It can be dangerous to think that a company can never be defeated. There are too many once-powerful businesses that have either disappeared or are a shadow of their former selves to totally rule out the chance of being disrupted.
However, there are a handful of companies that have such strong business models that they’re likely to remain at the top of their markets for a long time to come. These are the kinds of companies that you want to invest in. If you’ve got $5,000, here are three practically invincible stocks that you can buy right now to make a lot of money over the long run.
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It would be extremely difficult for a rival to dethrone Amazon.com (NASDAQ:AMZN) in e-commerce. The company has a well-known brand. It has a massive distribution infrastructure. Amazon claims roughly 40% of the online sales market, according to market researcher eMarketer. The No. 2 company, Walmart, has an e-commerce market share of only 5%.
Amazon has tougher competition for its Amazon Web Services (AWS) cloud hosting business. But it’s still the indisputed leader. As organizations migrate apps and data to the cloud, it seems highly likely that AWS will continue to deliver impressive growth even if it loses market share along the way.
Can anything stop Amazon? Perhaps the biggest threat is that government regulators could throttle the company’s expansion plans. It’s also possible (but I think quite unlikely) that Amazon could be broken up. Even if that happens, though, my hunch is that the sum of the parts would potentially be worth more than the whole.
Barring a major governmental roadblock, Amazon seems poised to continue delivering solid growth despite its huge size. The company has its eyes set on the lucrative healthcare market and is acquiring Zoox to get into the self-driving car technology arena. Amazon isn’t completely invincible, but it’s not too far from it.
2. Intuitive Surgical
Speaking of the healthcare sector, one company has absolutely dominated the robotic surgical systems market for two decades — Intuitive Surgical (NASDAQ:ISRG). More than 5,500 of Intuitive’s da Vinci systems are installed across the world. Over 7.2 million surgical procedures have been performed using these systems so far, with 1.2 million procedures in 2019 alone.
Intuitive Surgical’s success has attracted new rivals. Two healthcare giants, Medtronic and Johnson & Johnson, have robotic surgical systems that either already compete directly against Intuitive’s products or will do so soon.
However, I’m not too concerned about Intuitive losing its grip on the top spot in the market. Intuitive’s existing customers have ample motivation to get the most out of their investment rather than switch to a rival system. Newcomers will also be at a disadvantage going up against Intuitive’s long safety track record.
Most importantly, though, I think the market will expand enough to support multiple players with Intuitive Surgical remaining No. 1. Key growth drivers include aging demographic trends and technological innovations that increase the types of procedures that can be performed with robotic assistance.
Some think that the COVID-19 pandemic could cause an acceleration of the ongoing shift from cash to digital forms of payment with consumers’ worries that using physical currency could increase their chances of being infected by viruses. Although some studies have shown those fears are overblown, perception is sometimes more important than reality. I think Square (NYSE:SQ) is well-positioned to be a big winner from the growth in digital payments regardless.
Square has firmly established itself as the leader in providing payment technology and services to small- and medium-sized businesses. You probably see the company’s small credit card devices frequently if you make purchases from these smaller retailers. What you don’t see, though, is the impressive ecosystem that Square has built to serve these businesses, from payroll apps to business debit cards.
I look for Square to leverage its relationships with small- and medium-sized businesses to gain more traction in helping them in new ways, including building e-commerce sites. I also expect the company to make further inroads with larger clients.
Square’s Cash App peer-to-peer digital payment is competing well against PayPal‘s Venmo. The company thinks it has an opportunity of at least $60 billion annually in the U.S. alone with Cash App. With its strength in both business and individual financial ecosystems, it’s not unreasonable to view Square as the “Amazon of financial services.” I think that the growth in fintech and Square’s leadership position make it another nearly unstoppable stock to buy for long-term investors.
Keith Speights owns shares of Amazon, Intuitive Surgical, PayPal Holdings, and Square. The Motley Fool owns shares of and recommends Amazon, Intuitive Surgical, PayPal Holdings, and Square. The Motley Fool recommends Johnson & Johnson and recommends the following options: short September 2020 $70 puts on Square, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and long January 2022 $75 calls on PayPal Holdings. The Motley Fool has a disclosure policy.