Ever since the coronavirus pandemic disrupted our daily lives, the market has been on an unusual trajectory, to say the least. Thanks to unprecedented events such as government stimulus checks and the meme-trade phenomenon, anybody following popular equities seemed guaranteed to win. But now that some sanity appears to be taking hold, it’s time to consider long-term stocks to buy for 2022.
Obviously, the biggest dustup arrived courtesy of the Federal Reserve. In a long-telegraphed move, the central bank announced that it will raise interest rates throughout the new year. Additionally, the bond buy-back program will cease. Initially, Wall Street reacted positively to the clarified guidance. However, upon further digestion, several sectors (most notably technology) corrected sharply. Higher rates don’t incentivize risk-on assets but may boost stable or viable long-term stocks.
Second, we still need to talk about the omicron variant. What appeared to be encouraging reports from South Africa that the new strain caused less-severe symptoms now has a caveat, per NPR. Suffering from multiple waves, it’s likely that most South Africans had already been infected with prior strains. Thus, we don’t know how omicron will affect unexposed individuals, posing worries. Still, this might create discounts in long-term stocks.
If the pandemic wasn’t enough of a headache for investors, we also have a third consideration to take into account: geopolitical tensions. From the get-go, accusations about espionage and intellectual property theft have stymied U.S.-China relations. More recently, we have major concerns about Russia and its power play antics in Ukraine. Due to myriad variables, investors are likely better off considering long-term stocks for the upcoming new year.
Still, thinking ahead isn’t just about risk mitigation. Despite the many troubles we have encountered, we have also enjoyed radical transformations in technology. Combined with shifting social standards, plenty of upside opportunities exist that don’t necessarily involve absorbing unreasonable risk.
Therefore, here are some long-term stocks to consider for 2022:
- General Motors (NYSE:GM)
- Bloom Energy (NYSE:BE)
- California Water Service Group (NYSE:CWT)
- Huntington Ingalls Industries (NYSE:HII)
- Coinbase (NASDAQ:COIN)
- Phillips 66 (NYSE:PSX)
- Joby Aviation (NYSE:JOBY)
If 2021 has taught us anything, it’s that in the range of possibilities, nothing is off the table. Therefore, don’t automatically assume that long-term stocks (or any investment category) is a guaranteed path to success. Above all else, conduct your due diligence before moving ahead with any market idea.
Long-Term Stocks to Buy: General Motors (GM)
If you were to look at the week ended Dec. 17, you’d reasonably assume that automotive giant General Motors isn’t having a great moment. While I’m not entirely sure if the Fed’s policy shift to combat soaring inflation would be that much of a detriment to GM, the global supply chain crisis certainly is.
Unfortunately for GM and the entire auto industry, the company suffers from a multi-pronged supply crisis. For one thing, backlogs due to the semiconductor supply crunch have forced automakers to focus on their most profitable vehicles. Of course, that creates opportunity costs to sell other vehicles. But more worryingly, semiconductor firms don’t necessarily want to feed automaker demand.
That’s because the chips that go into vehicles are of lower margin to the manufacturers. Thus, the semis would rather focus on higher-margin products like consumer electronics.
Nevertheless, GM will lead off this list of long-term stocks to buy because at some point, the supply chain crisis will end. More importantly, the company has shifted priorities for electric vehicles but still provided auto enthusiasts with supreme excitement with the impressive eighth-generation Corvette.
Therefore, the red ink may just be a compelling discount for the patient investor.
Bloom Energy (BE)
Throughout the campaign trail of the 2020 election and the early days of his administration, President Joe Biden placed a high priority on the transition from fossil fuels to clean energy. Unfortunately for climate advocates, however, Mother Jones reported that Sen. Joe Manchin won’t support the Build Back Better bill, “effectively killing the Democratic Party’s $2 trillion sweeping domestic policy proposal.”
Not surprisingly, fellow Democrats were disappointed with Manchin’s move, which, to be fair, had been telegraphed for months. That was little comfort to his political colleagues, some of whom let loose with harsh criticism. Nevertheless, over the long haul, this shouldn’t impact clean-energy-related companies like Bloom Energy.
An innovator of its AlwaysOn microgrid network, Bloom’s platform helps its enterprise-level clients protect themselves against grid outages and extreme weather disruption. Thanks to its battery storage system, the company’s microgrid solution offers clean energy whenever power from the main grid is cut off. It’s one of the more practical steps toward decarbonization of the environment.
With the events over the past several years exposing our nation’s outdated electrical grid, Bloom stands poised to be one of the best long-term stocks, irrespective of the usual Washington gridlock.
Long-Term Stocks to Buy: California Water Service Group (CWT)
If you’re looking for relevant long-term stocks to buy that you can depend on not just for years but decades, the utilities segment is an excellent place to initiate your search. While terribly cynical in some sense, no matter what happens to the economy, people need access to their vital resources. Therefore, forward-thinking investors ought to consider California Water Service Group.
One of the nation’s regional water utilities, California Water isn’t the biggest name in its industry, serving approximately half a million customers in its namesake state and New Mexico. However, the company enjoys solid revenue growth and stable earnings. Also, its retained earnings line continues to expand, which is one of the typical hallmarks of reliable long-term stocks.
To be sure, CWT stock has enjoyed a strong showing in 2021, gaining 30% on a year-to-date basis. The security could swing higher in 2022 and beyond, with the California Department of Water Resources lamenting that its state is suffering from an unprecedented drought “intensified by climate change,” per its website.
Until we find a solution to pressing environmental challenges, you can expect more eyes to focus on CWT.
Huntington Ingalls Industries (HII)
In times of crisis, some of the best and worst of humanity springs forward, demonstrating who people really are behind their veneer. But not matter how much our outside circumstances shift, some things never change. Sadly, human societies will always find an excuse to attack one another, cynically necessitating defense-related long-term stocks to consider.
With the vast reach of the U.S. military industrial complex, the options for defense investments are seemingly limitless. However, those who want to get defensive on a literal basis for their portfolio should put Huntington Ingalls Industries on their radar. As the shipbuilder for the U.S. Navy and Coast Guard, it’s going to command serious attention over the years ahead.
How can I be so sure? The South China Sea. According to a ChinaPower article, “For many of the world’s largest economies, the South China Sea is an essential maritime crossroads for trade. Over 64 percent of China’s maritime trade transited the waterway in 2016, while nearly 42 percent of Japan’s maritime trade passed through the South China Sea in the same year.”
Given China’s aggressive posture in the Asia-Pacific region, the U.S. cannot afford to lose credibility. Therefore, HII is one of the higher-confidence ideas among long-term stocks.
Long-Term Stocks to Buy: Coinbase (COIN)
If one sector dominated financial headlines in 2021, it would be cryptocurrencies. Obviously, the meme-trade phenomenon was utterly massive as well. However, in my humble opinion, cryptos take the lead because we’ve already witnessed periods of wanton market enthusiasm before. But a decentralized asset class not beholden to any corporate enterprise or government body? That’s never been seen before.
Yet just as things were starting to look really exciting in this arena, it seems digital assets are on the cusp of going full circle. Concerns about the far-reaching impact of monetary policy — and perhaps taxation-related reasons — contributed to the steep correction. Admittedly, Coinbase, one of the world’s most popular crypto exchanges, suffered badly as well.
Nevertheless, COIN stock has managed to print a rising level of support since July of this year. That’s encouraging, because cryptos tend to be wildly volatile. That Coinbase isn’t careening to the ground suggests that digital assets may enjoy a baseline threshold of demand.
Further, what makes this corrective period different from prior boom-bust cycles is mainstream awareness and integration. Cryptos are probably not going anywhere. Therefore, COIN might make for one of the long-term stocks to buy but do be careful with this one.
Phillips 66 (PSX)
There’s a good chance I’m going to be destroyed for including Phillips 66 on this list of long-term stocks to buy, so take the idea with a grain of salt and a double dosing of due diligence. On paper, PSX conflicts with the environmental justice narrative that’s popular in society today.
As well, with the rapid development and deployment of electric vehicles, Phillips 66’s marketing division — which markets gasoline, diesel and aviation fuel — appears on a path toward irrelevancy or obsolescence. However, that might not be a slam-dunk case.
As multiple sources have pointed out, fossil fuels are difficult to quit because of their inherently high energy density. For just a gallon of gasoline, a modern, fuel-efficient vehicle can drive approximately 30 miles on the freeway or more. You’re just not going to get that kind of density from current EV battery technology.
Moreover, the economic profile of the EV industry is difficult to swallow. According to the U.S. Census Bureau, per-capita income in Los Angeles is only $34,156. That’s just not going to cut it when the cheapest normally functioning EV is about $30,000.
It’s very possible that EVs will take over. However, betting on PSX isn’t a bad idea, because multiple challenges must be addressed before this transition occurs.
Long-Term Stocks to Buy: Joby Aviation (JOBY)
For my final idea for long-term stocks to consider, I’m going extremely speculative with Joby Aviation. Specializing in electric vertical takeoff and landing (eVTOL) aircraft, Joby could represent the real future of mobility. Essentially, by looking upward, there’s a vast expanse of airspace that’s waiting to be utilized, helping mitigate our gridlock problems.
This issue isn’t just an inconvenience for individual drivers. As I mentioned in my coverage for Benzinga, “expert analyses project that Americans over a 17-year period to 2030 will waste $2.8 trillion due to traffic congestion should gridlock trends persist.” That’s a sum that neither investors nor government agencies can ignore, which may help lift Joby’s admittedly ultra-ambitious profile.
Of course, a major concern about advanced mobility solutions is the cost structure. While air mobility sounds intriguing, it might not matter much if the price is exorbitant. Fortunately, in Joby’s case, the consumer expense profile shouldn’t matter that much.
Cynically, the wealth gap is only increasing, number one. Number two, the people for whom time commands a maximum premium are the high rollers. Therefore, JOBY is geared to the right consumer base. It just needs to deliver, which is a super-risky proposition. Still, if you’ve got the time, you might enjoy an incline.
On the date of publication, Josh Enomoto 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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.