You’ve heard of Warren Buffett, the legendary value investor and co-founder of Berkshire Hathaway. Perhaps you’ve also heard of Charlie Munger, Buffett’s lower-profile but no less impressive business partner.
But unless you’re a seasoned DIY investor, you probably haven’t heard of two stock market veterans who — like the Oracle of Omaha himself — have proven their stock picking chops time and again.
They’re Tom and David Gardner, co-founders of The Motley Fool — the premier online resource for U.S.-based retail investors.
Want to invest like David and Tom Gardner? To truly replicate their success, you’ll need to pay for The Motley Fool’s premium investment newsletters, like the Stock Advisor and Rule Breakers services. But this list of 10 of their best recent stock picks offers a taste.
Who Are Tom and David Gardner?
The Gardner brothers and their growing team at The Motley Fool have been picking stocks for more than 25 years, delivering their stock recommendations through subscription stock picking services like The Motley Fool Stock Advisor and The Motley Fool Rule Breakers.
Many of these picks have handily beaten the broader stock market, as have Stock Advisor and Rule Breakers since their respective inception dates — although the Gardners would be the first to admit that not all of their choices have panned out.
According to the most recent performance data available, the average return since inception of all Motley Fool Stock Advisor recommendations — the Gardners’ most popular stock picking newsletter — is 397%. That’s far higher than the return for the S&P 500 during the same time period (128%).
Best Stock Picks by the Gardner Brothers at The Motley Fool
David and Tom Gardner’s top stock picks were all among the best stocks to buy when the brothers recommended them. Most remain among the best stocks to buy right now.
That’s no accident. The Gardners have a knack for sussing out long-term, game-changing value where others fail to see it. They believe that picking durable winners is the best way for long-term investors to build wealth for the long haul.
And so they pick individual stocks and exchange-traded funds (ETFs) for the next decade, not just the next quarter. Although no one can predict the future, each of these recommended stocks has outperformed the broader market on a consistent basis and is poised to capitalize on long-term economic trends.
1. Amazon (NASDAQ: AMZN)
Amazon is the dominant online retailer in North America. It sells just about everything on its namesake website: digital and physical books (its first product line), consumer electronics, household goods, pet products, sporting equipment, food and beverages, and much, much more.
Through its Whole Foods Market supermarket subsidiary, Amazon enjoys a growing foothold in the world of physical retail too, and analysts widely expect the company to build on that advantage in the years ahead.
Amazon isn’t only in the retail business. During the 2010s, the company invested heavily in its Amazon Prime Video service, which blends a massive library of licensed movies and shows with a rapidly growing studio that pumps out high-profile original content. In 2021, Amazon doubled down on this investment when it acquired MGM, a major film studio, for $8.45 billion according to The Verge.
Amazon benefited massively from the COVID-19 pandemic and stay-at-home orders as trepidatious consumers shifted retail’s center of gravity to the World Wide Web. The company’s net revenue increased by 38% to $386 billion in 2020, according to Forbes. That’s an eye-popping rate of growth for a firm of Amazon’s size and a warning sign for bearish investors who believe Amazon’s best days are behind it.
Amazon is all but certain to continue to dominate online retail in the near future and could threaten current market leaders in the physical retail and entertainment spaces in the years ahead. It’s no wonder that the Stock Advisor touts Amazon as one of its best stock tips of all time — nor that Amazon remains one of the top tech stocks to buy today.
Amazon’s five-year annualized return is 36.22% as of Nov. 10, 2021, according to Morningstar. That’s a bit better than the 28.45% five-year annualized return of the Internet retail sector.
This is especially impressive given that Amazon is the most dominant Internet retail company in North America, so it can only grow so fast these days. The stock’s 15-year annualized return of 34.85% is comfortably ahead of the sector’s 23.16% benchmark return.
2. Netflix (NASDAQ: NFLX)
From its humble beginnings as a mail-order rental service for DVDs (remember those?) to its present-day position as the North American market leader in streaming content, Netflix has consistently outperformed the broader stock market.
Like Amazon, Netflix is now a major producer of original video content. It’s behind some of the most-watched TV shows in recent history: “Bridgerton,” “Lupin,” “Tiger King,” “Stranger Things,” and “The Queen’s Gambit,” to name just a few.
And, like Amazon, Netflix was perfectly positioned to benefit from the widespread economic disruption wrought by the COVID-19 pandemic. It was the nominal leader of a diverse drop of “stay-at-home stocks” that saw outsize gains during the pandemic, like Zoom Video (NASDAQ: ZOOM) and Wayfair (NYSE: W).
Netflix saw incredible subscriber growth in 2020, adding nearly 16 million subscribers, per Reuters, and defying prognosticators who mistakenly believed the streaming market was saturated.
Netflix’s subscriber growth tailed off as the pandemic faded, coming in below expectations through the first half of 2021. But the company remains uniquely well-positioned to take advantage of a longer-term shift in content consumption. And that’s more than enough to include it on a list of the Gardners’ best stock picks ever.
Netflix’s five-year annualized return is 41.16% as of Nov. 10, 2021, according to Morningstar. That’s more than twice the 16.64% five-year annualized average return of the broader entertainment sector.
3. Shopify (NYSE: SHOP)
Shopify is a Canadian e-commerce retailer that makes it possible for small, lean businesses — often solopreneurs with big dreams and limited capital — to sell products online. Shopify also provides vital diversification for brick-and-mortar retailers looking to reach customers beyond their hometowns.
Needless to say, Shopify was a lifesaver for many small businesses amid pandemic lockdowns. The platform’s revenue nearly doubled in 2020, according to a company release. To the extent that the sudden pandemic shift to digital retail proves permanent, Shopify is poised to benefit.
That’s not to say that Shopify wasn’t on the up and up before COVID hit. According to The Motley Fool, $10,000 investment in Shopify’s IPO was worth about $286,000 in February 2020, the last truly “normal” month in pre-COVID history. Before the world-changing event that kicked its growth into another gear, Shopify was already one of the most successful Motley Fool Stock Advisor picks.
Shopify does operate in a fragmented industry. The company entered an e-commerce market that was already pretty crowded, and its success — along with consistent growth in online retail as a whole — spurred a wave of Shopify alternatives. Some of those alternatives improve on the original and may threaten Shopify’s dominance in the coming years. But in the short term, Shopify is riding high.
Shopify’s five-year annualized return is 105.63% as of Nov. 10, 2021, according to Morningstar. That’s more than triple the 30.20% five-year annualized return of the software application sector.
4. Tesla (NASDAQ: TSLA)
Tesla is a U.S.-based electric vehicle (EV) manufacturer that’s consistently ranked among the best electric vehicle stocks to buy. It’s arguably the best-known EV company in the world, although bigger competitors like Ford and General Motors are quickly making up for lost time in the EV manufacturing race.
Tesla is difficult to separate from the persona of Elon Musk, its impulsive and controversial founder. Musk is a serial entrepreneur whose attention often appears divided between his bread-and-butter business (Tesla) and riskier, capital-intensive ventures like interplanetary spaceflight (SpaceX) and subterranean transportation (the Boring Company).
And his public statements (often delivered on Twitter) have drawn SEC sanctions of material impact to his firm’s finances. As a result, Musk deserves more scrutiny than the typical founder.
Should that worry long-term investors in Tesla? Probably not.
Investors concerned about Tesla’s long-term potential need to remember that the company is on the leading edge of a once-in-a-lifetime sea change in human mobility — the transition from the internal combustion engine to the battery-powered electric engine.
With the Biden administration aiming to build 500,000 electric charging stations around the U.S. by 2030, per Government Technology, it’s not a question of whether electric cars will replace gas-powered vehicles, but how quickly.
And Tesla also isn’t just an electric car company, even if transportation still accounts for the bulk of its revenue. One of Tesla’s key long-term objectives — one even more ambitious than replacing the gas engine — is to decentralize and democratize the planet’s electricity infrastructure. Innovations like the Megapack, a utility-scale energy storage solution, offer an early taste of how that might look.
Tesla’s five-year annualized return is 95.84% as of Nov. 10, 2021, according to Morningstar. That’s nearly three times the 32.90 five-year annualized return of the auto manufacturers sector, which includes a mix of EV and conventional automakers.
5. Disney (NYSE: DIS)
For most people, the name “Disney” evokes Mickey Mouse and the Magic Kingdom. But Disney is in the business of much more than cartoons and theme parks, although both undoubtedly drive billions in revenue for this global entertainment behemoth.
Disney’s low-key holdings are surprising enough for Business Insider to run a list of brands the average person doesn’t realize Disney owns. Among them are:
- ABC, a major U.S. broadcast network
- ESPN, the global sports media brand
- Marvel Studios and Lucasfilm, two of the most successful film studios of the 2010s
- 21st Century Fox, another massively successful film studio with a huge content library
- Hulu, a major Netflix and Amazon Prime Video competitor
- Hollywood Records, a storied music publisher
Disney’s vast entertainment portfolio supported the company through the COVID-19 pandemic, which devastated its travel and leisure holdings. In a post-pandemic environment, something closer to the reverse could happen, with Disney’s theme parks, resorts, and cruise lines seeing a surge in revenue as leisure travel returns.
It’s worth noting that Disney’s medium-term stock returns are not as impressive as those of some other Gardner picks. But the company has easily outperformed the broader market since the beginning of the 21st century, and the company looks to remain relevant (and vibrant) for years to come. That makes it a sensible addition to any long-term stock portfolio.
Disney’s five-year annualized return is 13.69% as of Nov. 10, 2021, according to Morningstar. Though that actually underperforms the broader entertainment sector during the same period, Disney’s 15-year return of 12.42% is comfortably ahead of its benchmark index over the same timespan.
6. Apple (NASDAQ: AAPL)
Apple needs no introduction. If you’re reading this article on a mobile device, there’s a good chance it’s an iPhone, the handset that kickstarted the smartphone revolution. The iPhone has done more for Apple’s bottom line (and stock price) than any other piece of consumer electronics technology since the advent of the personal computer.
Perhaps not coincidentally, Apple also played a significant role in the PC revolution. Behind both transformative technologies stood Apple co-founder Steve Jobs, whose rare talent for branding and consumer product development quite literally changed the world.
Many investors and market analysts were understandably concerned about the company’s future following Jobs’ untimely death in 2011, as Apple endured a prolonged slump after he left the company for the first time in 1985. But current Apple CEO Tim Cook proved more than capable of picking up where Jobs left off, and the company’s stock performance to date reflects market confidence in his leadership.
Apple continues to launch and update successful consumer electronics products: the iPad, Apple Watch, Apple TV. Lately, the company has diversified into electric and autonomous vehicle systems.
Thanks to its deep pockets and vast technical expertise, those moves could eventually pose a competitive threat to EV upstarts like Tesla as well as established automakers like Ford, but they’re not a significant revenue driver at present.
Apple’s five-year annualized return is 41.28% as of Nov. 10, 2021, according to Morningstar. That’s roughly in line with the five-year annualized return of the consumer electronics sector.
Of course, like Amazon, Apple absolutely dominates its industry and simply can’t grow like a startup anymore. Its 15-year annualized return of 30.11% is comfortably ahead of the sector’s 26.64% annualized return during the same period.
7. MercadoLibre (NASDAQ: MELI)
If you’ve never heard of MercadoLibre, don’t blame your limited stock market knowledge. Blame geography.
MercadoLibre is a huge deal, just not in the United States. Based in Argentina, it’s the largest e-commerce platform and payments processor operating in Latin America today. That means it’s primed to tap into one of the world’s fastest-growing multinational economic blocs, stretching from Mexico in the north to Chile and Argentina in the south.
MercadoLibre’s breakneck expansion made it one of the top growth stocks of the 2010s — and one of the Gardners’ best stock picks to date. Indeed, overly simplistic comparisons to Shopify understate MELI’s value.
Not only is the company the top e-commerce player in Brazil, Argentina, Mexico, and Chile, its MercadoPago payments arm makes it a leading online payment provider in the region, and its MercadoCredito department is a valuable short-term financing solution for emerging digital merchants.
There’s more. In addition to its namesake online marketplace and the two solutions described above, MercadoLibre offers three distinct additional solutions for digital sellers and buyers in Latin America:
- MercadoShops. It’s fair to compare MercadoShops to Shopify. This is a turnkey digital storefront solution, not at all unlike Shopify or Etsy, that allows ambitious sellers to create, manage, and grow their own digital stores with plenty of help from MercadoLibre. MercadoShops integrates seamlessly with MercadoLibre itself and the MercadoPago payment platform.
- MercadoEnvios. MercadoEnvios is a third-party logistics service that allows smaller sellers to fulfill orders without investing in storage space, logistics contracts, and any number of other headaches associated with dropshipping.
- MercadoPublicidad. MercadoPublicidad is a marketing and advertising solution that allows smaller sellers to take advantage of the vast amounts of buyer data MercadoLibre collects.
In sum, MercadoLibre is a truly comprehensive online retail solution for Latin American entrepreneurs. No wonder it’s one of the best picks on the Gardners’ stock lists.
MercadoLibre’s five-year annualized return is 57.80% as of Nov. 10, 2021, according to Morningstar. That’s double the 28.45% five-year annualized return of the Internet retail sector, itself one of the hottest stock market sectors right now.
8. NVIDIA (NASDAQ: NVDA)
NVIDIA is another high-growth company that’s probably not familiar to the average American consumer. But, like Apple’s iPhone in its day, NVIDIA’s technology is quietly revolutionizing computing.
What is that technology, exactly? In a word (or three): high-end computer chips.
NVIDIA manufactures the graphics processing units (GPUs) that serious computer gamers rely on to minimize lag times and maximize visual resolution. NVIDIA is widely recognized as a market leader in the GPU space, dominating closely watched industry lists like PCMag’s annual best graphics cards roundup.
The Gardners and the Motley Fool Stock Advisor team are bullish on NVIDIA for other reasons as well. The company’s GPUs are widely used in commercial applications like data centers and cryptocurrency mining, two rapidly growing sectors that could pay dividends for NVIDIA and its investors for years to come. Anticipating said growth, NVIDIA acquired data center company Mellanox in 2020.
NVIDIA’s super-fast chips are poised to capitalize on another transformative trend that’s coming sooner rather than later: artificial intelligence. NVIDIA chips run AI systems better than any competitor’s. As those systems take on ever greater responsibility in applications as diverse as data centers, driverless cars, and health care, those little wafers will become ever more important to the smooth functioning of human society.
A bold claim, to be sure. But investors shouldn’t bet against NVIDIA. The Gardners certainly haven’t.
NVIDIA’s five-year annualized return is 77.12% as of June 30, 2021, according to Morningstar. That’s more than double the 33.89% five-year annualized return of the broader semiconductors sector.
9. The Trade Desk (NASDAQ: TTD)
In terms of revenue and market capitalization, California-based adtech firm The Trade Desk is dwarfed by the likes of Apple and Amazon. But what The Trade Desk lacks (so far) in market heft, it more than compensates for in share price growth.
Since going public in 2016 at a share price of $18, the company’s stock went on a four-year tear before finally pausing for breath in late 2020.
According to a Motley Fool analysis, before The Trade Desk’s all-time high, $1,000 invested in the company’s IPO would have been worth nearly $8,000 in April 2020. Of course, The Trade Desk’s impressive past-year performance doesn’t help investors who haven’t gotten in on the action yet.
A more recent Motley Fool analysis suggests there’s still plenty of upside here. In the near term, a 10-for-1 stock split is widely seen as a vote of confidence by management in the stock’s appreciation potential.
If The Trade Desk can stay one step ahead of the Google curve, it’s in an enviable position to take advantage of rapidly growing and diversifying advertising markets on Web, mobile, and streaming platforms.
The Trade Desk’s three-year annualized return (the longest span available since its IPO) is 106.82% as of Nov. 10, 2021, according to Morningstar. That’s more than three times the 30.20% three-year annualized return of the broader software applications sector.
10. Okta (NASDAQ: OKTA)
Like The Trade Desk, Okta is a digital technology company whose cybersecurity products and services the average Web user interacts with only indirectly. But those products and services are absolutely vital to the smooth functioning of the digital economy.
They’ll only become more important as high-profile hacking and ransomware attacks like those that temporarily felled Colonial Pipeline and JBS increase in frequency and severity.
Okta’s solutions are technical, even eye-watering, for nonexperts to wrap their heads around. What’s important for would-be investors to understand is that Okta’s solutions make the Internet safer for individual users and companies alike — and that those solutions are in high demand.
The Colonial Pipeline and JBS hacks focused national attention on what digital security experts have long known: Hackers are getting better at what they do, and their work grows more disruptive by the month.
Accordingly, a Motley Fool analysis from June 2020 identifies Okta as one of the “three tech stocks that could make you rich.” The reasoning is simple: Not only are Okta’s solutions sophisticated and adaptable enough to stymie elite hackers, but they’re also “sticky,” meaning companies tend to keep using them once they’ve tried them out.
And it appears that Okta is diversifying — if not from its core cybersecurity business, then at least into what The Motley Fool describes as a $30 billion consumer cybersecurity market. To this end, Okta purchased Auth0, a consumer identity and access management firm, in early 2021.
Okta’s three-year annualized return (the longest span available) is 63.28% as of Nov. 10, 2021, according to Morningstar. That’s roughly twice the three-year annualized return of the broader software infrastructure sector.
Rule Breakers and Stock Advisor are only the two most popular Motley Fool subscription services. MF has far more premium services where those came from — around two dozen in all, with new ones coming online periodically to replace older packages that have run their course.
Whether you’re keen to build a portfolio that mirrors David Gardner’s own with Everlasting Portfolio or unlock deep value with one of the industry- or trend-specific Rule Breakers packages, there’s almost certainly a Motley Fool service tailored to your personal investing style and objectives.
In truth, there’s almost certainly more than one MF service that fits your needs, in good times and bad. If you’re intrigued by the Gardner brothers’ stock-picking track record, you might be ready to take the next step.