Monday, September 10, 2007

My Core Long Term Stock Holdings

On August 7, 2007, I wrote about the how the value of $1000 invested in Dell, in 1988, and in MSFT, in 1986, would have been worth $246,700 and $386,250 respectively in May, 2007. I also mentioned that I picked Google (GOOG), Amazon (AMZN) and General Electric (GE) and great investments for $1000 today. Of note, several commenters correctly pointed out that that the capitalizations for GOOG, AMZN, and GE were already at $156B, $31B and $394B respectively. Therefore, they would be unlikely to return 20,000 to 40,000%.

The commenters are correct. It is highly unlikely GOOG, AMZN, or GE will increase by those percentages. However, if one accepts that trillion dollar capitalizations will be likely in the next 5-10 years, then 2000% to 10,000% may be possible in twenty years :-) Not as high as Dell and MSFT, but still pretty good, if it happens. So I will invest in GOOG, AMZN and GE as I continue to look for the $1 - $5 billion companies that may increase $500B to $2 trillion in the future
Here are the criteria I have for big winner stocks:

  1. A business model that has significant growth potential.

  2. A product that is future focused.

  3. A passionate business leader with staying power.

Business Model

GOOG - What a great business. Contextual advertising placements. Millions of individuals partner with Google to create the content sites for the ads. Google's business increases every time a new website is created that wants to advertise. If Google can continue to leverage this partnership with Internet users, they will continue to increase revenues and grow.

AMZN - Amazon's business model is evolving from an Internet sales company to running the backroom supply chain operations for any company. AMZN believes they can run warehouse and shipping operations better and for a lower cost than most companies. If they can, this business model could create significant revenue for them. To me, that seems like limitless opportunity, somewhat like the Google business model.

GE - Green and infrastructure rebuilding is the bet GE is making. The environment and decaying infrastructure are major topics that have been in the news recently. Both elements will be important in the future economy and GE is taking the lead.

Future Focused Product

GOOG - While many think Google as an Internet or search company, I see Google as a major enabler of personal development via social networking. They do this by leveraging the Internet: Search, G-Mail, Docs, Maps, YouTube, and perhaps free high speed access, in the future. And it's free to use because Google monetizes their products via advertising.

AMZN - I believe the future of business will be more distributed and involve collaboration of multiple small businesses. Low cost warehousing and shipping will enable a new generation of entrepreneurs, who previously didn't have the skills or resources to run a product oriented business.

GE - Reduction of carbon emissions, new sources of environment friendly power, and renovating our roads, bridges, and facilities will be major areas of focus over the next few decades.

Passionate Business Leader

GOOG - Founders Serge Brin and Larry Page are still heavily involved with setting the direction for Google. Eric Schmidt, CEO, is an experienced technology executive with stints at Sun Microsystems and Novell prior to Google.

AMZN - When Jeff Bezos created in 1995, I thought both Jeff and Amazon would a flash in the pan. Twelve years later, both Mr. Bezos and Amazon are still here, evolving the business and running strong.

GE - Jeff Immelt has shown he can more than fill the shoes of the legendary Jack Welch with a new vision for GE. Mr. Imhelt is focused on innovation for the environment and infrastructure, both critical elements for economic success.

For me, each of these companies is worth an investment of $1000 minimum. I also plan to hold these stocks for the long term unless there is a major change in one of my three criteria.

Disclosure: I own shares of GOOG, AMZN and GE.

For more on Strategies and Plans Ideas , check back every Monday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

No comments: