Investors naturally want to own the best companies in their portfolios -- stocks that can be had at good (or at least reasonable) prices -- and then hold on to them for many years, watching their values grow. But, of course, finding them is never easy.
To help you out, below are five solid investments you might keep an eye on and consider buying -- at the right price. See which ones pique your interest. (Note that one of them is an exchange-traded fund, which trades like a stock.)
Below are their performance records. They're mostly impressive, but remember that past performance does not guarantee future results.
Asset | 5-year average annual return | 10-year average annual return | 15-year average annual return |
|---|---|---|---|
Costco Wholesale (NASDAQ: COST) | 25.5% | 22.7% | 20.5% |
Paycom Software (NYSE: PAYC) | (4.8%) | 25.8% | N/A |
Amazon (NASDAQ: AMZN) | 16% | 28.6% | 27.7% |
Intuitive Surgical (NASDAQ: ISRG) | 21.9% | 25.1% | 20.7% |
Vanguard Information Technology ETF (NYSEMKT: VGT) | 23.3% | 21.8% | 19.1% |
Source: Morningstar.com as of Oct. 17, 2024.
Here's a closer look at each one:
Retail giant Costco's market capitalization recently topped $390 billion. Unlike many companies, it is striking a profitable balance of serving its employees, shareholders, and customers well -- via, respectively, competitive pay and benefits; solid returns, including dividends; and low prices, with markups mostly capped at 13% to 14%. The company recently boasted 891 warehouse stores, 614 (or 69%) of which are in the U.S.
Costco pays a quarterly dividend that recently yielded only 0.5%, but it also pays out hefty "special" dividends on an irregular basis. The most recent of those were a $15-per-share distribution in 2023 and a $10-per-share one in 2020. Unfortunately, the stock doesn't seem compellingly priced at a forward price-to-earnings (P/E) ratio of 50.1, well above its five-year average of 37.5. So if you don't own it yet, perhaps just add it to your watch list.
Paycom has a more appealing valuation. Its forward P/E of 18, for example, is well below its five-year average of nearly 44. It only recently started paying a dividend that at the current share price yields about 0.9%.
This software-as-a-service business helps companies manage payroll and human resources functions. Its business has taken a hit lately, in part due to cannibalization: Its newer self-service Beti platform is drawing some customers away from its other services.
That should not be a long-term problem, though, as the company remains quite profitable with a solid balance sheet and no debt. Its revenue rose 9% year over year in the second quarter.