Long-term investors often seek out great companies with the intention of holding onto their investments indefinitely. Warren Buffett, a renowned investor, famously stated that his preferred holding period was forever. This strategy aims to capitalize on the potential for sustained growth and financial success. While selling stocks can be justified under certain circumstances, adopting a “never sell” approach can lead to more favorable outcomes. In this article, we will explore two companies that have earned a spot on the “never sell” list due to their competitive advantages, track records of success, and potential for continued growth.
Amazon, the global e-commerce giant, stands as a prime example of a company that warrants a long-term investment. With millions of people relying on Amazon as their go-to online marketplace, its dominance in the industry is undeniable. Despite a temporary setback in early 2023 when the stock plummeted during the pandemic, Amazon has since made a remarkable recovery. The company has successfully optimized its cost structure and improved its bottom line, resulting in an impressive stock performance. Additionally, Amazon’s leadership in cloud computing services through Amazon Web Services (AWS) further solidifies its market position. As the demand for artificial intelligence (AI) continues to surge, AWS is well-positioned to accommodate this trend. Notably, while AWS remains a significant part of Amazon’s business, its advertising segment has experienced rapid growth, further bolstering the company’s future prospects.
Winmark, a lesser-known company, operates as a franchisor of stores specializing in the resale of used items. Brands under the Winmark umbrella include Play it Again Sports, Plato’s Closet, and Once Upon a Child, among others. Despite its relatively small market capitalization of $1.4 billion, Winmark has consistently proven to be a winning stock. The company’s business model, as a franchisor, allows it to benefit from attractive margins. In the second quarter of 2024, Winmark boasted a gross margin of 95.8%, translating into a net profit margin of 51.8%. These margins have steadily increased over time, indicating the effectiveness of Winmark’s franchising approach. Furthermore, the high renewal rate of its franchisees, reaching 100% in four out of five brands in Q2 2024, reflects the satisfaction and success of Winmark’s business model. While the company’s store growth has been deliberate, the consistent renewal rate provides a positive outlook for future expansion.