3 Top Stocks You Can Buy and Hold for the Next 20 Years

The work in artificial intelligence (AI) has accelerated over the last decade and is becoming a part of our everyday lives. Companies in numerous industries are racing to adopt AI to improve operations and the customer experience or make sense of the massive amounts of data available. We asked three Motley Fool contributors to highlight one company that's making strides in AI that would be worth buying and holding for the next decade. They came up with Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG), Etsy (NASDAQ: ETSY), and Zebra Technologies (NASDAQ: ZBRA). 

MercadoLibre: A Latin American specialist that’s just getting started

Brian Withers (MELI): In 1999 MercadoLibre was founded and started its e-commerce marketplace in Brazil and Argentina that year. Today, 22 years later, it serves 18 countries in Latin America and has a growing fintech business as well. The region is home to 638 million people and 200 million online shoppers and growing. But this regional leader has plenty of room to run and would be a great stock to hold for the next 20 years.

Although its online marketplace is hosted in 18 countries across the region, not all of its businesses operate in all of those countries yet. Its payment services that started in 2003 are only available in seven countries. Its branded shipping and fulfillment services, Mercado Envios operates in six and Mercado Credito (consumer loans) operates in three. The company is investing heavily in the region to grow its services within the countries it operates in and is expanding into other countries where it doesn’t yet have a presence.

Additionally, the company is growing quickly to add to its 130 million active e-commerce customers and 76 million active fintech customers. With 362 million people with access to the internet in the region, the company has a long way to go to grow its base of customers. Its most recent quarter shows how strong the company’s growth trend is. The table below shows the overall revenue growth, items sold on its e-commerce platform, and payment transaction growth with its fintech solutions.

Data source: Company earnings releases.

The stock has been on a tremendous run, but this regional leader still has plenty of room to run. Especially with e-commerce still in its infancy and a massive unbanked and underbanked population, MercadoLibre has numerous ways to grow. Maybe it’s time you got on board or added more shares to your portfolio. This is one stock you’ll be happy to hold for the next 20 years.

Disney: A strong track record and a bright future

Danny Vena (Disney): When looking for a stock that you can hold not just for years, but for decades, it helps if it ticks a couple of boxes. First, having a company that's a household name and a long track record of navigating an ever-changing business landscape will certainly increase your chances of success. Second, a company that is anchored firmly in the past, but with significant future prospects is also part of the recipe for success. One company that checks off those criteria nicely is Disney.

It's worth remembering that the House of Mouse was founded in 1923, giving it nearly a century of experience changing with the times. The company graduated from animated shorts to feature films, while never losing homespun appeal of its characters. Disney also navigated the early days of television -- a revolutionary development at the time, offering family-friendly fare that attracted an entire generation of fans.

Even though Disney has some of the most successful sports and entertainment channels on broadcast and cable television, the company is forging into the future of streaming video with its ownership of Hulu and the debut of Disney+. The company's legendary marketing machine has integrated its uber-popular Marvel's The Avengers characters into every aspect of its multi-media entertainment universe, following its successful integration of both Pixar and Star Wars into the fold.

Disney has already gone a long way to proving that it has the right stuff to navigate the changing entertainment landscape with the debut of such hits as Mulan, Soul, and Cruella on Disney+, as well as receiving nearly universal acclaim for shows like WandaVision, Loki, and The Falcon and the Winter Soldier, which all garnered scores of more than 90% on review aggregation site Rotten Tomatoes.

The company certainly wasn't the first to build a theme park, but revolutionized the industry, building some of the world's most popular and successful destinations. In fact, four of the top five and eight of the top 10 theme parks in the world have the Disney logo over their turnstiles. 

Let's not forget that just prior to the pandemic, Disney had its most successful year ever at the multiplex, shattering the studio box office record with $11.1 billion in ticket sales worldwide and accounting for a whopping 33% of the domestic box office for 2019. Disney also crushed the record for the greatest number of movies to generate more than $1 billion in ticket sales, with seven. The pandemic may have wreaked havoc on movie theaters last year, but this too shall pass.

With nearly a century of business acumen under its belt and numerous opportunities to continue to dominate the entertainment landscape, it's hard to bet against the House of Mouse. The company is a movie powerhouse, a worldwide theme park leader, a consumer goods staple, and has now added a streaming video destination.

In my book, Disney is a stock you can feel comfortable holding for 20 years or more -- regardless of what changes tomorrow may bring.

A forgotten chip stock that should quietly move higher

Will Healy (Texas Instruments): Amid the focus on chip companies such as AMD (NASDAQ: AMD) and Nvidia (NASDAQ: NVDA), investors should not forget about TI. The company responsible for inventing the integrated circuit in the 1950s has kept itself relevant in its fast-moving industry. It remains an industry leader in analog and embedded chips, serving almost 100,000 customers in the automotive, industrial, personal electronics, and other industries.

Also, it owns 14 manufacturing sites worldwide, including 10 wafer fabs. This places TI in an advantageous position amid a worldwide chip shortage. Since it operates its own facilities, it does not have to compete with other companies for manufacturing capacity.

Also, thanks to its customer base and the chip shortage, TI earned $8.9 billion in revenue in the first six months of 2021. This is a 35% increase from the same period in 2020. Net income surged 44% during that period to $3.7 billion as the company limited growth in the cost of revenue to 25%.

Admittedly, such growth is unusual considering TI did not experience a significant increase in annual net income between 2018 and 2020. However, over the last year, TI has generated $6.5 billion in free cash flow, 14% higher than one year ago. It earned about $3.3 billion of that cash flow in 2021, easily covering the $1.9 billion in dividend expenses during that time.

Indeed, investors should take into account its surprisingly solid dividends. TI's payout has risen to $4.08 per share annually, a cash yield of about 2.2%. This beats the 1.3% average from the S&P 500. Moreover, it has increased the dividend every year since 2004. Last year, the payout climbed by 10%, and it has risen 46-fold since paying less than $0.09 per share in 2004.

Such earnings and dividend increases have likely helped TI’s stock climb by about 33% in the last year and 610% over the previous 10 years, figures that assume no dividend reinvestment. Furthermore, its 26 P/E ratio comes in well below AMD’s earnings multiple of 39 or Nvidia’s 79 P/E ratio. While this multiple has risen amid the chip shortage, it may not fully reflect the company's recent growth rates.

TXN data by YCharts

Despite chip demand, TI may continue to generate little excitement. Nonetheless, it appears positioned to make gains over time, especially for stockholders who reinvest their dividends.