One of the greatest forces in wealth-building is the power of compounding. That is why every portfolio needs some set-it-and-forget-it stocks. When you find a good compounder, you should hold it forever.
It is well known that investors do poorly timing the market. Due to the psychological nature of investing, most investors tend to buy at the top and sell at the bottom. As a result, they end up underperforming the market indices.
Similarly, trying to time the tops and bottoms in the best-in-class compounders is a fool’s errand. Instead, the best approach is to hold these set-it-and-forget-it stocks. Moreover, selling may leave significant gains on the table as these companies continue to compound.
The following set-it-and-forget-it stocks have durable competitive advantages that will continue entrenching their dominant market positions. These stocks are called sleep well and night stocks. While they might not have explosive growth, they will deliver stable growth and profitability.
Walmart (WMT)
Walmart (NYSE:WMT) is the largest global retailer by sales, making it one of the top set-it-and-forget-it stocks. It has delivered revenue and profit growth across all economic environments. For instance, it is one of a few retailers that managed to grow comparable store sales at the height of the Global Financial Crisis in 2008.
Today, this retail giant retains the same defensive characteristics. Due to its global scale and size, it enjoys significant economies of scale that enable it to offer low prices to consumers. Therefore, during economic downturns, consumers on tighter budgets flock to the chain for value. Conversely, during good times, it captures the benefits of economic growth.
Another factor that makes Walmart so stable is its product mix. Today, groceries account for about 59% of total sales. Thus, it’s less vulnerable to the gyrations in demand for discretionary items that ebb and flow depending on consumer strength. Its significant grocery exposure ensures consistent profitability throughout.
Added to the stability, Walmart has several growth drivers going forward. It has invested heavily in other high-margin businesses. For instance, its advertising business, Walmart Connect, grew 26% year-over-year in Q1 2025. Moreover, fulfillment services and third-party marketplace are other high-margin business lines with massive growth potential.
Alphabet (GOOG, GOOGL)
The parent company of search giant Google is well-positioned to capitalize on several secular trends. Furthermore, Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) has always been an innovator that has spawned new and lucrative businesses.
The key anchor that makes Alphabet among the top set-it-and-forget-it stocks to consider is its high-margin search business. Google Search achieved $175 billion in revenues in 2023 and enjoys an over 90% market share globally. Furthermore, after fears that AI is slowing growth, it’s emerging that AI is increasing search activity.
Besides Search, Alphabet is one of the best set-it-and-forget-it stocks due to its innovation. It’s an understatement to say that the tech giant has lots of irons in the fire—divisions like Google Cloud, YouTube, Android, Chrome, Gemini AI, Waymo, and Verily have massive potential.
Over the years, Alphabet has shown a knack for innovation and scaling businesses. For instance, it bought YouTube in 2006 for $1.5 billion. Today, YouTube’s trailing twelve-month advertising revenues stand at $32.9 billion. After including subscriptions to YouTube TV, Premium and Music revenue jumps to about $50 billion.
Since its IPO in 2004, Alphabet has grown revenues at a 27% compounded annual growth rate. While Search is slowing, other segments like YouTube and Google Cloud are stepping up, not to mention moonshots like Waymo that could bring in substantial revenues in the future.
AstraZeneca (AZN)
Drug maker AstraZeneca (NASDAQ:AZN) has one of the strongest pipelines. Hence, it deserves to be on your set-it-and-forget-it stocks list. Its high-margin specialty drugs will continue to drive higher profits, and the company expects its margins to expand over the next five years.
On the back of its 2024 investor day, there is a lot to like about the British pharmaceutical company. It revealed an ambitious goal to grow revenues from $45.3 billion in 2023 to $80 billion by 2030. Moreover, management said they would drive core operating margin improvement to the mid-30s by 2026.
The company is banking on its science and innovation to achieve these goals. Its recent launches, Tagrisso, Imfinzi, and Calquence, have shown leading efficacy in hard-to-treat cancers. Moreover, it has twelve new molecular entities (NMEs) in trials, with 7 in Phase III trials. Each of these NMEs set to launch by 2030 has a peak revenue potential of over $5 billion.
The growth of its pipeline will boost cash generation and support shareholder returns. As of this writing, AZN stock pays a 1.8% dividend, and management has promised a progressive dividend policy.
On the date of publication, Charles Munyi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.