Apple Inc. (AAPL), Amazon.com, Inc. (AMZN): Long Term Investments With Short Term Loss

There are basically two types of investors: long term and short term. Long term investors look at what a company can do over the next ten years or more years while short term investors “play the market.” They face the odds on what will happen tomorrow (or in the next few months). I lean toward the buy and hold approach, and will now look at a few companies that seem to present great long term opportunities.

Short term…

Before I get into why I believe these companies will perform well over the next decade or so, lets look back as to how they have done over certain periods of time. Year-to-date (YTD) Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Whole Foods Market, Inc. (NASDAQ:WFM) and eBay Inc (NASDAQ:EBAY) have performed pretty poorly considering how the market in general has performed.

AMZN data by YCharts

Mid term performance…

Despite these companies’ YTD performance, they have all performed very well over the past five years. Apple, Amazon, Whole Foods, and eBay have increased their revenues by 482%, 319%, 147%, and 165% respectively. Two of these five companies have at least tripled their revenues in a five year period!

Not only have revenues increased this much, but earnings per share have also increased (except for Amazon) by at least 46% each. Again, besides Amazon.com, Inc. (NASDAQ:AMZN), every one of these companies has increased free cash flow (FCF) by at least 11%. While 11% is not overly impressive, consider that Apple Inc. (NASDAQ:AAPL) increased their FCF by 494% while Whole Foods went from $ -198 million to $725 million. Let’s look at their stocks to see how they performed.

AMZN data by YCharts

Long term production…

So, as you can see, their five year performances put their YTD performances to shame. Let’s see about the ten year performance. In the past ten years, eBay’s earnings per share have increased seven, Whole foods eight, Amazon five, and Apple ten consecutive years. Looking at the chart below, we see incredible returns for the span of the decade.