Long-term investing has been shown to outperform short-term trading, but that doesn’t mean that every stock deserves a spot in set-it-and-forget-it portfolios. Many of today’s winners won’t have what it takes to thrive for decades, so it’s critical to due your homework and focus on those companies best positioned for long-haul success. To help you find the best long-term stocks to buy, we asked three Motley Fool contributors to scour their universes. Read on to find out why they think…
Riding the wave of global internet growth with…real estate?
Tyler Crowe (American Tower): Investing in growth stocks over a multidecade period is incredibly hard because so few businesses are able to maintain their competitive advantages for that long. Two things tend to remain constant over time, though: improving standards of living in emerging markets and real estate.
That combination of factors is what makes American Tower a compelling growth stock for the next half century. Don’t let the name mislead you; the owner and operator of cellular towers isn’t a pure play on the U.S. Rather, it has a diverse portfolio of towers and structures for telecommunications equipment across 19 countries on four continents. In fact, less than a quarter of the company’s (technically, it’s a real estate investment trust, or REIT) assets are in the U.S.
As mobile data speeds become faster, data transmission requires a more dense network of communication equipment. Therefore, American Tower benefits from more tenants renting space for their equipment on tower sites. This is providing ample room to grow in more mature markets such as the U.S. and Germany as they move from 4G to 5G as well as longer runways in emerging markets such as Nigeria and India as they move from 3G to 4G to 5G. According to management, smartphone data usage will grow 31% annually worldwide through at least 2023.
For American Tower investors, this has translated into stellar growth. Over the past decade, it has grown its free cash flow by more than 15% annually. The company is also making a large push into emerging markets in India, Latin America, and Africa, where it can get in on the ground floor of exponential data usage growth over the next several decades.
Whether cellular towers will remain the go-to method for communication equipment for the next half century remains to be seen, but it seems like a reasonable bet today, and it makes American Tower a very compelling growth stock for such a long time horizon…
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