3 Top Stocks to Buy and Hold Forever

Key Points

• Scale, recurring demand, and high switching costs make Waste Management, Intuitive Surgical, and Marriott hard to disrupt.

• Recent quarterly updates show good business growth and healthy cash generation across all three businesses.

• Their valuations aren't cheap, but long runways and durable moats can justify buying small positions and holding for decades.

• 10 stocks we like better than Intuitive Surgical ›

Investors hunting for "forever" stocks should start with businesses that are difficult to displace. The best candidates pair scale advantages with recurring demand and customer lock-in, allowing them to compound earnings through business cycles and return excess cash along the way. This summer's earnings season offered a fresh read on three companies that fit the bill: Waste Management (NYSE: WM), Intuitive Surgical (NASDAQ: ISRG), and Marriott International (NASDAQ: MAR).

Each of these companies reported second-quarter results underscoring their strong competitive positions and their meaningful business momentum. While no stock is risk-free and allocations to these stocks should remain modest, their businesses look like sensible anchors for a patient portfolio. Their common thread is simple: they deliver essential services at scale, with economics that tend to improve as they grow.

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1. Waste Management

WM is a resilient franchise with pricing power and predictable and highly reliable sales. Additionlly, the company has been putting up great business performance recently. WM's second-quarter revenue rose to roughly $6.4 billion, up about 19% year over year, reflecting solid performance in its core collection and disposal operations and contribution from its recently acquired healthcare disposal operation. WM's legacy disposal business saw revenue rise 7.1% year over year (highlighting good growth even when excluding the impact of WM's recent acquisition). Operating profitability expanded as well; management highlighted double-digit adjusted operating EBITDA growth.

Balance sheet strength and steady free cash flow remain central to the case here. WM continued to convert revenue gains into higher operating EBITDA, and management reiterated confidence in full-year cash generation. Specifically, WM guided for full-year free cash flow to be between $2.8 billion and $2.9 billion (up from $125 million from the initial full-year guidance the company provided). That cash supports dividends and buybacks over time without starving growth investments in recycling and renewable natural gas. Ultimately, the company's scale, route density, and long-term contracts create a moat that new entrants would struggle to breach.

With a price-to-earnings ratio of 32 as of this writing, shares aren't cheap. But investors are paying up for stability and visibility. If growth accelerates (perhaps by successfully leveraging its renewable natural gas or medical waste expansions), that could eventually make today's stock price look like a great entry point in the rearview mirror.

Of course, for investors who do decide to own WM, one risk to watch will be regulation. In some countries, waste disposal is far more regulated. If WM faces increased regulation, this could weigh on costs and pricing.

2. Intuitive Surgical

Meanwhile, Intuitive Surgical's installed base growth and rising procedures continued compounding higher in the company's most recent quarter. The robotic-surgery leader posted second-quarter revenue of about $2.44 billion, up 21% year over year, driven by higher da Vinci system placements and continued growth in procedure volumes. Management now expects 2025 da Vinci procedure growth of roughly 15.5% to 17%, a step down from last year but still a healthy clip for a business at scale.

What makes Intuitive hard to disrupt is the ecosystem: surgeons train on its platforms, hospitals integrate workflows and instruments, and recurring instruments and accessories revenue follows each procedure. Importantly, the installed base of platforms in this ecosystem increased at a double-digit rate again in Q2, and the company continued the global rollout of its next-gen da Vinci 5 system, which should support upgrades and keep competitors at bay. Management emphasized focus on the full launch and feature releases for da Vinci 5 in 2025, underscoring confidence in continued adoption.

But the company faces some unique risks. Capital spending cycles at hospitals and any slowdown in procedure growth could derail the bull case for the stock, or at least hurt returns until management works its way through those challenges. Additionally, with great expectations comes valuation risk. A price-to-earnings ratio of about 61 as of this writing means much of the upside is already priced in. Any negative surprises in procedure growth, regulatory pushback, or worse-than-expected hospital budget constraints could spook shareholders.

Intuitive Surgical's higher valuation compared to WM and Marriott will likely make it the more volatile stock of the three, but that can be acceptable as a part of a broader portfolio. Plus, the company has an extraordinary balance sheet with a significant cash position and no debt, bolstering its staying power.

3. Marriott International

Marriott's competitive advantage is derived from its asset-light approach to scaling and its global brand power. Showing how well the company is flexing these strengths, Marriott's second quarter featured worldwide revenue per available room (RevPAR) up 1.5% year over year, with international markets growing 5.3% and the U.S. and Canada roughly flat. Non-GAAP earnings per share came in at $2.65 (up from $2.50 in the year-ago quarter), and adjusted EBITDA reached about $1.4 billion, up 7% year over year. The company also repurchased roughly $0.7 billion of stock during the quarter and has returned about $2.1 billion year to date through July 30 via dividends and buybacks.

Marriott's model is built for endurance: it predominantly franchises and manages hotels rather than owning them, which keeps capital needs low and converts fee revenue into cash at attractive rates -- all while enabling it to focus intensely on its brand and its loyalty program. Management reaffirmed a measured full-year outlook and pointed to steady net-room growth despite softer demand in parts of North America. That combination -- global brand scale, an expanding system, and fee-based economics -- makes the business difficult to disrupt and well-positioned to compound through travel cycles.

Marriott's price-to-earnings ratio is about 30. But its forward P/E is significantly lower, roughly around 24, reflecting expected improvement in RevPAR growth, occupancy, and cost control.

Sure, none of these investment ideas are bargains. But high-quality compounding businesses often warrant premium price-to-earnings multiples.

For investors looking to build a durable core as part of their portfolio (perhaps allocating around 1% to 3% of their portfolios to each investment), these stocks make sense. These three companies -- an essential disposal services leader, a surgical-robotics pioneer, and a global hotel platform -- have business models designed to last. Owning a little of each and letting compounding do the heavy lifting could prove rewarding over the long haul.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuitive Surgical. The Motley Fool recommends Marriott International and Waste Management. The Motley Fool has a disclosure policy.