Given today’s fast-paced trading environment where the average holding period for any given stock is less than four months (by some reckonings), it might seem crazy to look for investments you could hold for decades. Still, many legendary investors have done exactly that, relying on the stocks of the world’s greatest companies to build their incredible fortunes.
But seriously, let’s talk about finding investments a high-schooler could buy and hold until they retire (no easy feat, I know). To do so, we’ll need to look for stocks which have solid underlying businesses with serious competitive moats. In addition, these companies need to have forward-looking management that consistently makes great decisions with a long-term focus in mind.
A world of glass
First up, consider well-known glass maker Corning Incorporated (NYSE:GLW). Founded in 1851, it’s a safe bet few companies know more about what it takes to last a lifetime.
Corning takes pride in its ability to innovate through continued research and development and survive no matter what technological revolutions come its way. Sure enough, Corning CEO Wendell Weeks is often maligned by Wall Street for his stubborn refusal to manage the company around quarterly results.
Nowadays, Corning is about much more than conventional glassware and boasts an array of products from providing glass substrates for LCD displays to optic cables for telecommunications. However, as prices and demand for LCD panes have fallen, Corning currently finds itself trading down almost 50% over the past five years, even after reporting record sales of $2.15 billion for the fourth quarter of 2012. Its fourth-quarter earnings per share of $0.34 (excluding special items) represented the company’s first year-over-year quarterly improvement since 2010, signaling a potential turning point to reverse the lasting downward trend of its shares.
As it stands, with shares of Corning currently trading at just over 11 times trailing earnings, it’s difficult to claim the stock is overvalued. What’s more, the company ended 2012 with $6.1 billion in cash and equivalents on its balance sheet, or nearly one-third of its entire market capitalization.
Finally, Corning also recently completed a $1.5 billion share buyback and boosted its quarterly dividend by 20% to $0.09 per share, so investors can be paid for their patience while they wait for the stock to rebound.
E-commerce and cloud computing
If Corning’s too old and cheap for you, perhaps you might consider retail’s perennially overpriced digital behemoth, Amazon.com, Inc. (NASDAQ:AMZN) , whose shares hit an all-time high recently after the company missed estimates for both revenue and earnings per share and lowered guidance during its most recent quarterly report.
Wait, what? Why would any stock rise after a report like that?
As fellow Fool contributor Tim Brugger pointed out, a closer inspection of Amazon’s results revealed all is well with the retailer. In fact, year-over-year revenue rose 22% during the crucial holiday season, easily outpacing the wider retail industry’s expected 14% growth. In addition, thanks largely to Amazon’s fanatical efforts to streamline operations through building new distribution centers, gross margin in North America expanded to 5% from 2.9% from the year-ago period — its highest level for the holiday quarter since 2001. Furthermore, as Amazon continues to implement its warehouse-optimizing Kiva robots while building more strategically placed distribution locations, margins should continue marching upward going forward.
