There are certain stocks that, from a long-term investment perspective, I think are ‘no-brainers’. I’m talking about the stocks of dominant global companies that are almost guaranteed to get much bigger in the years ahead.
Here, I’m going to highlight two such stocks I’ve bought for my own portfolio and plan to buy more shares in the near future.
Warren Buffett’s top stock
Let’s start with Apple (NASDAQ: AAPL), which is Warren Buffett’s largest holding. It’s a classic example of a no-brainer stock, to my mind, as it has a very high market share of the smartphone business and has users ‘locked in’ via its ecosystem.
Apple is already a massive company. Currently, it has a market capitalisation of $2.9trn. Yet this doesn’t deter me. That’s because I expect the company to get much bigger in the years ahead as it expands its presence in high-growth industries.
One industry that I think Apple could see a lot of success in is payments. Already, its Apple Pay service is bringing in billions of dollars in revenue for the company every quarter. However, I think it’s just getting started here.
It’s worth noting that Apple is shortly about to let businesses accept contactless payments on its iPhones without the need for extra hardware. I see this as a game-changer, as the market for small-business payments is enormous.
Another industry that could provide long-term growth is healthcare. I’ve been really impressed with what Apple has done in this area in recent years via its iPhones and Watches. Its ‘Fall Detection’ feature, for example, looks very useful for the elderly. But I believe Apple is still in its early days here.
Of course, Apple will need to keep innovating to keep growing. If it doesn’t, it could become another Nokia.
But I’m confident the company is heading in the right direction. And with the stock trading on a reasonable P/E ratio of 28, and the company buying back shares, I see it as a ‘buy’.
One of the biggest players in AI
Another stock that I see as a no-brainer today is Alphabet (NASDAQ: GOOG). It’s the owner of Google and YouTube. Alphabet is growing at a rapid rate. Last night, for example, it posted revenue growth of 32% for Q4 2021.
There are a number of reasons I see Alphabet as a must-buy. For starters, it has a very dominant position in internet search (90%+). This puts it in a very powerful position from an advertising perspective. I expect digital advertising revenues here to surge in the years ahead.
Secondly, it has an incredible content platform in YouTube. Here, over a billion hours of content are viewed every single day. Again, this puts it in a very strong position for digital advertising.
What I’m really excited about however, is the potential in artificial intelligence (AI). In recent years, Alphabet has made a large number of AI-based acquisitions. As a result, it looks set to lead the sector revolution.
Now one risk to consider here is regulation. Because Alphabet has become so dominant, it could be broken up or fined by regulators. I think this risk is factored into the valuation however, as the P/E ratio is only about 25.
All things considered, I see this BigTech stock as a ‘buy’.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Edward Sheldon owns shares in Alphabet (C shares) and Apple. The Motley Fool UK has recommended Alphabet (A shares) and Apple. 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.
