The very followed Dow Jones Industrial Average has produced a positive return about two-thirds of the time over the past century. And through all of these ups and downs, the market has historically averaged around a 10% annualized return. At this rate, a $10,000 investment turns into $1.45 million after 50 years.

That’s why sticking with the best companies is all you need to build generational wealth in the stock market. Market sell-offs are the perfect time to buy top companies in their respective industries. Here are some of the best companies in the world that are expected to deliver above average returns for many years to come.

Alphabet

Google Parent Company Shares Alphabet (GOOG 1.15%) (GOOGL 1.05%) are down 25% year-to-date, putting the dominant search engine on sale. With a price-to-earnings (P/E) ratio of 19.5 based on this year’s consensus earnings estimate, Alphabet can offer good returns to investors from this historically low valuation. Note that the average stock in the S&P500 The index has averaged a P/E ratio of 16 over the past century, making Alphabet look undervalued given its dominant position in online advertising.

Google and Alphabet’s YouTube are as dominant in their respective markets as you could want in an investment. The number of monthly active users on YouTube has more than doubled in the past three years, and Google controls 92% of the search engine market. With so many people relying on Google’s various apps every day, Alphabet generated $61 billion in ad revenue last year, accounting for 81% of total revenue.

It continues to deliver strong growth in a difficult economic environment. Revenue grew 23% year-over-year in the first quarter, driven primarily by Google search revenue. Advertising growth is driven by more people searching for vacation destinations and retail stores. Additionally, as more people meet face-to-face in the wake of the pandemic, time spent on YouTube continues to grow, increasing demand for advertising from big brands.

Some investors might worry about the impact of a recession on advertising spend, but Alphabet has a cushion to survive a tough economy with free cash flow hitting $68 billion over the past four quarters. Even if a recession puts pressure on ad revenue, there will still be plenty of money to fund reinvestments in future growth opportunities, such as cloud services and artificial intelligence technology — the meat and bones of Google. .

Alphabet is an essential business that will continue to generate strong returns for its shareholders for many years to come.

Berkshire Hathaway

When the markets fall, one company that stands out in terms of quality is that of Warren Buffett. Berkshire Hathaway (BRK.A -0.20%) (BRK.B -0.18%). It’s the largest collection of companies ever assembled — led by the most shareholder-friendly CEO in history — and it remains a primo stock worth buying in a bear market.

Berkshire’s Class B shares are down 11% year-to-date, a notable outperformance versus the 22% decline in the S&P 500. Other investors are obviously flocking to the quality and security in this environment, but Berkshire stocks still offer great value. We don’t need to look at price-to-earnings ratios or price-to-book multiples to see that. Instead, we can look at Berkshire Hathaway’s recent share buyback activity — a signal that Buffett sees the stock trading below its value.

Since late 2019, Berkshire has repurchased more than 10% of its outstanding shares. As Buffett noted in his 2021 letter to shareholders, “This spending has left our permanent shareholders owning about 10% more of all Berkshire companies, whether wholly owned (like BNSF and GEICO) or in part (like Coca Cola and Moody’s).”

Berkshire owns dozens of businesses, including Dairy Queen, See’s Candies and Fruit of the Loom. He also has a large stock portfolio worth $390 billion at the end of the first quarter.

With the stock down year-to-date, investors may buy stocks below what Buffett was buying at the start of the year. There’s no other time Buffett can better add value for shareholders than during bear markets, when companies go up for sale. At the end of March, Berkshire was sitting on $124 billion in cash and fixed income investments. This gives the greatest investor of all time plenty of ammunition to hunt for bargains.

Airbnb

The travel industry has heated up over the past year, and no company is benefiting more than Airbnb (ABNB 6.68%). Like Google, Airbnb has turned its name into a noun and a verb. The company was established in 2007 in the founders’ apartment in San Francisco and now generates $47 billion in gross annual booking value from people renting homes around the world.

Since the company’s IPO in 2020, it’s been a bumpy ride for shareholders, with the stock currently trading 30% below its IPO price. The fear is that people will cut back on travel if the economy deteriorates, but that’s taking a very short-term view of the company’s long-term value. Management estimates its addressable market to be nearly $1.5 trillion ($1.2 trillion short-stay and $239 billion long-stay).

Perhaps Airbnb’s greatest strength is its large base of four million hosts who list their properties for rent on the platform. This provides Airbnb with enough supply to meet an increase in travel demand. This is one of the reasons the company has been able to post such strong growth in gross booking value. In the first quarter, gross bookings increased by 73% compared to the comparable quarter of 2019.

The stock trades at 10 times the company’s 12-month sales. It may seem expensive, but historically, fast-growing companies that can generate high margins are rewarded with a similar valuation. This is a growth stock to consider buying during the bear market.