Buying and holding stocks for the very, very long term can be difficult in a market where investors seem to chase the hottest daily trend. But holding stocks for years or decades can lead to market-crushing returns with the right investment.
We asked three of our Foolish contributors for their best stock idea for decades to come. The answers ranged from…
Canopy Growth (NYSE:CGC), the marijuana industry leader, to utility NextEra Energy (NYSE:NEE) and tech giant Microsoft (NASDAQ:MSFT). Here’s why we think these stocks are well positioned for the long term.
Global legalization could make this pot stock a long-haul winner
Todd Campbell (Canopy Growth): I’m going to go out on a limb here and recommend Canopy Growth, Canada’s largest marijuana company.
Undeniably, there are significant global regulatory risks associated with marijuana that could derail this company’s future, but I think the odds are that we’ll continue to see worldwide deregulation of cannabis, and if I’m right, then stashing a little Canopy Growth away in a long-haul portfolio could be akin to buying shares in alcohol companies following the end of prohibition in the 1930s.
Canada’s medical marijuana market has been successfully operating nationwide for years, and last fall a national adult-use market opened there, too. Canada’s marijuana market is worth $6 billion Canadian dollars annually, according to Statistics Canada, so it represents a major opportunity for Canopy Growth, which boasts market share above 30% in Canada’s medical marijuana market.
Canopy Growth reported quarterly results that include the first six weeks of recreational sales last week, and its growth hints at the potential associated with Canada’s adult-use market. Its revenue was CA$83 million in the quarter, up 282% year over year.
There’s an even bigger opportunity outside Canada. Worldwide, the marijuana market is worth about $150 billion, according to the United Nations, including $50 billion in the United States. Most marijuana sales in the U.S. still occur on the black market, but 33 states have passed pro-pot laws in some form, and the U.S. Farm Bill recently removed hemp, a type of cannabis, from the controlled substance list. This prompted Canopy Growth to announce plans in January to spend up to $150 million establishing hemp processing operations in New York. Those operations could, conceivably, allow it to capitalize on the U.S. marijuana market if Congress reclassifies it someday, too.
Canopy Growth is a high-risk stock, though, so it should only represent a small portion of portfolios. Nevertheless, the size of the potential opportunity makes it a stock that warrants “stash-away” status.
The power to outperform
Matt DiLallo (NextEra Energy): Utility NextEra Energy has invested tens of billions of dollars to build…
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