One of the key requirements for successful buy-and-hold investing is to accurately identify companies that sell products or services which will still be demanded by customers decades into the future.
When it comes to an investor who has the ability to identify these “forever” companies – Warren Buffett is once again the standout. Buffett’s key long-term holdings include beverage maker Coca-Cola, insurer GEICO and chocolate maker See’s Candies. These businesses all have one thing in common, their continuing necessity. In other words, people will always need food and drink and they will always need insurance!
Given the speed of technological development and change it is very hard for investors to accurately forecast whether most companies will even still be around in 50 years! However, basic essentials such as the need for sustenance from food and drink and energy to keep warm and cool would appear to be a near certain bet.
Here are four businesses which should still be going strong in 50 years’ time.
Woolworths Limited (ASX: WOW) and Coca-Cola Amatil Ltd (ASX: CCL) are major suppliers of food and beverages. While consumer tastes may change and Coca-Cola Amatil in particular will need to be alert to this, it seems likely that the demand for food and beverage will be even greater in 50 years’ time than it is today.
AGL Energy Ltd (ASX: AGK) is a major supplier of domestic energy needs. AGL’s retailing arm is an important aspect to its business but more importantly AGL is already looking to the future and has built itself a strong position in the renewable energy sector. For this reason, AGL appears better placed than its nearest rival Origin Energy Limited (ASX: ORG) over the long term.
Transurban Group (ASX: TCL) owns some of the major arterial roads in Australia’s major cities. While it’s not impossible that in 50 years’ time we are all zooming around in flying cars thereby doing away with the need for bituminised roads, I suspect the road assets of Transurban will still be in heavy use.
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Returns as of 6th October 2020
Motley Fool contributor Tim McArthur owns shares in Origin Energy Ltd.
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