5 Lesser-Known “Forever Stocks” to Consider Buying
Investing in the long term means finding companies that possess strong, sustainable competitive advantages that help them thrive over decades. While giants like Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA) often dominate the conversation, there are lesser-known companies with unique strengths that make them excellent long-term investments. Here’s a closer look at five such stocks that are poised to remain relevant 20 years from now.
Keep in mind that these are not buy recommendations, and we are not saying these stocks are undervalued at the moment. These are just stocks with strong long-term attributes.
1. Sherwin-Williams (NYSE:SHW)
What Makes It Unique: Sherwin-Williams, established in 1866, has solidified its place as a global leader in the paints and coatings industry. The company’s vast network of over 4,700 stores in North America provides unparalleled convenience and accessibility to contractors and professionals. Sherwin-Williams not only manufactures its products but also controls a significant portion of its supply chain, ensuring consistency and quality.
Moat: The brand loyalty that Sherwin-Williams enjoys, along with its deep customer relationships, acts as a protective moat. Contractors often depend on the reliability and performance of Sherwin-Williams products, creating a level of customer stickiness that is difficult for competitors to disrupt. This loyalty is further reinforced by the company’s innovative color-matching technology, which professionals trust for precise results.
Long-Term Viability: With a history that spans over 150 years, Sherwin-Williams has demonstrated remarkable resilience and adaptability. As global demand for infrastructure and housing continues to rise, the company is well-positioned to capitalize on these trends. Sherwin-Williams has consistently delivered strong financial performance, making it a solid candidate for long-term investment.
SHW stock has returned almost 180,000% over the years.
2. Waste Management (NYSE:WM)
What Makes It Unique: Founded in 1968, Waste Management is the largest waste disposal and recycling company in North America. The company operates in a capital-intensive industry where establishing the necessary infrastructure—such as landfills, recycling facilities, and collection routes—requires significant investment, creating a high barrier to entry for new competitors.
Moat: Waste Management’s moat is rooted in its natural monopoly status, supported by long-term contracts with municipalities that provide a steady revenue stream. As environmental concerns become increasingly important, Waste Management’s investments in advanced recycling technologies and waste-to-energy conversion give it a competitive edge. The company’s expertise in environmental compliance and its ability to navigate complex regulations further solidify its leadership position.
Long-Term Viability: Waste Management has consistently delivered stable cash flows and dividends, making it a reliable choice for long-term investors. The essential nature of its services and its ability to adapt to regulatory changes ensure that Waste Management will remain a crucial player in the industry for decades to come.
WM has returned more than 7,000% since 1988.
3. Illinois Tool Works (NYSE:ITW)
What Makes It Unique: Illinois Tool Works, founded in 1912, is a diversified industrial manufacturer that focuses on creating specialized products for niche markets. The company operates a decentralized business model, with over 80 independent business units that each focus on specific industries, from automotive components to food equipment and construction products.
Niche Focus: ITW excels in developing highly specialized products that are critical to the operations of its customers. For example, in the automotive industry, ITW produces fasteners and components that are specifically engineered to meet the unique requirements of car manufacturers. These products are often tailored to the exact specifications of the customer, making it difficult for competitors to replicate.
Quick Responsiveness: An example of ITW’s responsiveness can be seen in its approach to the automotive industry during the shift to electric vehicles (EVs). As the demand for EVs grew, ITW quickly adapted its product offerings to meet the new requirements for lightweight materials and energy-efficient components. This ability to rapidly respond to industry changes while maintaining product quality has helped ITW stay ahead of the competition.
Moat: ITW’s moat is built on its deep relationships with customers, who rely on the company for its specialized products and engineering expertise. The high level of customization and integration into customer operations creates significant switching costs, as changing suppliers could disrupt production processes.
Long-Term Viability: With over a century of innovation and steady growth, ITW has proven its resilience and adaptability. The company’s focus on niche markets, combined with its decentralized structure, allows it to remain agile and responsive to changing industry needs. This positions ITW as a strong candidate for long-term investment, likely to continue thriving for decades.
Since 1972, ITW stock has returned over 72,000%.
4. Novo Nordisk (NYSE:NVO)
What Makes It Unique: Founded in 1923, Novo Nordisk is a global leader in diabetes care, particularly known for its insulin production. The company has been at the forefront of diabetes research and development, creating life-saving treatments that are critical to millions of patients worldwide. Novo Nordisk’s commitment to innovation and its deep focus on a single therapeutic area have solidified its leadership position.
Moat: Novo Nordisk’s moat is built on its extensive patent portfolio, which protects its market share in the highly competitive pharmaceutical industry. The company’s strong relationships with healthcare providers and governments further enhance its moat, as these stakeholders rely on Novo Nordisk’s products to manage the growing global diabetes epidemic. The high cost and complexity of developing new drugs, along with the stringent regulatory environment, create significant barriers for new entrants, ensuring Novo Nordisk’s continued dominance.
Long-Term Viability: Novo Nordisk’s nearly century-long history of innovation and growth has established it as a reliable leader in the healthcare sector. As the global prevalence of diabetes continues to rise, Novo Nordisk’s specialized focus ensures its long-term growth potential, making it a strong candidate for a "forever" stock.
Since 1981, NVO stock has returned almost 133,000%.
5. Stryker Corporation (NYSE:SYK)
What Makes It Unique: Stryker, founded in 1941, is a leading medical technology company specializing in orthopedic implants, surgical equipment, and neurotechnology. The company’s success is largely due to its close collaboration with healthcare professionals, which enables it to develop products that meet the specific needs of surgeons and patients. This focus on customer-driven innovation has made Stryker a trusted name in the medical field.
Moat: Stryker’s moat is rooted in the high switching costs associated with its products. Hospitals and clinics invest heavily in Stryker’s equipment, and switching to another provider would involve significant retraining and potential disruptions in patient care. Additionally, Stryker’s strong relationships with healthcare providers allow it to stay ahead of competitors by continually developing new technologies that address the evolving needs of the healthcare industry.
Long-Term Viability: Stryker has consistently delivered strong financial performance, with a history of dividend growth and stock appreciation. The company’s focus on innovation and its diversified product portfolio makes it well-positioned to continue thriving in the healthcare sector, which is expected to grow as populations age and demand for medical care increases.
Since 1979, SYK stock has returned over 550,000%.
Conclusion
These five lesser-known companies each possess strong competitive advantages that make them solid candidates for long-term investment. From Sherwin-Williams' brand strength and service network to Novo Nordisk's leadership in diabetes care, these companies are well-positioned to thrive in their respective industries for decades to come.
When building a long-term portfolio, it's important to consider not just the most well-known names but also companies that have proven their resilience and adaptability over time.
