Key Takeaways:
- Taiwan Semiconductor dominates the high-end chip market, supplying companies like Apple and NVIDIA. Analysts see nearly 50% upside for the stock today.
- Sherwin-Williams is the world’s largest paint and coatings company with strong pricing power.
- United Rentals is the largest equipment rental company in North America, and analysts believe the stock has about 30% upside as it benefits from economies of scale.
- Get accurate financial data on over 100,000 global stocks for free on TIKR >>>
During the California Gold Rush in 1849, one of the most reliable ways to make money wasn’t mining for gold.
It was selling the tools, like pickaxes and shovels, that miners needed.
In fact, Levi Strauss was founded around this time because they were selling durable denim jeans to miners.
This same concept can apply to investing.
Instead of looking for the next big winner in a competitive market, we can look for the companies that dominate their markets and have a strong chance of making money even if they don’t strike gold.
Here are three “pick & shovel” stocks that could be strong long-term investments.
1: Taiwan Semiconductor (TSM)
Taiwan Semiconductor is the world’s largest semiconductor foundry, producing chips for some of the biggest names in tech, including Apple, NVIDIA, and AMD.
While tech companies rise and fall, every AI system, smartphone, and data center needs chips to function. Taiwan Semiconductor dominates the high-end chip market, making it one of the most important companies in the global economy.
Why Taiwan Semiconductor has upside:
- The company is a critical supplier to major tech giants, ensuring steady demand.
- It controls the high-end semiconductor market, making it difficult for competitors to catch up.
- Analysts see nearly 50% upside for the stock as chip demand continues to grow.
Despite its dominant position, the stock still trades at a reasonable valuation, making it one of the best pick-and-shovel plays in tech today.
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2: Sherwin-Williams (SHW)
Sherwin-Williams is the largest paint and coatings company in the world, supplying homebuilders, manufacturers, and DIY painters.
Regardless of economic conditions, buildings need maintenance, and Sherwin-Williams benefits from steady demand in both residential and commercial markets.
Why Sherwin-Williams is worth watching:
- The company’s market leadership provides pricing power and stable returns.
- Demand for paint and coatings remains consistent, even during downturns.
- Analysts see about 15 percent upside as the company maintains strong profitability.
The stock has underperformed recently, but with steady demand and pricing power, Sherwin-Williams could be a solid long-term investment.
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3: United Rentals (URI)
United Rentals is the largest equipment rental company in North America, providing heavy machinery to construction, industrial, and energy companies.
Instead of buying expensive equipment, companies turn to United Rentals for flexible leasing solutions, making it an essential heavy equipment supplier in multiple industries.
Why United Rentals is interesting:
- The company benefits from economies of scale, making it a dominant player in its space.
- Construction and infrastructure spending continue to drive demand for rental equipment.
- Analysts have an average price target of $818 for the stock, which means they believe the stock has about 30% upside from current levels.
By the way, if you like United Rentals, you might also want to look at Ashtead Group, the second-largest company in the industry. Scale matters in this industry, so big companies tend to outperform their smaller peers.
Both companies generate high returns on capital and have outperformed the market over time.
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TIKR Takeaway
Pick-and-shovel stocks sell essential products and services that the world relies on.
Taiwan Semiconductor, Sherwin-Williams, and United Rentals all have strong business models and could deliver solid returns over time.
The TIKR Terminal offers industry-leading financial data on over 100,000 stocks and was built for investors who think of buying stocks as buying a piece of a business.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
