Buying and holding long-term stocks is an investment strategy that runs counter to investing in 2020. No commission trades and an app like Robinhood allow traders to buy or sell shares in the time it takes to order from DoorDash. In the case of Robinhood, they can even buy fractions of shares.
The popularity of rapid fire trading is not really surprising. Gambling has become a big part of our culture. Casinos (at least before the novel coronavirus pandemic) are a mainstream form of entertainment. DraftKings (NASDAQ:DKNG) has climbed into bed with ESPN in a significant way.
And there’s nothing wrong with setting aside a portion of your portfolio to take some risks if you can. But frequent trading, like gambling, can be hazardous when it comes to meeting your long-term goals. This is especially true during times of market volatility like we’re seeing in 2020.
By contrast, history shows that buying quality stocks and holding them for a long time is the key to investing success. This doesn’t mean that long-term stocks will always go up. Every stock has its ups and downs.
The key word is quality. Quality stocks have a track record that gives you confidence that the stock will trend up over the long term. Is it boring? It can be. However, there’s something to be said for stocks that have been there and done that. Although past performance doesn’t guarantee future results, it’s a pretty good indicator that the company is not resting on past laurels.
Here are six long-term stocks to see you through the bad times.
- Walt Disney (NYSE:DIS)
- Apple (NASDAQ:AAPL)
- Johnson & Johnson (NYSE:JNJ)
- Starbucks (NASDAQ:SBUX)
- PayPal (NASDAQ:PYPL)
- Walmart (NYSE:WMT)
Let’s take a look at what makes each a solid investment today.
Long-Term Stocks to Buy: Walt Disney (DIS)
At first glance, DIS stock was one of the biggest losers during the pandemic. The House of Mouse relies on theme parks and resort visits for a significant chunk of revenue. And that revenue was threatened when the company’s theme parks around the world were forced to close. The pandemic also affected Disney cruise ships which have suspended operations indefinitely. And reports have recently come out that Disney is expecting a lean fall season at its theme parks.
However, we’re talking about long-term stocks. At some point the pandemic will pass. And when there is a vaccine or proven antiviral treatment, demand will return. In the meantime, despite the concerns about a resurgence of the novel coronavirus, there has not been a single major outbreak tied to any of Disney’s Florida theme parks since they have reopened. This doesn’t mean customers will come back in droves, but it shows, perhaps, that protocols can work.
And in any event Disney still has Disney+ going for it. The company’s new streaming service continues to add new customers. And with the ability to bring new releases directly to streaming, it looks to be well positioned to ride out any new waves of the virus. Investors have tended to agree. DIS stock is up over 50% since its March lows and has climbed 12% in the last month.
Like Disney, many investors could look at Apple as a one-trick pony due to the extraordinary popularity of its iPhone. But if they are, they’re missing the bigger reason why AAPL stock is a great long-term choice.
In the last quarter the company reported earnings, the company’s Services division posted $13.2 billion in revenue, a 15% year-over-year gain. And this is along with growth from Apple Wearables (e.g., the Apple Watch). In fact, Apple reported that 75% of Apple Watch purchases in the quarter were from new users.
It remains to be seen if Apple can generate the same magic with its Apple TV+ streaming service. However, with the offer of a free year of Apple TV+ for those who purchase a qualifying Apple device, the company will have a large base from which to seed its programming.
And after Apple’s recent 4-for-1 stock split, investors who were hesitant to buy Apple at a lofty share price can get in at a more reasonable price.
Johnson & Johnson (JNJ)
Johnson & Johnson is a leading multinational that is drawing significant attention for its potential Covid-19 vaccine. The company was chosen as part of Operation Warp Speed because it has a track record that means it may be successful. And, it’s one of the few companies with the ability to manufacture a vaccine at the scale that will be required.
But that’s not the reason you want to consider JNJ stock as one of our long-term stocks. After all, we’re discovering that getting a vaccine candidate across the finishing line is going to be tricky.
The reason you want to consider Johnson & Johnson is because it’s simply one of the best defensive stocks you can own. And it makes no apologies for it. It just continues to issue a dividend, and increase it, every year. In fact, it’s done so every year since 1973, making it a member of the exclusive Dividend Aristocrat club.
The company has a portfolio of products that has allowed it to largely shrug off the worst effects of the novel coronavirus. And as a defensive stock, it should hold up even if the United States economy teeters into a recession.
What’s fascinating to me about Starbucks is how they have managed to avoid the “Kleenex” treatment. By that I mean when customers say they’re going to get a Starbucks, they really mean Starbucks. For sure some of that has to do with the company’s ubiquitous presence throughout the country. But it’s also because Americans truly love the product.
However, a product with a cultish following isn’t the only reason to like SBUX stock as one of our long-term stocks. The company has a history of making strategic pivots to keep up with shifting tastes. One of those is the company’s recent partnership with Impossible Brands to introduce plant-based breakfast sandwiches. This is consistent with the company’s stated sustainability goals as well as the value of many of its consumers.
A less exciting, but equally strong influence on the stock is the company’s push into digital sales. This is a pivot the company made in part to compete with Luckin Coffee (OTCMKTS:LKNCY) in China. But it has worked out well to help the company weather the pandemic.
PayPal is one of the hottest growth stocks of 2020. PYPL stock is up nearly 68% for the year. And the reasons for that go beyond the way the company facilitates digital payment for consumers and businesses. In fact, if consumers look closely they’ll see a company that is starting to resemble a full-service bank, including products like debit cards, credit cards and small business loans.
However, part of the reason that PayPal has had to adapt is because it has to. The big banks and even many regional players are catching up as digital banking is now widely available and accepted. But PayPal still may have some runway left.
First, the company is ideally positioned for the growing gig economy. Business owners can get paid immediately rather than waiting on an ACH transfer. And although PayPal is starting to look like a bank, it’s not a bank. This is a distinction that may appeal to the growing unbanked segment of Americans.
Walmart has managed to thrive in 2020. WMT stock is up over 30% from the March selloff. However, compared to other stocks, Walmart did not have as steep of a drop. That was due in part because investors expected it to play a large role in keeping American households stocked up prior to sheltering in place.
The pandemic has been further proof of Walmart’s continued success with the omnichannel model, which it had to adopt to better compete with Amazon (NASDAQ:AMZN). As a result, when the pandemic hit, Walmart was in a better position to pivot quickly to the new normal.
The company is now taking direct aim at Amazon Prime with its Walmart+ membership program. While some may look at this as a suicide mission, at least one industry advisor thinks it’s an expected move. According to CEO of DealNews.com Dan de Grandpre, “When 100 million U.S. households are paying money to your biggest competitor, you have got to do something.”
And while Walmart is clearly taking on Amazon, Walmart+ can also help the company take aim against Instacart, which has seen a booming business during the pandemic.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019.