It’s unclear what’s in store for short-term equities. On the one hand, it is possible that the market has already bottomed out. On the other hand, fears of inflation and recession could mean more volatility in the future. So what’s the best move? Focus on adding more long-term stocks to your portfolio.
That is, shares of companies with strong long-term prospects. They may not be the “hottest” names out there, but with a high probability of providing steady growth for many years (or in some cases, decades), buying these names now, while trading for favorable valuations, might seem like a wise move in hindsight.
When it comes to long-term stocks, you have plenty of options. The downturn in the market has led many high-quality names to become oversold. These seven, however, currently all earn “A” ratings in my Portfolio Grader. Consider each of them as possible to buy and hold positions to add to your portfolio.
|CHRW||C.H. Robinson Worldwide, Inc.||US$ 106.21|
|DLTR||Dollar Tree, Inc.||US$ 156.16|
|HSY||The Hershey Company||US$ 207.55|
|OGE •||OGE Energy Corp.||US$ 36.51|
|CAP ·||Grupo Aueroportuario del Pacífico, S.A.B. de C.V.||US$ 140.43|
|Ppc||Pilgrim’s Pride Corporation||$30.10|
|Zim||ZIM Integreated Shipping Services Ltd.||US$ 51.63|
Long-term shares to buy: C.H. Robinson Worldwide (CHRW)
Headquartered in Eden Prairie, Minnesota, C.H. Robinson Worldwide (NASDAQ: CHRW) is a third-party logistics service provider. It plays a vital role in the supply chain, mediating truck loading and intermodal freight transport. Along with this, it also helps to connect freight forwarders with air and sea transport service providers.
As can be seen from its latest financial results, the supply chain crisis has been a tailwind for the company. In the March quarter, revenues increased 41.9% year-on-year and net profit increased by 56%. Yet this growth in revenue and earnings has not led to successful moves for CHRW stock. Shares have only risen 7.8% in the last twelve months and are down 1.1% year-to-date.
because? Perhaps, as investors are skeptical, this strong performance will continue. However, the market may overestimate the speed at which the logistics market normalizes. Trading for only 14.7 times the estimated earnings of this year, consider it a purchase.
Dollar Tree (DLTR)
When you think of “long-term stocks,” Dollar Tree (NASDAQ:DLTR) is definitely a name that should come to mind. So far, it has managed to continue to perform well operationally, despite inflationary pressures. This is in stark contrast to the names of the big-boxes, which due to high inflation have had to deal with reduced margins and excess inventories.
The nature of its business (retail at discounted prices) also makes DLTR shares attractive as recession-resistant stocks. But these shorter-term factors are not the only reason to own it. Even if today’s challenges clear up, this retailer has a strong chance of continuing to provide steady revenue and earnings growth.
In turn, this will allow the stock, a strong performer in recent years, to continue moving towards new highs. Pulling back, after recovering from the mid-May decline due to the sell-off in retail stocks, today is a great time to start accumulating a long-term position.
Long-term shares to buy: Hershey Company (HSY)
So far in 2022, investors have dived into the shares of Hershey Company (NYSE: HSY), thanks to its merits as a “safe harbor” stock. The famous confectionery and snack company has historically been resistant to recession. The company is also managing inflation well, as can be seen from its solid quarterly results and subsequent increase in indications.
This helped HSY shares stay green for the year. Don’t see this as a sign that it’s on top though. Although its strong prospects are very much reflected in its current assessment. According to the earnings forecasts of sell-side analysts, steady earnings growth is expected in the coming years.
This indicates that it supports its current valuation and gradually moves upwards in line with rising earnings. Add in its 1.69% dividend, which has grown an average of 7.83% per year over the past five years, and there will likely be solid returns for equities.
OGE Energy Corp. (OGE)
OGE Energy Corp. (NYSE: OGE) is an electrical utility company. As I discussed earlier, it is also involved in midstream natural gas. It may not be a household name outside of the areas where it serves (Oklahoma and Arkansas), but this shouldn’t be a reason to skip it.
because? For starters, it’s a high-quality dividend stock. OGE stock has a forward dividend yield of 4.53% at today’s prices. This dividend has grown by an average of 6.66% over the past five years. Earnings growth is likely to increase the payout rate at a moderate pace.
To top it off, the company has invested heavily in clean energy, such as solar. This gives him exposure to an important long-term trend. With much that is favorable and little that is unfavorable, OGE is another great choice for long-term investors.
Long-term shares to be purchased: Grupo Aeroportuario del Pacífico SAB de CV (PAC)
Put simply, in the United States, privately operated airports are not a thing. There is only one privately operated commercial airport in the United States. Yet, outside the United States, they are more common. For example, in Mexico, where the Pacific Airport group SAB de CV (NYSE: PAC) operates twelve (as the name suggests) on the west coast of Mexico.
As Ian Bezek of InvestorPlace argued, there are many benefits to investing in airports. Airports are a state-sanctioned monopoly and a hedge against inflation. These advantages have allowed this company to provide solid results over many years. They have also made PAC actions a winning long-term investment.
This will probably continue. Perhaps not to the extent that it was seen in previous years, when this stock was more under the radar. However, it’s still a reasonably priced opportunity to add to your watchlist and possibly add to your portfolio. The valuation is favorable, with its forward price-to-earnings (P/E) multiple of 24.2x.
Pilgrim’s Pride (PPC)
Rising meat prices are bad news for consumers, but for Pilgrim’s Pride (NASDAQ:PPC), it was a boon to its sales results and earnings. Passing higher costs to customers, this poultry and pork products processor is expected to report $3.31 per share of earnings this year.
This is a huge improvement over the EPS earnings per share reported in 2021 (13 cents per share) and 2020 (39 cents per share). If you think this is fully taken into account in the PPC stock price, think again. Although stocks have risen since February, it is still cheap. At today’s prices, it is traded for only 12.8x gains.
Yes, the meat business is cyclical. It is already trading close to what it was traded for in 2017, when it last reported equally strong earnings. However, if you are optimistic that high inflation will last longer than expected, PPC earnings could remain at high levels for years to come.
Long-term shares to buy: ZIM Integrated Shipping Services Ltd. (ZIM)
ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) is a container ship operator based in Israel. He has been taking a plunge since March, after paying a special dividend. A pullback in shipping prices (which has increased due to the supply chain crisis) has also had a major negative impact on its recent performance.
But does this mean that you lost the boat with the ZIM stock? Not so fast. As I discussed in April, even if shipping prices go down, it will take some time before they normalize. A decline in earnings next year, compared to this year’s manna, is reflected more than in its current valuation.
ZIM is now trading for just 3.5 times the estimated earnings for 2023. 2023 earnings are expected to be 67% lower than expected earnings for this year. With this shipping giant continuing to grow its business, expanding its fleet, the potential for long-term growth also looks promising.