Four essential large cap stocks for any long term portfolio.
There are certain companies that have become a part of the human experience. They are companies that provide goods or services that just about any human being in the developed world will use many times in their life. In fact, it would be downright impossible to avoid using what these companies have to offer.
That doesn’t just go for you and I. It goes for other people, and for companies around the world in most of the cases.
Consequently, these companies’ large cap stocks should have a place in your long-term diversified portfolio. They aren’t merely “all-weather” stocks, but stocks that will likely survive for a very long time…and thrive…and provide growth along the way.
No. 1 Must Own Large Cap Stock: Amazon (NASDAQ:AMZN)
Amazon (NASDAQ:AMZN) may never actually replace the shopping mall, but it has become the single greatest retailing website ever. It will likely never be de-throned. At this point, just about anything you could ever want from a retail environment can be found on Amazon. Furthermore, it can probably be found cheaper. In some cases, it may only be a dollar or so cheaper. In other cases, it may be as much as 35% cheaper. All this, and you may even get free shipping.
Now Amazon is expanding into many other areas, such as cloud computing, movie streaming and producing television shows. It has also created a sticky concept called Amazon Prime, in which it can generate perennial revenues based on a subscription service like Costco (NASDAQ:COST).
Amazon is wrapped into our daily experience and it won’t change. Yes, the company will make money one day. The recent sell-off is a great buying opportunity.
No. 2 Must Own Large Cap Stock: Federal Express (NYSE:FDX)
Federal Express (NYSE:FDX) is a must-own for three big reasons. First, it pioneered a service to compete with the government and blew that provider away. Any time a business can beat out the government, it has a good chance of succeeding. Fedex did more than succeed, it effectively created a perpetual workaround for the USPS.
Second, it is now part of an oligopoly. Sure, there are many mail services, but at this point, the field has so narrowed that you have to own at least one stock in the sector.
Third, Fedex has become a verb. We don’t “send by express mail” anymore. We “Fedex something”. That’s when you know a service has become entrenched in consumer minds, and is likely the go-to selection when something absolutely, positively has to be there overnight.
No. 3 Must Own Large Cap Stock: Berkshire Hathaway (NYSE:BRK)
Berkshire Hathaway (NYSE:BRK) is a bit of a cheat because it’s a conglomerate. Yet the companies that it owns under its banner stretch across all aspects of human existence: insurance, utilities, real estate, shoes, boots, underwear, building products, flight services, candy, furniture, jewelry, kitchen tools, fast food, toys, party items, newspapers…the list goes on and on.
One might argue that none of Berkshire-owned brands are world-class brand names, other than perhaps GEICO. However, the sheer breadth and depth of the Berkshire portfolio is such that virtually every significant good or service is represented. You are also buying the world-class management to go along with it. Better to own Berkshire than the leader in all of these sectors, if you ask me.
No. 4 Must Own Large Cap Stock: PowerShares Fundamental Pure Large Cap Growth ETF (NYSE:PXLG)
PowerShares Fundamental Pure Large Cap Growth ETF (NYSE:PXLG) is a cheat, but I’d be remiss in suggesting large–cap stocks only, and not a diversified ETF. In this case, I think you want to own a large-cap ETF that contains a lot of world-class stocks, but ones which may or may not necessarily be category leaders. You need the exposure to these stocks, because they are solid long-term holds. Some will grow faster than others, but overall, they are a good mix. They include Microsoft (NASDAQ:MSFT), Wells Fargo (NYSE;WFC), Apple (NASDAQ:AAPL), Coca-Cola (NYSE:KO), and Cisco Systems (NASDAQ:CSCO).
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