warren Buffett wrote about 2023: berkshire hathaway Shareholder: “As the flowers bloom, the weeds die with significance. Over time, it only takes a few winners to make a miracle happen.” For your benefit.
So it makes sense to look at the highly successful world of stocks as fertile ground for your next stock purchase. As investments with plenty of room for execution become more active, microsoft (NASDAQ: MSFT) and costco (NASDAQ:COST) Belongs near the top of your watchlist.
software is king
Microsoft is already the biggest player in “.Magnificent Seven“Stock price, and the world’s largest publicly traded company, the tech giant is likely to continue its impressive growth for decades to come. Consider just the enterprise software services sector, backed by the Azure platform. We have a strong foothold in the niche space,” with sales up 28% in the most recent quarter, which is better than our results. Amazon Achieved in the same time period as the AWS platform.
The companies are poised to capitalize on the trend of more companies moving their digital operations to the cloud in the coming decades. And this is an example where winners like Microsoft can continue to win thanks to switching costs and scale efficiencies. Please note that Azure contract lengths and annual revenue commitments will continue to grow. It’s also a very profitable business, as evidenced by Microsoft’s impressive 44% profit margin.
Wall Street is bullish on the company in the short term, with most Wall Street professionals predicting a 15% revenue increase when the software giant releases its fiscal 2024 third-quarter results in late April. I’m looking forward to it. That’s a 15% increase for a company that already generated a record $227 billion in revenue over the past 12 months. Further growth in cloud services, along with other areas such as cybersecurity, video games, and consumer technology, will pave the way for Microsoft to set revenue records well beyond 2030.
join the club
Retail is notoriously difficult to achieve sustainable profit growth, but Costco is not your average retailer. The warehouse giant makes most of its profits from membership fees, rather than from volatile product sales. With a record 92% of members renewing their annual contracts these days, Costco’s membership revenue comes in incredibly regularly. This success should (potentially) make it easier for the chain to raise prices in the near future, something it hasn’t done since 2017.
A graph of the company’s profit growth over the years shows the power of a member-centric sales approach. Over the past 10 years, Costco has increased its annual profits by 240% without any major dips.Please compare it walmart and the goalboth experienced slower growth and much greater volatility over that period.
Costco stock isn’t cheap right now. In fact, that premium is about twice what you’d pay at Walmart or Target. But that’s the benefit of looking decades into the future with your investment thesis. In a few years, you may not remember buying Costco or Microsoft at high valuations compared to their less successful peers. But you’ll be glad to have these winners in your portfolio, as they further enhance their already excellent market share position.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Demitri Kalogeropoulos It has positions at Amazon, Berkshire Hathaway and Costco Wholesale. The Motley Fool has positions in and recommends Amazon, Berkshire Hathaway, Costco Wholesale, Microsoft, Target, and Walmart. The Motley Fool recommends the following options: His January 2026 $395 long call on Microsoft and his January 2026 $405 short call on Microsoft. The Motley Fool has Disclosure policy.
2 Fastest Growth Stocks to Own for the Next 20 Years Originally published by The Motley Fool
