For Millennials looking for stocks to buy now to hold until retirement, selecting stocks for the extremely long-term can be a difficult proposition. Even some of the best companies start running into question marks ten or 15 years in the future, but General Motors (GM),Wells Fargo (WFC) and Verizon Communications (VZ) are well-positioned to continue paying off for Millennial investors 40 years down the line.
Perhaps the most iconic long-term value investor of all time, Warren Buffett, always looks for stocks that have a durable competitive advantage in their respective markets. Not only do these three stocks fit the bill, Buffett’s Berkshire Hathaway(BRK.B, BRK.A) holds stakes in all three.
General Motors (GM)
The new restructured “lean and mean” GM currently trades at an incredibly low 5.1 PE and 5.4 forward PE. When growth is factored in, the stock’s PEG ratio is a minuscule 0.26.
Despite high hopes for Tesla Motors (TSLA), GM and Ford (F) have the U.S. auto market pegged for now. There seems to be some misconceptions out there that TSLA is the only game in town when it comes to electric cars. While TSLA has gotten a lot of attention for its Model 3, GM is also quietly rolling out its Chevy Bolt EV this year, which is expected to start in the $30,000 range and deliver a 200-mile electric driving range.
Sure, GM is not an electric car-centric company today. But the transition away from gasoline won’t happen overnight, and GM will certainly shift its mix to electric as the market changes. The biggest differences between GM and TSLA is that GM already has a huge market advantage, it is already extremely profitable and it has a stock that is trading at a historically low valuation.
Aside from GM’s durable competitive market advantage, relative lack of competition and solid stock valuation, the company also has another long-term trick up its sleeve: a 5% dividend. Even if the stock gains 0% over the next 40 years, a $50,000 investment today could balloon to $338,835 40 years from now if dividend payments are reinvested.
Wells Fargo (WFC)
The Federal Reserve’s decision to postpone the next interest rate hike has extended…
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