Four stocks I've been long-term bullish on; Jeers to United Airlines
1) If you've been paying attention to my e-mails recently, you'll know I've been harping on the importance of holding stocks for the long term...
And there are four big ones in particular that I've been consistently bullish on over the years – and still am today.
For some context, in Thursday's email I outlined the simple investment strategy I would use if I were ever to go back to managing money again. I call this potential strategy "10 for 10" – buying only 10 stocks and having an average holding period of 10 years.
This strategy would mean replacing no more than one stock a year on average and it would involve very little rebalancing – as the key to long-term investment success (as I've written many times before) is letting your winners run.
However, for this to work, you of course need to pick the right stocks – which is easier said than done...
Today, I'll share four that I've been overall bullish on for the long term. And they won't be a surprise to longtime readers...
Back at my old firm Empire Financial Research, I recommended four stocks as long-term core holdings in the April 17, 2019 inaugural issue of my former newsletter Empire Investment Report. These were:
- Berkshire Hathaway (BRK-B)
- Amazon (AMZN)
- Alphabet (GOOGL)
- Meta Platforms (META)
I believed then (and continue to believe) that these are four of the greatest businesses of all time... with bright, long-term prospects.
Since April 2019, I have been spot on...
Each of these stocks has beaten the S&P 500 Index (which, in turn, has beaten the vast majority of money managers) since then. As you can see, they've risen by an average of 141% versus an 88% gain for the S&P 500 – as measured by the SPDR S&P 500 Fund (SPY):
And here in my daily e-mails, I've also been bullish on these stocks over the years.
For example, I made three big calls on Berkshire and Meta – shown by the circles on this chart showing the performance of these stocks and the S&P 500 since April 17, 2019:
The first circle highlights the period in fall 2020. Led by tech stocks, the market was ripping after the COVID bust earlier that year... but Berkshire Hathaway's stock lagged. This looked like a good buying opportunity, which I highlighted multiple times (along with bank stocks) for my readers.
Sure enough, Berkshire's stock massively outperformed over the next year and a half, which led me to write on March 28, 2022 (highlighted by the second circle):
Berkshire Hathaway, which I've been pounding the table on for years as "America's No. 1 Retirement Stock," hit an all-time high on Friday, up 19.6% this year versus negative 4.7% for the S&P 500 Index and 54.7% since the beginning of 2021 versus 21.1% for the S&P...
My take: The stock has done exactly what I wanted and expected it to do – massively outperforming during times of turmoil, when growth stocks are getting whacked.
That said, it's now trading at almost exactly my estimate of its intrinsic value, which I calculated in two ways in my March 2 e-mail.
So while I think it's a solid long-term hold, I wouldn't be adding to it here.
My cautionary words proved prescient, as Berkshire has done fine since then – rising 13.9%, though that trails the S&P 500's 19.4% return.
Lastly and most importantly, I was particularly bullish on all three of my favorite tech stocks in late 2022.
In particular, I pounded the table on Meta when it when it traded below $100 per share in a six-part series beginning on November 1, 2022 (highlighted by the third circle in the chart above). As of Friday's close, META shares are up five-fold to around $500.
So why are Amazon, Alphabet, and Meta Platforms my three favorites among the so-called "Magnificent Seven" today? It's in part because they have the smallest market caps, with the exception of Tesla (TSLA):
I'm wary of companies with the biggest market caps because they historically have underperformed. Just look at the three largest stocks in 1982, 1999, and 2008, shown in this chart (courtesy of the always-insightful Charlie Bilello's latest Week in Charts blog post):
For my quick takes on the rest of the Magnificent Seven...
- Microsoft (MSFT) will likely do fine... but I doubt it outperforms from here.
- Apple's (AAPL) revenue has barely budged in the last two and a half years and I can't see how it grows much going forward – it's mainly a share-repurchase story now.
- Nvidia (NVDA) is an incredible company. In fact, the stock is up a whopping 1,918% since I pounded the table on it to subscribers of my former newsletter Empire Stock Investor on February 5, 2020, back at Empire Financial Research.
But as I wrote on May 23, when I analyzed its latest blowout earnings report, I wouldn't be able to get comfortable with buying Nvidia's stock at these levels because of its valuation.
- And Tesla (TSLA) doesn't belong in this group – it's a totally different business with much less attractive economic characteristics. For nearly a decade, I've said I wouldn't buy the stock... but I wouldn't short it, either.
In contrast, I think Berkshire, Amazon, Alphabet, and Meta Platforms will continue to grow nicely. For more details on why I've still been bullish on them:
- Here's my analysis of Berkshire's first-quarter earnings and my calculation of its intrinsic value from early May.
- On April 26, I analyzed Meta and Alphabet's latest earnings reports.
- And on May 1, I shared my take on Amazon's first-quarter earnings.
2) Jeers to United Airlines (UAL), which I don't want to fly with anymore after what I just went through over the weekend...
It's all due to a new policy – unique among all airlines, to my knowledge – to harass and annoy anyone flying Basic Economy...
I discovered this Saturday evening when I went to Boston's Logan International Airport to catch my flight to Newark.
When I checked in online 24 hours in advance, the app wouldn't issue me a boarding pass – it said I had to go to the check-in area at the airport. It was annoying enough that I couldn't go straight through security and to the gate, but it got worse...
There was a long line at the check-in area, which was understaffed because it was the last domestic flight of the day, so I went to a kiosk to get my boarding pass.
After typing in my information and confirming that I didn't have any carry-on bags, it still wouldn't print me a boarding pass – instead the kiosk flashed a big warning sign that told me I had to find a United employee to scan their ID.
What!?
There was nobody around, so I called over to one of the agents helping the people in the long line, asking if I had to stand in it just to get a boarding pass.
To his credit, the gate agent said "excuse me" to the people he was helping and rushed over to scan his ID (while everyone in line gave me the stink eye).
I asked why the kiosk wouldn't just give me a boarding pass, and the agent replied sheepishly that staff needed to check and make sure that I wasn't bringing a carry-on bag.
I couldn't believe what I was hearing. I said it was a waste of time for both of us... and that United was the only airline in the world I knew of that was doing this. I told the agent that I knew it wasn't his fault but that it was outrageous.
He could only grimace and shrug his shoulders.
I've taken hundreds of flights with ultra-low-cost carriers like Spirit Airlines (SAVE) and Allegiant Travel (ALGT) in the U.S., Ryanair and easyJet in Europe, and the Basic Economy equivalents on major carriers. So I'm familiar – and have no quarrel – with their extra charges for things like seat assignments and carry-on bags.
But to deny a boarding pass and make travelers waste their time in the check-in area is totally outrageous. So until United rescinds this policy, I'm going to avoid flying it – and raise as big of a stink as I can.
To that end, I've posted this complaint on Facebook, Instagram, and X, and e-mailed it to United's CEO, Scott Kirby. I'll let you know if I hear anything...
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.