Do you have $ 1,000? 2 stocks you can buy and hold for decades

One of the most important traits investors need to have is patience – the patience to hold stocks of large companies during good times and bad, and even in the face of major market volatility. For investors disciplined enough to achieve this, the magic of the composition will do the rest. But this strategy works if, and only if, the stocks you select are indeed those of winning companies.

With hundreds of options to choose from in the market, it can be difficult to separate the wheat from the chaff. Today, let’s take a look at two companies that appear to be on track to remain leaders in their respective industries for years to come. The companies in question are pharmaceutical giants Johnson & johnson (NYSE: JNJ) and fintech specialist Square (NYSE: SQ). Let’s see why both are worth adding to your portfolio.

JNJ data by YCharts

1. Johnson & Johnson

Johnson & Johnson recently made headlines with its efforts to develop a vaccine for COVID-19. This opportunity may give the drugmaker a boost in the short term, but in the long term, the pharmaceutical giant will benefit even more from the global need for innovative drugs. This factor will be all the more important as our population ages.

Johnson & Johnson’s pharmaceutical business is the most lucrative. In its fiscal 2020, this segment’s sales were $ 45.6 billion, an 8% year-over-year increase that represented approximately 55% of the company’s total revenue. society. Johnson & Johnson claims more than half a dozen successful products, which are drugs with annual sales of over $ 1 billion. Most pharmaceutical companies would consider themselves lucky to have only one.

For example, there is the Stelara plaque psoriasis treatment, for which fiscal year 2020 revenue increased 21% to $ 7.7 billion. There is also the cancer treatment Darzalex, which generated sales of $ 4.2 billion in 2020, an increase of 39.8% from the previous year. Imbruvica, another cancer treatment, reported sales of $ 4.1 billion in 2020, 21% more than in 2019.

These drugs (and others) are helping the pharmaceutical giant recoup some of the losses it suffers elsewhere. For example, sales of the rheumatoid arthritis treatment Remicade fell 14.4% in 2020 to $ 3.7 billion. The decrease was due to competition from biosimilars. But note that Johnson & Johnson has well over two dozen advanced stage clinical trials underway, and an even greater number of Phase 1 or Phase 2 studies.

These candidates give the drug maker many opportunities to compensate for products whose sales are stagnant. The company received more than half a dozen regulatory approvals or submissions in the fourth quarter alone. Johnson & Johnson’s pharmaceutical segment is well positioned to continue to add new products to its line (or add new indications to existing products) virtually quarterly.

One of Johnson & Johnson’s big concerns is the lawsuits that plague the company. However, as a shareholder, I am not concerned about these potential legal issues. The Company recognizes financial losses arising from these pending lawsuits in its financial statements when such losses can be “reasonably estimated”.

And after dealing with thousands of such lawsuits over the past decades, the company doesn’t believe its current legal issues will have a significant effect on its financial position. For example, in FY2020, the drugmaker spent $ 5.1 billion on litigation costs (the same amount it spent in 2019), which was only 6.1% of its sales for the year.

Aside from this potential headwind, the strength of Johnson & Johnson’s pharmaceutical business, coupled with its medical device and consumer healthcare segments, makes this pharmaceutical stock worth keeping in your portfolio for decades to come.

2. Square

“We believe that everyone should be able to participate in the economy,” Square, a financial services specialist, says on its website. How is the company doing its part to achieve this goal? First, Square appeals to small and medium business owners by offering efficient options for processing payments. The company also offers payroll services, small business loans, e-commerce services, invoices, and more.

Square’s product library is extensive, and while many of its competitors offer alternatives to some of its solutions, few offer as many in one place. Once a business joins the Square ecosystem, it is likely to expand the range of solutions it purchases from the financial services company. CEO Jack Dorsey has previously called Square’s ecosystem “extremely sticky,” giving it a powerful competitive advantage.

Square has also branched out into personal financial services with its peer-to-peer mobile payment application, Cash App. The app now allows users to invest in stocks or cryptocurrencies as well. Cash App also offers direct deposits and a debit card with ATM withdrawal options. Square’s Cash app and its ecosystem of sellers continue to help it deliver strong financial results.

In its fourth quarter 2020 ending December 31, the company reported total net sales of $ 3.2 billion, representing a 140.5% year-over-year increase . Square’s gross profit for the quarter increased 52% year-over-year to $ 804 million. Meanwhile, the Cash App’s gross profit was $ 377 million, 162% more than the previous year. Square’s seller ecosystem posted gross profit of $ 427 million, 13% higher than the previous year quarter.

Square still has a long avenue for growth, making it a great title to stow in your portfolio for decades to come. Analysts see the company’s revenue increase by 39.6% over the next five years. Square tapped less than 3% of a $ 100 billion opportunity for its seller ecosystem and less than 2% of a $ 60 billion opportunity for its personal financial services offerings.

With the “rigidity” of its seller ecosystem and increased brand recognition, the company appears poised to continue to capitalize on these long-term opportunities for many years to come. Because of these factors, there is no doubt in my mind that in 10 years – or even longer – Square’s stock will have more than doubled.