Two Outstanding Shares I'm Persistently Hanging onto

Making a profit through short-term trading is quite challenging due to numerous hard-to-predict factors affecting short-term stock prices. However, investing in robust businesses with solid long-term fundamentals can yield significant long-term profits. Although companies must adapt to changing environments, these two stocks are worth considering for long-term investors.

1. Costco

Costco, with the ticker symbol COST (-0.70%), provides members with a vast selection of merchandise and services at competitive prices through its warehouses and online platform. It often sells products in bulk.

The company's management continues to excel in its straightforward business. You can see this in the company's high retention rate, which typically hovers around 90%, and its member growth. In the most recent fiscal year, ending in September, Costco had a 90.5% worldwide renewal rate, and its paid membership rose 7.3% year over year to 76.2 million.

Costco executed a modest membership fee increase in the U.S. and Canada at the beginning of September. Fees for certain types of memberships went up from $60 to $65, while Executive memberships increased to $130 annually. Given that this was the first price hike in seven years, it seems unlikely members will object, especially considering the value they receive.

Costco continues to be highly profitable. In the previous fiscal year, its operating income jumped 14.4% to $9.3 billion.

Investors have been generously rewarded by the shares over time. From November 2012 through November 2022, the stock rose over 560%, outperforming the S&P 500's 192%. Costco's consistent profitability growth has resulted in a higher market valuation than the overall market. The shares currently trade at a price-to-earnings (P/E) ratio of 56, compared to the S&P 500's 31.

Considering a long-term investment, utilization of dollar-cost averaging is a smart strategy, investing the same amount at regular intervals to even out your average purchase price.

2. Home Depot

Home Depot, with the ticker symbol HD (-0.84%), is the leading home-improvement retail chain, boasting over $150 billion in annual sales. It serves both homeowners and professional contractors and provides convenience and a wide variety of products and services.

Recent sales have been lackluster. Same-store sales (comps) have been negative, including -1.3% in the fiscal third quarter (ended October 27). This is due to economic factors that have decreased home sales and had homeowners postponing major projects. These factors include rising interest rates, which have increased borrowing costs. Existing home sales fell 1% in September, and mortgage rates have risen, with the 30-year fixed-rate mortgage reaching around 6.8% recently.

However, home sales are cyclical and will likely rebound. Homes will eventually be sold and major projects undertaken either out of necessity or desire. The Federal Reserve, pleased with progress on inflation, has started reducing short-term interest rates. This should alleviate financial pressure and help Home Depot capitalize on its strong market position.

While waiting for the cyclical upturn, Home Depot shareholders can collect dividends. The stock offers a 2.2% dividend yield, which is 1 percentage point higher than the S&P 500.

Shareholders have also benefited from regular dividend increases. The board has increased payments annually since 2010.

From January 2023 through November 13, Home Depot's shares have risen 18.4%, lagging the S&P 500 by approximately 7 percentage points. However, the stock's 313% growth over the previous 10 years has surpassed the market's 192% gain. Home Depot's shares sell at a P/E ratio of 27.

When considering long-term investing opportunities in the finance sector, Costco and its stock (COST) are worth considering due to its robust business model, high retention rate, and member growth. effecting significant long-term profits for investors.
Despite temporary setbacks in sales, Home Depot (HD) remains a strong investment option due to its leading position in the home-improvement retail market and its ability to capitalize on market cyclical upturns. Its dividend yield and history of annual dividend increases also attract investors looking for consistent income.