3 unstoppable investments everyone needs in their portfolio

Has your portfolio slowly drifted away from the well-rounded collection of stocks you wanted to own when you first started investing? If yes, you are not alone. The last two and a half years have been a wild time for the market, and it’s been all too easy to sell solid, reliable holdings for something dazzling but speculative.

If that’s you, don’t worry — there’s hope to rebuild your holdings into something that makes a lot more sense in the long run. Here’s a rundown of three proven, unstoppable investments that would make good additions to almost any portfolio.

1. Costco

According to most accounts Costco Wholesale (COSTS 1.21%) should not thrive. It doesn’t offer anything that competing retailers like target, Krogerand Walmart not, and none of these retailers charge customers a membership fee just to shop at their stores.

The fact of the matter is, Costco has mastered the art and science of club-based retail. As of May, the company has 64.4 million paying members, up nearly 4 million year-over-year. Membership dues revenue increased to $984 million from $901 million in the same quarter, coinciding with revenue growth of 16% over the trailing 12 months. In fact, this company’s revenue has grown every quarter year over year for over a decade. Analysts are expecting similar revenue growth this year and next, with earnings growth expected to be even stronger.

There are many more options below. There are over 122 million homes and thousands of businesses of all sizes in the United States, many of which are not yet members of this discount shopping club. There are also just 577 Costco stores in the U.S. and Canada — Costco’s core market — versus more than 4,700 Walmarts, nearly 2,800 Krogers, and 1,937 Target stores, all of which operate in markets that arguably could support one more store … like a Costco.

2.Microsoft

Attentive investors probably know Microsoft (MSFT -0.47%) fell short of last quarter’s earnings and revenue estimates. You probably also know that the software giant recently asked employees to curb their travel and training expenses. The message is far from encouraging for potential shareholders.

However, take a step back and look at the bigger picture. Microsoft is still looking for a better back half of the 2022 calendar than analysts are, and analysts were already expecting quite a bit! Wall Street is forecasting revenue growth of 11.4% for the fiscal year just started, with earnings per share expected to rise to $10.34 from $9.21. The company expects revenue from its intelligent cloud unit to reach $20.5 billion in the current quarter, up at least 20% even after adjusting for currency fluctuations. Productivity and business process revenue is expected to grow approximately 7% for the current quarter after excluding the negative impact of currency value changes of 6%. That’s solid given the looming economic turmoil.

There is also no reason to doubt these prospects.

Think about it. While Microsoft faces some form of competition in every market it operates in, it’s a leading name in each of those markets. Consumers and businesses still see productivity software like Excel and Word as top choices, and the Xbox console can stand shoulder to shoulder with them Sony‘s PlayStation or Nintendoconsoles. Meanwhile, the company’s cloud computing platform management software — dubbed Azure — posted 40% revenue growth in the second quarter of the year, beating growth, according to Canalys Amazon‘s cloud computing business contracted.

The kicker: Microsoft’s revenue is increasingly recurring or renewable. This means that access to platforms such as Office or Azure is increasingly being “rented” for a relatively small monthly sum instead of being bought once. This software-as-a-service model generates predictable, consistent revenue from quarter to quarter.

3. JPMorgan Chase

Add at the end JPMorgan Chase (JPM 0.85%) to your list of unstoppable investments that would be a welcome addition to almost anyone’s portfolio.

Admittedly, it’s a difficult time to be excited about owning a bank. Despite a series of recent Federal Funds Rate hikes, interest rates are still near historic lows, cutting into lending margins. Investors fear that the domestic and global economies are also headed for recession. This not only reduces the need for new loans, but also poses a risk to banks’ existing loan portfolios. A lousy economic environment can also weigh on the investment banking and brokerage industries, creating another potential headwind for one of JPMorgan’s businesses.

However, if you understand that banks are very sensitive to economic cycles, you can feel good about taking a position in JPMorgan in the middle of an economic slowdown and ahead of the next economic recovery.

And such a lull is arguably already fully priced in. Shares are still nearly 30% off their early 2022 peak, despite their rally from last month’s low, as more sellers realize they’ve surpassed their target, so to speak. You can still buy the stock at about 11 times this year’s forward earnings per share of $11.20 and less than 10 times next year’s forward earnings per share of $12.57. Perhaps best of all, you’d get in while the dividend yield is an above-average 3.33%. Incidentally, it’s a dividend that’s increased every year since 2011, after being cut in 2009 in the wake of the subprime mortgage collapse.

Only time will tell how easily and at what pace the country’s largest bank name (by assets) can keep growing its payouts. However, there is plenty of scope for this powerhouse. This year’s projected earnings of $11.20 per share — while well below last year’s impressive bottom line of $15.36 — is still more than enough to support its current annual dividend of $4 to cover per share.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. James Brumley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Microsoft, Target, and Walmart Inc. The Motley Fool recommends Nintendo. The Motley Fool has a disclosure policy.

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