While some investors like to manage their portfolios actively, others prefer to buy stocks under $100 for the long term. This means holding onto shares for as long as thirty years, or even forever.
However, you can’t hold just any stock indefinitely. Plenty of companies seem like a great bet one year, only to plummet the next.
The types of stocks that you can hold forever must have sustainable business models. They should be leaders in their fields and have longstanding reputations as strong companies. Additionally, they should be growing and have solid balance sheets.
With the market continuing to hit new highs, many of the share prices of these companies are in the hundreds or even thousands. This makes it hard for investors with limited capital to purchase large quantities of shares.
However, there are still top companies that you can hold forever that are trading below $100. And while that level is definitely not low-priced stock territory, it is nowhere near the prices of companies such as Amazon (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA).
When you look at stocks under $100 combined with our POWR Ratings system, you get three great long-term picks:
Stocks Under $100: Coca-Cola Company (KO)
Coca-Cola is the largest non-alcoholic beverage entity globally. It owns and markets some of the leading carbonated beverage brands such as Coke, Fanta and Sprite, as well as non-sparkling brands like Minute Maid, Costa and Glaceau. It has a market share of more than 40% in the non-alcoholic beverage industry.
The firm is evolving its business model to become a total beverage company due to the industry-wide flattening of soda sales. It has investments in alternatives such as coffee, sparkling water and sports drinks. This includes Coca-Cola Energy, Coca-Cola with Coffee and Powerade.
The company had a robust second quarter; both revenue and earnings beat expectations. Sales bounced back from a decline in the prior year’s quarter. This was driven by increased consumer mobility and the widespread reopening of businesses. These factors led to an increase in away-from-home channel sales.
Coca-Cola also gained from an improved price-to-mix ratio, an increase in concentrate sales and a higher unit case volume. As a result, management has raised guidance for the year.
The company has an overall grade of “B,” which translates into a “Buy” rating in our POWR Ratings system. KO stock has a growth grade of “B,” which makes sense as earnings per share rose 61% year-over-year (YOY) in the most recent quarter.
The company also has a Quality Grade of “B” due to solid fundamentals. For instance, KO stock has a current ratio of 1.4, indicating it can easily handle short-term liquidity.
Coca-Cola is highly profitable, with a net profit margin of 23.8%. We also provide Value, Momentum, Stability and Sentiment grades for KO stock, which you can find here.
Coca-Cola is ranked #11 in the B-rated Beverages industry. For more top stocks in this industry, click here.
BHP Group Ltd. (BHP)
BHP is a leading global diversified miner that supplies iron ore, copper, oil and gas. A 2001 dual-listed merger of BHP Limited and Billiton PLC created the present-day BHP.
The company’s major assets include iron ore, Queensland coal, Escondida copper and conventional petroleum assets, principally in Australia and the Gulf of Mexico.
It manages product distribution through a global logistics chain, which includes freight and pipeline transportation. BHP sells products through direct supply agreements with customers and international commodity exchanges.
Population growth and rising living standards should continue to generate demand for energy, metals and fertilizers for years. This can help drive BHP’s growth.
The company is benefiting from higher copper prices that have resulted from increasing demand as well as potential supply disruptions in Chile. BHP is also benefiting from an increase in Potash prices due to favorable farm conditions and constrained supply.
Plus, the long-term prospects for metal prices are solid. The growth in steel production, driven by urbanization, should increase demand for iron ore and help sustain prices. The need for nickel in electric vehicle batteries should also continue to grow. BHP has an overall grade of “A” and a “Strong Buy” rating in the POWR Ratings system.
The company has a Value Grade of “B,” which isn’t surprising with a trailing price-to-earnings (P/E) ratio of 14.13x. Its price-to-tangible-book ratio of 3.1 is also well below the industry average.
BHP also has a Quality Grade of “B” due to its solid balance sheet. The company has a low debt-to-equity ratio of 0.5 and a current ratio of 1.4. For the rest of BHP’s grades (Growth, Momentum, Stability and Sentiment), click here.
BHP is ranked #4 in the Industrial – Metals industry. For more top-ranked stocks in this industry, click here.
Stocks Under $100: Pfizer Inc. (PFE)
Pfizer is one of the world’s largest pharmaceutical firms, with 2020 sales of more than $40 billion. While the company historically sold many types of healthcare products and chemicals, prescription drugs and vaccines now account for most of its revenue.
Its top sellers include its pneumococcal vaccine Prevnar 13, cancer medication Ibrance and cardiovascular treatment Eliquis.
The company has benefited significantly from its Covid-19 vaccine. Management reported a solid second quarter; earnings per share rose 73% YOY and sales surged 92%.
The majority of its sales were from its Covid-19 vaccine, BNT162b2. The vaccine brought in $7.8 billion in global sales during the quarter.
The vaccine was developed in record time. It has full approval in the U.S. and emergency use authorization in several other countries. The company expects to make up to 3 billion doses by the end of the year and has agreements in place to deliver 2.1 billion doses in 2021.
Pfizer is evaluating the vaccine in younger patients and testing a booster vaccine dose. Additionally, it is trying to develop an updated version of the vaccine specifically designed to target the delta variant.
The company expects strong growth in key brands such as Ibrance, Inlyta and Eliquis. Pfizer also boasts a sustainable pipeline with multiple late-stage programs that can drive growth. PFE stock has an overall grade of “A,” translating into a “Strong Buy” rating in our POWR Ratings system.
The company has a Value Grade of “B,” as its forward P/E is only 12.72x. Its price-to-free cash flow of 12.7 is also well below the industry average. PFE stock also has a Growth Grade of “B,” as analysts expect revenue to surge 85.7% YOY in the current quarter and 92.2% for the year. Earnings are expected to jump 85.1% this year.
To access the rest of PFE stock’s grades, including Momentum, Stability, Sentiment, and Quality, click here. It is ranked #8 in the Medical – Pharmaceuticals industry. For more top stocks in this industry, click here.
On the date of publication, David Cohne did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.
