Rich people become rich because they think of the future. They bet on the vision and invest in businesses that look viable. When you consider how Warren Buffett picks his stocks, he bets on consumer demand and how well the company is catering to it. Does it have a competitive edge? Does it have the potential to scale the business? As long as revenues are doing great and the balance sheet has sufficient cash, any dip or short-term headwind is an opportunity to buy and hold forever.
How to get richer?
Companies with strong management and secular demand can make you richer. But you need to be patient and give them time to prove their mettle. Think like a business owner. If you open a shop, you can’t expect it to be bustling with customers. A keen investor looks at management’s strategy and their long-term roadmap.
Two best stocks to buy and hold forever
A company that balances shareholder value and business growth can help you generate wealth over the long term.
Bombardier stock
Bombardier’s (TSX: BBD.B) management has a well-defined growth plan, planning three years at a time. It implemented the first phase (2020–2022) better than expected, turning the loss-making, debt-ridden company cash flow positive. The second phase (2023–2025) is also on track, reducing debt and boosting operating profit while diversifying revenue sources beyond aircraft to after-market services.
The company is delivering more aircraft and has a strong order book. Its latest business jet model, Challenger 3500, has received its first order. Its next-era flagship jet, Global 8000, is expected to enter service in 2025. Bombardier has already paid off its debt maturing in 2025 and has its product roadmap on schedule.
Now for the demand. Recessionary pressure could have an impact on business jet demand. But its $1 billion-plus liquidity could tackle a slowdown in business. The stock has slipped 30% from its April 2023 high over macroeconomic concerns, creating an opportunity to buy the dip. Once the economy revives, probably in the second half of 2024, it might be too late to benefit from a recovery rally. The stock is in a long-term growth trend, and holding it for another 10 years could grow your money multifold.
Ballard Power Systems stock
Bombardier stock already grew 600% during its turnaround. Its future growth will be more normalized than aggressive. But Ballard Power Systems (TSX: BLDP) is yet to prove its worth. And when it does, a 600% rally is a possibility.
Most rich people invest in the research of sustainable goods because they know that if the product works, it will generate 100 times more value.
And Ballard Power Systems could be that investment for you. Founded in 1979, the company has now started selling its proton-exchange membrane fuel cells. These are zero-emission fuel cells that use the chemical reaction of hydrogen and oxygen to generate energy without emissions.
Fuel cells work like diesel or petrol but without emissions. You need to refill hydrogen, and the cell will take oxygen from the air to create the reaction. The problem is there are not many hydrogen refill stations, just like electric vehicle charging. Therefore, Ballard Power Systems is targeting commercial applications like bus, truck, train, marine, industrial forklifts, and stationary power. These applications have three benefits:
- These vehicles have a heavy payload, long driving range, and high utilization, which makes them ideal for the immense power generated by hydrogen.
- The hydrogen refuelling infrastructure barrier is low as these heavy vehicles have a centralized refuelling point.
- The order volumes are significant. For instance, Ballard received an order for 62 hydrogen fuel cell engines from Solaris buses in Europe.
While the company is still making losses, it has a product that works and secular demand to achieve zero-carbon targets. The stock is near its 52-week low and trading slightly above $4.10. It could grow severalfold once the ecosystem is created for hydrogen fuel cells.
