Picking stocks to buy and hold for the long term is not easy. The world is changing rapidly today and as a result, many businesses are now facing big challenges.
Here, I’m going to highlight three stocks I own and plan to hold for the next decade. Whatever the next 10 years brings, I’m confident these three companies will prosper.
A leader in AI
One of my top picks for the next decade is Alphabet (NASDAQ: GOOG). It owns Google, YouTube, DeepMind Technologies (its artificial intelligence (AI) subsidiary), and Waymo (its autonomous driving subsidiary).
One reason I see Alphabet as a top buy for the next 10 years is that the company is a major player in the artificial intelligence space. AI looks set to have a huge impact on the world in the next decade and is likely to disrupt many industries including healthcare, financial services, and retail. Alphabet – which has access to an enormous amount of data – is likely to be at the forefront of this disruption.
Another reason I like Alphabet for the long term is that the company has dominant positions in a number of growth industries. It should benefit from the growth of digital advertising, cloud computing, and autonomous vehicles.
Alphabet shares aren’t without risk, of course. One potential risk is regulatory action. Because Alphabet is so dominant, regulators want to break up the company.
I’m comfortable with the risks, however. I see this stock as a great long-term buy.
Moving into crypto
Another stock I like for the next decade is Mastercard (NYSE: MA). It operates one of the world’s largest electronic payment networks.
The reason I’m bullish on Mastercard is that today, the bulk of retail transactions globally are still made in cash. This is set to change. Over the next decade, we are set to see a massive shift from cash to credit cards and electronic payments. Mastercard should benefit.
Recently, Mastercard has been acquiring small FinTech companies to future-proof itself. It has also been moving into the crypto space. These moves lead me to believe that the group is well positioned for long-term growth.
One risk to consider here is that Mastercard faces intense competition from the likes of Visa and PayPal. Its valuation is also quite high.
Overall, however, I think the long-term risk/reward proposition here is very attractive.
Resilient to change
Finally, my third stock for the next decade is Diageo (LSE: DGE). It’s a leading alcoholic beverages company that owns a portfolio of premium brands.
What appeals to me about Diageo is that it’s fairly resilient to change. People have been drinking its brands, such as Johnnie Walker, Tanqueray, and Guinness, for decades. I’m pretty sure that in 10 years’ time, they’ll still be doing so.
Another thing I like about DGE from a long-term buy-and-hold perspective is that the company is set to benefit from the rise in wealth across emerging markets and the aspirational nature of consumers in these regions. Diageo believes that in the years ahead, hundreds of millions of new consumers will be able to afford its products.
One risk here is that attitudes towards alcohol could change. We’re seeing a little bit of this today, with younger consumers embracing healthier lifestyles.
Overall though, there’s a lot to like about Diageo from a long-term investing perspective, in my view.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Edward Sheldon owns shares of Alphabet (C shares), Diageo, Mastercard, PayPal Holdings, and Visa. The Motley Fool UK owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), Mastercard, PayPal Holdings, and Visa. The Motley Fool UK has recommended Diageo and has recommended the following options: long January 2022 $75 calls on PayPal Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.