Two Strong Stocks for Long-Term Buy and Hold Investors
Buy-and-hold investors often face two significant hurdles:
- Finding excellent companies and purchasing their stocks at good valuations.
- Maintaining their positions during stock market fluctuations.
The current market sell-off presents a unique opportunity for investors to tackle both challenges. Here, we will analyze two stocks that stand out as long-term buy-and-hold candidates.
Where to invest $1,000 right now? Our analysts have identified the 10 best stocks for your consideration. Learn More »
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1. Spotify Technology
First on the list is Spotify Technology (NYSE: SPOT).
Currently, Spotify’s stock has decreased by more than 20% from its all-time high of $648. This positions the stock firmly in correction territory, offering a prime buying opportunity for long-term investors.
Despite this recent dip in share price, Spotify’s fundamentals remain robust. Following its latest earnings report on February 4, the stock rebounded significantly, fueled by strong performance metrics:
Essentially, the company is thriving. Its user base continues to grow, marking its best-ever fourth quarter for user expansion. Revenue growth is similarly impressive, with total revenue reaching 4.2 billion euros, up 16% year-over-year.
Importantly, Spotify achieved its first full year of profitability in 2024, an essential milestone for any growth stock. The company recorded an operating income of 477 million euros, translating to an operating margin of approximately 11%. This contrasts sharply with previous years, where Spotify faced multi-million euro losses.
In summary, investors should focus on Spotify’s strong fundamentals rather than the surrounding market turbulence. The stock still possesses considerable growth potential.
2. Amazon
Next is Amazon (NASDAQ: AMZN). What factors have influenced its current market standing?
This inquiry is worthwhile, especially since the stock previously reached new all-time highs before this latest correction. As it stands, the stock has decreased by nearly 20%, a drop that appears excessive when considering its intrinsic valuation.
For instance, Amazon’s trailing-12-month price-to-earnings (P/E) ratio currently sits around 34x. This figure is not only the lowest P/E ratio for Amazon over the past year but also its lowest in the past decade.
Does this valuation alone make Amazon a compelling buy? Most likely, but there are additional factors to consider.
For one, Amazon’s e-commerce segment is becoming increasingly appealing to consumers grappling with inflation. The substantial capital expenditure investments made during the pandemic years are yielding results, enhancing the efficiency and affordability of delivering billions of shipments yearly.
Furthermore, advancements in artificial intelligence (AI) and robotics will likely generate further cost savings, leading to lower prices for customers and greater profits for shareholders.
In summary, with the stock trading at an all-time low valuation, insightful long-term investors may wish to accumulate shares at this discounted price.
Should You Invest $1,000 in Amazon Right Now?
Before making a purchase of stock in Amazon, consider the following:
The Motley Fool Stock Advisor analyst team has identified what they believe are the 10 best stocks for investors to consider currently… and Amazon did not make the list. The selected stocks could potentially yield significant returns in the coming years.
For context, consider when Nvidia was included in this list on April 15, 2005… if you had invested $1,000 at that recommendation, you’d have $708,400!*
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Amazon and Spotify Technology. The Motley Fool has positions in and recommends Amazon and Spotify Technology. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
