This blog's content was taken from episode 311, "6 Stocks to Hold for the Next Decade" You can go check out the whole episode here:
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1. Roper Technologies
Roper Technologies is a conglomerate of around 40 companies. Traditionally, a portfolio of industrial businesses Roper has been aggressively transitioning into owning more recurring cash flows tech companies.
2. Canadian Nation Rail
CNR has one of the most extensive railway networks in all of North America. It spans from the east coast to the west coast of Canada. Goes all the way up to the Northwest territories. It goes all the way down from southern Ontario to the gulf of Mexico in the US.
One of the biggest advantages for railways is that they have moats that are rock solid. It would be very difficult for any new potential competitor to build a railway that would go across so many provinces and states, think of the regulatory approval and how difficult that would be to get.
3. Intuitive Surgical (ISRG)
Intuitive surgical is a leading robotic surgery company with over 8,000 of their Da Vinci RAS systems in place. The business operates a wonderful biz model of selling ongoing services and instruments once the hospital has the unit installed.
It is a risky stock due to the fact that the competitive landscape on a 10 year time horizon is much more unknowable and will certainly change over time. There is a long runway for growth to expand into other procedures, gain more market share and the global adoption of RAS.
The biggest question mark is the competitive landscape. Just since owning the stock personally, competitors in Medtronic and Stryker who are truly operating in the medical devices and surgery space. Other medical and pharmacy companies have attempted it but with limited success.
4. Home Depot
What they really have is a distribution moat and one on the type of items they sell. They sell items that you can only find in hardware stores and they always have delivery options which is extremely enticing for both home owners and contractors.
Just like CNR, there’s going to be some cyclicality around home depot as well. If people have less money to spend, it’s going to affect them. However, there’s a certain amount of maintenance that homeowners have to do on their homes and Home Depot will benefit from that.
Costco is the best boring blue chip in the world, it is the ultimate sleep well at night stranded on a deserted island stock.
The valuation is not cheap and I think in the short and medium term, it's a bit of an uphill battle in terms of modelling market-beating returns. However, it deserves to trade at a premium given there is a lot of growth left in this story.
As we are seeing right now, there is regulatory risk on grocers and that’s something to take into account. The biggest tailwind for Loblaws, and other grocers, are that Canada’s population is growing. Yes, they have low margins but the more people there are in Canada, the more they’ll sell food and pharmacy goods.