Like a fine wine or a family heirloom, the best stocks only get better with age. Investing in great companies will build wealth over the long run that you can pass down to your children and grandchildren. After all, many of today’s most valuable companies were just starting up a generation or two ago, so tomorrow’s titans of industry are available on the cheap today. If you’re looking for stocks that could one day make your children rich, take a look at these three recommendations from three of our Motley Fool investors: Netflix (NASDAQ:NFLX), Electronic Arts (NASDAQ:EA), and Vail Resorts (NYSE:MTN)
The one that started it all
Danny Vena (Netflix): Just 10 years ago, it would have been difficult to imagine the changes that would occur in media consumption over the coming decade, and the birth of streaming has changed the entertainment landscape forever. Netflix started it all, and its investors have been richly rewarded — and I think it’s just the beginning.
Netflix began its international expansion with Canada in 2010. The real revolution, however, happened in 2016 when the company announced its expansion to 130 additional countries simultaneously, growing its worldwide total to over 190 countries and becoming a global media empire in the process.
In Netflix’s most recent quarter, global revenue increased to $2.985 billion, up 30% year over year, while net income reached $130 million, more than double the $52 million achieved during the prior-year period. That wouldn’t have been possible without solid customer growth, which continued unabated to 109.25 million total subscribers, up 26% year over year.
The solid growth in new viewers was the result of a continued push for quality content. Netflix dominated this year’s Emmy awards, scoring 91 nominations and 20 awards — more than any other network with the exception of HBO. This is a stunning achievement, considering the streaming giant released its first original series only four years ago.
The key to Netflix’s future will be to succeed internationally, but significant penetration in early markets like Brazil and the U.K. show why that success is likely to continue. If you own Netflix, your kids will brag about it someday.
eSports is the future
Daniel Miller (Electronic Arts): One stock your kids could grow up to brag about might be a company they become very familiar with in the coming decades — well, as long as your kid becomes a gamer. Electronic Arts is one of the world’s largest third-party video game publishers, and has recently expanded beyond console games to include PC and mobile games. It has well-known titles such as Madden, FIFA, and Battlefield, among others, and the company recently signed a 10-year contract with Disney to develop Star Wars games across all platforms.
The video game maker has done incredibly well for its investors: EA’s stock price is up more than 760% over the past five years. But it’s the opportunity in eSports and its massive growth that could be an X-factor for the company’s future.
Consider that eSports and other video game broadcasts already attract hundreds of millions of people across the planet, and it’s still in the early stages of what could be a lucrative long-term story. As my colleague Keith Noonan points out, some popular eSports events already amass similar viewer numbers as sporting events such as the NBA Finals — and the audience is more receptive to ads, to boot.
The truth is simple: Young Americans love to play video games on multiple platforms, and they also love to watch competitive games. However, eSports is such a young growth story, it’s not totally clear how EA could end up monetizing the competitive gaming scene.
It’s reasonable for investors to expect management to figure it out over the long term. Until that plays out, EA still dominates the sports genre of today’s gaming industry and has expanded its top line through mobile and PC gaming, in addition to its console business. If management does figure out how to capitalize on eSports, and perhaps other segments such as virtual reality, Electronic Arts could easily become a stock your kids will brag about owning in two decades.
Jeremy Bowman (Vail Resorts): A great way to get your kids interested in investing is to buy them shares of a company they’re already interested in. Vail Resorts presents an appealing investment idea for youngsters who like skiing and snowboarding.
Not only does Vail own some of the premier ski resorts in North America, including its eponymous mountain, as well as Whistler/Blackcomb and Park City, but the company has been a winner for investors, too. The stock is up more than 300% over the last five years and has a number of features that give it a competitive advantage that should ensure it continues to outperform.
Its brand name itself is an asset, as Vail has long been known as one of the best ski resorts in the country, with a glitzy image to boot, and the company’s portfolio allows it to offer access through the Epic Pass, which gives skiers and snowboarders unrestricted access to Vail’s 15 mountains in North America, as well as 30 European resorts.
With the company’s acquisition strategy, those advantages should continue to grow as it adds new properties to the Epic Pass. In addition to acquisitions, the company is also growing organically by amping up its off-season attractions, like ziplines, adventure courses, and a mountain coaster, which should also help improve the bottom line over the long haul.
The preference of millennials for spending money on experiences rather than things should give the company a tailwind, as real-world experiences become more valuable in the e-commerce era. Catch some big air with Vail Resorts. Your kids will thank you for it.
10 stocks we like better than Netflix
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