Holding stocks for the long-term represents the best bet for investors to profit. In an effort to make it easier to keep holdings for the long term, investors need to find companies that set themselves apart and sit behind high barriers to entry. Companies that sell unique products that competitors cannot duplicate are most likely to grow revenue, net income and free cash flow, serving as a recipe for superior gains.
Entertainment conglomerate Walt Disney Co. (NYSE: DIS) owns an interesting portfolio of well-known fantasy characters under its Marvel, LucasFilm and Pixar labels. This is in addition to its traditional and legendary characters such as Mickey Mouse and Goofy. Characters in the various fictional universes are impossible to duplicate. As an added bonus, the company pays shareholders $1.32 per share per year, translating into a yield of 1.2% annually, while they wait for capital gains.
Hasbro Inc. (NASDAQ: HAS) successfully took toy play into the 21st century. The company creates stories around its products to increase consumer engagement. The recent Transformers live action movies represent the most prominent example of this strategy. Hasbro pays shareholders $1.84 per share per year, yielding 2.3% annually.
Beverage giant Coca-Cola Co. (NYSE: KO) sells carbonated sodas such as Sprite, Fanta and its namesake Coca-Cola. Moreover, it sells non-carbonated beverages such as bottled water and juice. The headwinds this company faces from the healthy lifestyles movement are well documented. However, Coca-Cola possesses a global distribution network that even its rivals rely on. Also, the company can pull other levers to raise revenue, such as increasing prices. Coca-Cola pays shareholders $1.32 per share per year and yields 3.2% annually.
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PepsiCo Inc. (NYSE: PEP), unlike its rival Coca-Cola, sells snacks in addition to beverages, giving it a more diverse product portfolio. PepsiCo can make up for potential declines in soda volume with snacks and other items. The company also possesses a distribution network that acts as a barrier to entry from any serious competitor. PepsiCo’s shareholders receive $2.81 per share per year, translating into 2.8% annually.
These companies may not make you rich overnight. However, they should expand the wealth of shareholders given enough time. Analysts have mean target prices pegged at $121.37, $84.13, $45.26 and $105.67 per share for Walt Disney, Hasbro, Coca-Cola and PepsiCo, respectively, representing potential increases of 13%, 4%, 10% and 7%, respectively.
Note that William Bias owns shares in Disney, Hasbro, Coca-Cola and PepsiCo.
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