Buying shares with the intention of holding them forever is rarely a good idea. While Warren Buffett’s favourite holding period is indeed forever, few stocks can consistently remain above his high bar through the course of decades, especially with the continued acceleration of technological disruptors. We live in an age of narrowing moats and moat erosion due to up-and-coming tech-leveraging disruptors that are popping up across nearly every industry. So, it’s only prudent to be “in the know” with regard to current holdings, even the ones that were once thought of as “untouchable” forever investments. If you don’t have time…
To keep reading, enter your email address or login below.
Buying shares with the intention of holding them forever is rarely a good idea. While Warren Buffett’s favourite holding period is indeed forever, few stocks can consistently remain above his high bar through the course of decades, especially with the continued acceleration of technological disruptors.
We live in an age of narrowing moats and moat erosion due to up-and-coming tech-leveraging disruptors that are popping up across nearly every industry. So, it’s only prudent to be “in the know” with regard to current holdings, even the ones that were once thought of as “untouchable” forever investments.
If you don’t have time to monitor your securities constantly, you should still try to look to some of Canada’s wide-moat businesses that possess durable competitive advantages and high barriers to entry.
More specifically, you should look for competent management teams with a track record of adapting to the tectonic shifts experienced in their industry’s landscape. It’s become as important as ever to for managers to be quick on their feet, so they don’t become a victim to resourceful competitors, which will always be breathing down the necks of the incumbents for their share of economic profits.
Exceptional stewards are a must if the concept of a “forever” investment is still to be intact in the digital age. With that in mind, I’ve compiled a list of three Canadian stocks that you may want to look into if you’re a “buy and hold” kind of investor.
Alimentation Couche-Tard (TSX:ATD.B)
When it comes to exceptional stewards, it’s hard to top those of the M&A superstar Couche-Tard. Founder Alain Bouchard has assembled the perfect team to accomplish his ambitious long-term vision. Despite being one of the larger TSX firms with a market cap of $40.2 billion, Bouchard still sees the company growing at a fast rate. Back in 2016, Bouchard expressed his strong desire to “double the size of the company again.”
With a strong emphasis on value creation over the extremely long-term, Couche-Tard is an ideal holding in spite of the competitive forces that may be on the horizon, most notably Amazon.com and its entrance into the convenience store market. While there’s no doubt that Amazon is the ultimate disruptor, I believe it will have no chance at bringing down Couche-Tard with its incredibly talented management team that’s embraced tech in its various “test” locations. Moreover, Couche-Tard has a widely dispersed footprint that will be very expensive (and likely not worthwhile) to replicate.
What about autonomous vehicles? Electric cars? Drone delivery? The rise of in-store experiences? These are all potential disruptive forces that some believe could derail the Couche-Tard thesis over the next decade. Management has already factored in such long-term risks to their business and have tested new concepts in various geographics, most notably the Norwegian market, where electric cars are more abundant.
It’s this proactive approach that allows me to take comfort in knowing that Couche-Tard will continue to fight its way to the top.
Canadian Tire (TSX:CTC.A)
Speaking of not going down without a fight. This iconic Canadian brick-and-mortar retailer has demonstrated that it’s not only capable of existing in the digital age, but I believe the company has made a strong case for why the digitization of retail could make way for the best Canadian Tire that’s ever existed.
There’s no question that the rise of e-commerce disruptors is causing Canadian Tire to up its game, and as it continues to do so, I do believe that Canadian Tire will open doors to higher profit margins.
Management is all about building its moat through the acquisition of exclusive brands. Such exclusive labels will allow Canadian Tire to command higher profit margins that will not only offset potential digital sales pressures, but such exclusive offerings could be seen as a “main attraction” that could drive physical store traffic.
Add the new Triangle loyalty rewards program into the equation and I see Canadian Tire as an unfairly beaten-up powerhouse with a management team that’s on a mission to prove the doubters wrong. That’s precisely the type of business I want to own in my forever portfolio.
Stay hungry. Stay Foolish.
The financial world is buzzing as Iain Butler and his team of market-beating analysts in Stock Advisor Canada pick their favorite stocks for 2019 and beyond.
As a special gift for investors, they’ve decided to give away one of their top TSX stock picks of 2019 for FREE.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Joey Frenette owns shares of ALIMENTATION COUCHE-TARD INC and CANADIAN TIRE CORP LTD CL A NV. David Gardner owns shares of Amazon. The Motley Fool owns shares of Amazon. Alimentation Couche-Tard is a recommendation of Stock Advisor Canada.