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There are several UK stocks in my portfolio that I plan to hold beyond 2030. One such stock is InterContinental Hotels Group (IHG.L), which owns a number of well-known hotel brands including InterContinental, Kimptonand Holiday Inn.
As someone who likes to travel, I know this business pretty well. Just recently, I used some credit card points to stay at the InterContinental hotel in Barcelona and it was a fantastic experience.
Multiple growth drivers
As for why I’m planning to hold on to the stock for the long term, there are two main reasons. The first is that I expect the travel industry to grow significantly over the next decade. One key driver could be the retirement of cashed-up Baby Boomers (who generally love to travel). Another could be rising levels of wealth in emerging economies across Asia.
The second reason is that the company has a major expansion strategy in place. Currently, it has a global pipeline of 330,000 rooms (2,225 hotels), representing 35% of the current system size. So, in 10-years’ time, the company is likely to be far bigger than it is today.
Of course, a ‘black swan’ event like another global pandemic could change my view on this stock. In this scenario, I might decide to sell my shares.
Assuming that we don’t have another terrible event like this however, I can see myself holding the shares for years to come. My plan is to buy more shares on the dips when the valuation is slightly lower — the forward-looking price-to-earnings (P/E) ratio today is about 21.3.
Rebound potential
Another stock that I plan to keep in my portfolio for years to come is Diageo (DGE.L). It’s the owner of Johnnie Walker, Tanqeray, Guinnessand many other well known alcoholic beverage brands.
This stock has been an absolute dog recently. But I remain optimistic that it can deliver attractive returns for me over the next decade.
Again, rising wealth in emerging economies should help the company grow over the long term. In countries like India, demand for Scotch is growing rapidly as incomes rise (the whisky market in India is projected to increase by around 8% per year between 2023 and 2029).
Another driver here could be tequila. Today, this is the fastest-growing spirit category globally, and Diageo – which owns Don Julio and several other brands – has plans to take it around the world.
Now, with this stock I see two main risks. The first is changing attitudes towards alcohol. Today, younger generations are drinking far less as they’re more health-focused. The second is GLP-1 weight-loss drugs like Wegs. These could reduce demand for alcohol.
With the shares down around 35% from their highs however, I reckon much of this risk is already priced into the stock. I plan to buy some more shares for my portfolio soon.
The post 2 magnificent UK stocks I plan to hold beyond 2030 appeared first on The Motley Fool UK.
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Edward Sheldon has positions in Diageo Plc and InterContinental Hotels Group Plc. The Motley Fool UK has recommended Diageo Plc and InterContinental Hotels Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2024