Forever Stocks

What is a Forever Stock?

The word “forever” is often hyperbole.

What do you say if you’ve been waiting a long time in line at the DMV or on hold with your cable provider? “I’ve been waiting forever!”

The term “forever stocks” is a similar exaggeration. You don’t necessarily hold on to these stocks “forever.” But you do hold onto them at least until retirement.

Forever stocks are stocks that are fairly evergreen. Typically they are industry leaders that have been growing for a while and should continue to grow for decades to come. They're stocks you can count on to be viable not only today, but 20 or 30 years from now.

There are five key attributes you want in forever stocks:

  1. A product or service or business model that is revolutionary.
  2. A mass market.
  3. A company that’s still small enough to grow rapidly.
  4. A company that is not respected—perhaps not even known—by the majority.
  5. And last but not least, a stock that’s trending up, indicating that investors’ perceptions of the company are improving. This is important because perceptions are always at least as important as reality, at least on Wall Street.

Forever stocks aren’t synonymous with safety stocks or even dividend stocks, necessarily. You’re not searching for the next Procter & Gamble (PG) or Johnson & Johnson (JNJ)—reliable, low-beta dividend growers that will deliver a steady stream of income and decent, if unspectacular, returns. Their purpose is to make you rich.

You want to find the next Apple (AAPL), Google (GOOG) or Amazon (AMZN)—stocks that if you had bought them 10 years ago (or more), you would have earned 10, 20, even 100 times your initial investment. Those are life-changing investments. And that’s what forever stocks are supposed to be.

Not every forever stock will deliver those kinds of returns, of course. In fact, you’ll be lucky to find a single buy-and-hold stock that will provide the same kind of return as you would have gotten by investing early in Apple or Amazon. But if one or two of these stocks can gain half the long-term return of an Apple or an Amazon, you can position yourself for a nice financial windfall by the time you retire.

At Cabot Investing Advice, we regularly search for those kinds of life-altering stocks in an advisory called Cabot Stock of the Month. Every month, our company president and chief investment strategist Timothy Lutts picks a stock—a growth stock, value stock, momentum stock, international stock or dividend stock—that has the potential to deliver major returns for years to come. To learn more about Cabot Stock of the Month, click here.

Featured Stock Picks

Each write-up features commentary on the picks from one or more of our expert stock market analysts, as well as company details and a stock chart.


Are You Diversified Enough? (It's especially important for buy-and-hold investors.)

Diversification is especially important for long-term buy-and-hold investors. If you plan to hold most of your investments through multiple market cycles, you’ll want to do whatever you can to make sure your portfolio doesn’t get wiped out by one event or sector correction.»

Stocks to Buy and Hold Forever

Back in 1972, Thomas W. Phelps wrote a book about the ultimate in buy-and-hold investing. His "forever stocks" strategy can bring you profits of 10,000%.»

Stock Picks

Loews Corp.

This undervalued stock has strong future earnings growth expectations.

Biogen

Biogen is the market-share leader in treating multiple sclerosis.

Weibo

One of Paul Godwin’s favorite stocks in his Cabot Emerging Markets Investor portfolio.

Cabot Wealth Advisory

Does Alibaba (BABA) Stock Measure Up to Amazon (AMZN)?

By Paul Goodwin on September 23, 2016

Alibaba (BABA) is the Amazon (AMZN) of China. But does BABA stock measure up to AMZN stock? Let’s break it down!Read More >

As Stock Market Trends Change, Invest in these New Leaders

By Michael Cintolo on September 22, 2016

History tells us that all stock market trends change, and if you don’t recognize the leaders of that change early, you risk missing out on the next big winners.Read More >

AMZN Stock vs. FB Stock: Which Is the Better Value Buy?

By J. Royden Ward on September 20, 2016

For the past five years, AMZN stock and FB stock have been two of the market's great growth stories. But could you make the case that either stock is still undervalued? Let’s break it down.Read More >