If you've been an investor for a while, you've likely heard Warren Buffett's advice: "You can't buy what is popular and do well." And his point is well taken. Plenty of stocks are overvalued simply because everyone seems willing to pay a premium price to own them.
Don't be so committed to a general tip, however, that you look right past a solid wealth-building prospect staring you right in the face. Sometimes, the highest-odds wealth builders are its most obvious stocks.
With that in mind, here's a closer look at three no-brainer ideas that may not create fireworks but are surefire market leaders with the potential to make good forward progress for a long, long time.
1. Walmart
You know the company. Walmart(NYSE: WMT) is, of course, the world's biggest brick-and-mortar retailer, operating nearly 11,000 locales worldwide, with more than 5,000 of these stores in the United States alone (when counting its Sam's Club warehouses). Indeed, 90% of U.S. residents live within 10 miles of a Walmart store. It also operates the country's second-biggest e-commerce platform, behind Amazon.
The retailer hasn't always used its powerful name and reach all that well. It arguably got complacent with its growth between the 1980s through the early 2000s, not recognizing the threat that Amazon was becoming while at the same time just failing to remain competitive. You may recall horror stories from a decade ago about Walmart's habitually empty store shelves, for instance.
Putting CEO Doug McMillon in charge back in 2014, however, jump-started a long-needed evolution. Not only did the company finally start taking e-commerce seriously shortly thereafter, but McMillon started what could be considered a cultural revolution for the retailer. That's when Walmart became more than just a place to buy a range of consumer staples at a good price. It became a lifestyle company, offering once-unlikely goods like private-label premium wine and plant-based ice cream. It's operating a handful of veterinarian clinics, too, and offers technology installation services akin to Best Buy's Geek Squad. In-store shoppers will also notice store displays that look like something you'd expect to see at a traditional department store such as Macy's or JCPenney. It even manages a subscription-based delivery service that's competitive with Amazon Prime.
And all of these initiatives have mattered. Although boosted by a combination of inflation and the sheer difficulty of going through the COVID-19 pandemic, most of Walmart's market share growth since 2022 has come from residents of households earning more than $100,000 per year. Yet, the backdrop hasn't necessarily prevented Walmart's other customers from continuing to shop with the retailer. Conversely, rival Target -- once a frequent destination for these six-figure consumers -- has seen its sales stagnate since 2023.
More important to interested investors, this new pragmatic consumer norm paired with Walmart's willingness to evolve is likely here to stay for at least one full generation of shoppers. Maybe more.
2. Apple
It's another name that doesn't need much in the way of an introduction or explanation. Not only is Apple(NASDAQ: AAPL) considered the world's most valuable brand name, but it's also the world's biggest company as measured by market cap. That's what happens when you make the world's most popular smartphone -- the iPhone.
Apple is more than just the iPhone, of course, which only accounts for about half of its current revenue. Indeed, being the name behind the world's most beloved smartphone hasn't helped much for a while now. iPhone sales -- revenue as well as units -- haven't really grown since 2021.
There's a reason, however, that Apple shares have continued to climb since coming out of 2022's bear market. That is, this is Apple! It's the world's biggest and best-loved company for a reason. Any iPhone slowdown is apt to only be a temporary headwind while it's working on its next revolutionary growth engines.
Artificial intelligence is one of these engines. Although interest in its Apple Intelligence platform, which launched in October, has been modest, that's not an indictment of the quality of the tool. This is an indication that consumers just need a bit more time and education before they fully embrace the power of personalized AI, while Apple itself needs to further refine its solution.
It's still coming, though. Analysts at Jeffries don't see Apple's AI efforts measurably paying off until 2026 or 2027, but once it starts, Wedbush's Dan Ives believes we'll see "a multiyear upgrade cycle that will result in a supercycle and ultimately drive iPhone growth toward the high single digits."
In the meantime, it's encouraging that Apple is finally thinking outside the box by looking outside of its own product/service ecosystem. While last month's decision to make the Apple TV app and its exclusive content available on Android devices isn't exactly earth-shattering, it does suggest that the company is open to new revenue sources it likely wouldn't have considered in the past.
And, once again, this is Apple. It didn't get to be the world's largest company just by sheer luck.
3. Alphabet
Finally, add Google parent Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) to your list of stocks that could be easy wealth builders.
There's no denying that Alphabet's highest-growth days are in the past. While breadwinning Google still dominates the search engine/web advertising industry and Alphabet's Android remains the leading name in mobile device operating systems, both markets are mature, crowded, and surprisingly competitive.
Don't confuse a mature and crowded market with a slow-growth one, though. Google's search revenue still improved to the tune of 12% during the final quarter of last year, capping off full-year growth of about the same rate and extending a long streak of comparable forward progress.
Credit the fact that we're all increasingly connected to the internet and increasingly dependent on our mobile devices. That's not apt to change anytime soon, either. If anything, we're likely to see even more immersion into these technologies. Market research outfit SkyQuest Technologies predicts that the worldwide search engine market alone is poised to grow at an annualized pace of 10% through 2032, while the global app market is apt to grow from a little less than $190 billion last year to nearly $290 billion by 2028, according to forecasts published by Sensor Tower.
That being said, perhaps the top reason to own a stake in Alphabet for the foreseeable future is the work it's doing with artificial intelligence. Not only is its AI-powered chat platform Gemini showing incredible promise as a traffic-generating and engagement-improving tool, but it's also clearly valuable to companies that want to utilize artificial intelligence for their employees as well as their customers. Although uptake of generative AI tools among businesses has been tepid so far, as the Motley Fool's own in-house research points out, business usage of artificial intelligence within the United States is expected to grow from 6.8% of companies now to 9.3% in just a few months.
Further down the road, Google's current work on quantum computing will pay off. In December, the company unveiled a quantum chip called Willow, which completed a calculation in five minutes that would take most conventional modern-day computers 10 septillion years (that's a one followed by 25 zeros) to finish. It's not quite ready for proverbial primetime just yet, but when it is, this tech will plug Alphabet into a market that Precedence Research believes is set to grow at an average annual pace of 31% through 2034, when it should be worth more than $16 billion per year.
Don’t miss this second chance at a potentially lucrative opportunity
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Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. James Brumley has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Best Buy, Jefferies Financial Group, Target, and Walmart. The Motley Fool has a disclosure policy.
