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Who doesn't love a monster stock? Definitions can vary, and in my mind, a monster stock is one that has one or more amazing qualities that can lead it to be a terrific grower over time for its shareholders. If your portfolio has one or more monster stocks in it, it might grow like gangbusters over time (though such growth might even be achieved with simple, low-fee index funds).
Here are three such companies to consider for berths in your portfolio. See if any or all of them pique your interest, and if any do, dig deeper into them. Each could help your net worth grow over the coming decade and beyond.
Image source: Getty Images.
Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has been in the news a lot recently. At its recent annual meeting in early May, CEO Warren Buffett, aged 94, announced he'd be stepping down at the end of the year, after 60 years of growing his company. And grow it he did -- over those 60 years, the S&P 500 index of America's 500 biggest companies gained about 39,000% (10.4% annually, on average), while Berkshire Hathaway grew in value by 5,500,000% (nearly 20% annually).
The company is huge now -- recently ranked No. 5 on the Fortune 500 -- so it's not likely to grow as briskly as it did in the past. But it's still likely to grow. It's sitting on nearly $350 billion in cash, too, which can be deployed to buy more businesses or stocks. Right now, if you invest in the company, you'll become a part-owner of scores of businesses owned by Berkshire, such as GEICO, Benjamin Moore, See's Candies, and the entire BNSF railroad. You'll have a stake in Berkshire's stock portfolio, too, with major positions in companies such as Apple, American Express, Coca-Cola, and Bank of America.
The stock is not a screaming bargain at recent levels, but it's not extremely overvalued, either. There's a lot to like about Berkshire Hathaway, and its future is promising.
While Berkshire Hathaway shares don't exactly look cheap, shares of Constellation Brands (NYSE: STZ) do. The stock's recent forward-looking price-to-earnings (P/E) ratio of 14, for example, is well below the five-year average of 19. Its dividend, meanwhile, recently yielded 2.2%. That's not a huge dividend yield, but it's a growing payout -- which has been hiked by an annual average of 6% over the past five years.
In case you think you don't know Constellation Brands, know that it's an alcoholic beverage specialist, with brands such as Corona, Modelo, Robert Mondavi, High West, and Casa Noble selling primarily in the U.S., Mexico, New Zealand, and Italy.
The stock's low price might have you wanting to rush in, but hold on. The company, like many others, may be hurt by proposed or enacted tariffs, as it brews its beers in Mexico. It's certainly been a monster stock in the past, averaging annual gains of 18% over the past 15 years, but the near future features some headwinds. So give tariffs some thought and dig deeper into Constellation before buying.
Everyone knows the "Magnificent Seven" component Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). It encompasses not only the mighty Google search engine, but also the YouTube video platform, the Chrome browser, the Nest suite of smart home products, the Android operating system, the Google Cloud Platform, and more. With all that, no wonder the company recently carried a market value of $1.8 trillion!
Alphabet is even a dividend-paying stock now, having initiated a payout in 2024 and recently increasing it by 5%. It's also a monster stock, averaging annual gains of about 20% over the past decade. Will it keep growing at a respectable clip? That certainly seems likely. It already dominates the search world, and it's a leader in artificial intelligence (AI), as well. With more than $100 billion in cash, it's well poised to pounce on opportunities that come along. (A noteworthy new development is that Apple is considering replacing Google as its default search engine for its Safari browser.)
Some worry about Alphabet being broken up due to antitrust concerns, but that's not necessarily bad for shareholders. They may well end up owning all the pieces, which may even end up being worth more separately. Meanwhile, the stock's valuation is compelling, with its recent forward P/E of 17.5 well below the five-year average of 22.5.
Give these stocks a closer look and weigh their pros and cons. There's a good chance that one or more could help you get wealthier over the coming 10 or more years.
Before you buy stock in Berkshire Hathaway, consider this:
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Selena Maranjian has positions in Alphabet, American Express, Apple, and Berkshire Hathaway. The Motley Fool has positions in and recommends Alphabet, Apple, Bank of America, and Berkshire Hathaway. The Motley Fool recommends Constellation Brands. The Motley Fool has a disclosure policy.
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