What's a monster stock? In my book, it's a company that's built a long track record of earnings growth thanks to a solid business with staying power. And this player also offers a strong long-term outlook, so you can buy the stock with the idea of holding on for at least a decade. You should aim to own a handful of these players as they are likely to power your portfolio's performance over time -- and, since they're quality businesses, you can count on them wisely managing any tough economic periods that may arise.
You can find these players across industries, allowing you to diversify your portfolio as you gain exposure to great companies. I'll zoom in on three of my favorites now. One is a consumer goods/technology leader dominating in artificial intelligence (AI), the other is a pharma giant selling one of the most sought-after drugs, and the third is a premium payment card leader that's reporting record revenues.
Each has delivered triple-digit gains in share performance over the past five years -- and could keep on soaring. Let's check out these monster stocks to buy and hold for the long term.
Image source: Getty Images.
1. Amazon
Amazon(NASDAQ: AMZN) is a leader in two high-growth markets: e-commerce and cloud computing. The company has more than 200 million subscribers to its Prime subscription service, and this has led to billions of dollars in quarterly revenue as these customers shop for essentials and mass merchandise on the e-commerce platform. And thanks to Amazon's investment in AI and attention to efficiency across its fulfillment network, it's decreasing its cost to serve these customers -- a positive sign for profit moving forward.
Amazon Web Services (AWS), the cloud business, actually drives the company's overall profit -- and there's reason to be optimistic about growth ahead. This is because AWS has heavily invested in AI and is already reaping the rewards. Last year, the business reached a $115 billion annual revenue run rate, and we're in the early chapters of AI growth. After all, the AI infrastructure buildout is still underway, and companies are just starting to apply AI to supercharge their businesses.
So, there's reason to be optimistic about Amazon's earnings growth and share performance over the coming decade, making it a fantastic stock to add to your portfolio right now for a great price -- only 32x forward earnings estimates, down from 45x just a few months ago.
2. Eli Lilly
Eli Lilly (NYSE: LLY) sells a wide variety of medicines, in treatment areas from neuroscience to diabetes and immunology. But the ones that have attracted the most attention -- and importantly, demand -- in recent times are two of the company's products prescribed for weight loss. The compound is called tirzepatide, and it's approved for weight loss under the name Zepbound and for type 2 diabetes under the name Mounjaro. (Doctors have prescribed either for patients hoping to lose weight.)
Demand for these drugs has been so high that they were on the U.S. Food and Drug Administration's drug shortage list until just recently. Lilly has ramped up its production capabilities and has designed versions of the drug that are faster and cheaper to produce to tackle the supply problem and maximize profitability.
Zepbound and Mounjaro deliver blockbuster revenue, in the recent quarter bringing in $1.9 billion and $3.5 billion, respectively. And the efforts to increase supply as well as gain approvals for tirzepatide in new areas -- such as obesity with sleep apnea, an indication that won approval late last year -- should increase the revenue opportunity.
Analysts expect the weight loss drug market to increase more than 15-fold to beyond $100 billion by the end of the decade -- so Lilly's earnings and stock performance could continue to march higher.
Image source: Getty Images.
3. American Express
American Express(NYSE: AXP) is celebrating its 175th anniversary this month -- it started out as a freight forwarding company then through the years transformed, eventually offering travel services and premium payment cards. So American Express clearly is a well-established company, but that doesn't mean it's no longer delivering growth.
In the recent full year, this player actually reported record revenue of more than $65 billion, earnings-per-share climbed 25%, and the company noted record levels of card member spending. Importantly, this company continues to draw new members from younger age groups -- a bright sign for growth ahead. In the third quarter of last year, American Express said Millennial and Gen-Z consumers represent its fastest-growing consumer group in the U.S. They made up 80% of new accounts on the recently launched U.S. Consumer Gold Card.
On top of this, American Express offers investors passive income, something that over a 10-year investment period, adds up nicely -- or offers you the opportunity to increase your position in American Express through dividend reinvestment. American Express just increased its quarterly dividend by 17% to 82 cents per share -- representing a 1.1% dividend yield.
So, this monster stock makes a top buy for growth and annual recurrent income that you can count on.
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American Express is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino has positions in Amazon and American Express. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
