One of the best ways to generate wealth from the stock market is to invest over in long-term stocks. As the saying goes, it’s not timing the market, it’s time in the market. This saying holds just as true today as it did 10 years ago.
For those looking to invest over the next 10 years, now’s certainly an interesting time. Those looking to put fresh capital to work have a number of considerations to think about. First of all, will the pandemic even be relevant in a few years’ time? How many companies that look great today have business models that could falter via competition or other market forces over the next decade? And what’s the margin of safety with a given company, relative to other great options out there?
Indeed, being a stock picker and thinking about long-term stocks isn’t easy. We live in a society where trading and short-term trends and technical analysis rein supreme. However, those looking at longer-term trends and the potential winners from these trends may be asking different questions.
With this backdrop, let’s take a look at a few companies with the potential to succeed long-term. These companies are from all different sectors, and represent intriguing opportunities in my books. Here are seven companies on my watch list right now as potential long-term stocks:
- Coinbase (NASDAQ:COIN)
- Applied Materials (NASDAQ:AMAT)
- Altria Group (NYSE:MO)
- Intel (NASDAQ:INTC)
- Pfizer (NYSE:PFE)
- Novartis (NYSE:NVS)
- StoneCo (NASDAQ:STNE)
Top Long-Term Stocks: Coinbase (COIN)
Let’s start with perhaps the most speculative pick on this list, shall we?
Coinbase Global is among the most well-known cryptocurrency exchanges out there. However, Coinbase is a relatively recent addition to the market, only going public last year. Since reaching its high of nearly $430 per share immediately following its market debut, shares of COIN stock have been on the downtrend, now trading for nearly half that peak.
What gives? Well, the crypto market has been extremely volatile over the past year. A few tokens have done extremely well, but the massive losses we’ve seen in certain tokens have provided many investors with reason to be cautious with this space. Fair enough.
However, looking at the longer-term performance of various cryptocurrencies such as Bitcoin and Ethereum, it’s easy to make the case that Coinbase could be a long-term holding. That’s because this exchange’s fee-based revenue stream does well when the crypto market as a whole does well. Thus, investors don’t need to pick a winner, just simply bet on a longer-term trend. I like that.
Applied Materials (AMAT)
Applied Materials is a big player in the semiconductor capital equipment sector. Additionally, the company has also transformed into a leader in the manufacturing of advanced displays. For longer-term investors looking for sectors with strong secular tailwinds, these are good places to look.
Of course, as a long-term holding, Applied Materials has the kind of stock chart most investors like to see: It goes up and to the right. However, more and more of the company’s stock price performance is derived from the company’s fundamentals. With a price-earnings ratio that’s reasonable (around 24 times), and a small but growing dividend, there’s a lot to like about this tech infrastructure play.
In the company’s advanced packaging segment, Applied Materials has seen impressive growth in its 3D NAND production in recent years. As a result of the pandemic, Applied Materials’ role in the semiconductor and advanced manufacturing space is becoming more important. Investors are realizing that in order for everything to work in the global tech supply chain, companies like Applied Materials need to do well. Accordingly, this is a company long-term investors may want to take a look at on any dips moving forward.
Top Long-Term Stocks: Altria Group (MO)
Famous for being the company behind the Marlboro brand of cigarettes, Altria is a company investors either love or hate. Indeed, this company’s core business is still one that turns many investors off. Fair enough. Cigarettes are big business, but there’s no doubt this line of business is terrible for the overall health of our global population.
Of course, Altria may not be for every investor for this reason. However, those looking past where Altria got its start to where it’s headed may want to look at this company. That’s because a greater percentage of the company’s sales are actually coming from non-cigarette related businesses over time.
Among the growing businesses under Altria’s umbrella is e-cigarettes, vapes, and other cannabis-related products. The company’s market share in these growth segments is taking off. And many investors like the direction this company is headed — encouraging reduced smoking and tobacco alternatives.
This is a major shift for Altria. However, the company reported very strong results this past quarter, boosting its dividend on the back of strong projected forward cash flows and excellent earnings. For those looking for a stock with a 7.3% dividend yield, Altria is a great option to look at right now.
One of the more legacy companies to make this list is Intel. This semiconductor (computer chip) company was formerly the leader in the server and desktop market. However, these markets have been shifting quite rapidly of late. Many investors have sought fit to seek out other higher-growth, younger companies in this field in recent years.
Intel has lost market share to most of its peers in the mobile processors business. AMD took over Intel’s desktop market with its high-powered Ryzen processor. Further, AMD’s Epyc chip outperforms Intel’s Xeon option. In the semiconductor space, Intel is losing ground, and investors have noticed.
That said, this chip giant has been making strategic moves worth considering. In addition to cutting prices to shore up market share, the company’s 12th generation Alder Lake processor is likely to spur additional growth over the medium-term. The competitive dynamics of this space are difficult to assess. However, Intel has been a leader for decades for a reason. I like the company’s fundamentals, which include a price-earnings ratio around 10, and a dividend yield of 2.5%.
Top Long-Term Stocks: Pfizer (PFE)
Big pharma company Pfizer has been on quite the run this past year. As a truly diversified global player in a range of pharmaceuticals, vaccines, and other therapeutics and treatments for a wide range of ailments, Pfizer is a company with a long track record of healthy performance over time.
However, the focus on Pfizer of late has been directed at its high-profile partnership with BioNTech for a leading Covid-19 vaccine. This vaccine is expected to reach $65 billion in sales by the end of this year. That’s impressive, and has certainly provided a boost to Pfizer’s fundamentals of late.
However, it’s important to remember that Pfizer is much more than a company with a Covid-19 vaccine. In fact, before the pandemic, Pfizer was often known as the “company that owns Viagra.” The range of brand name drugs this company has developed or acquired over time is impressive. Those betting on continued growth from the pharmaceutical industry can’t go wrong owning Pfizer over the long-haul.
Another healthcare player to make this list, Novartis is certainly an interesting company to watch. This provider of a range of pharma and healthcare products is one I’ve recently started looking at for its fundamentals. Novartis currently boasts a dividend yield of 3.6%, alongside a price-earnings ratio of 19 times earnings, and relatively stable long-term growth.
During the company’s most recent earnings report, Novartis noted revenue growth of 6% to $13 billion on a year-over-year basis. While these short-term results may have fallen short of some investors’ expectations, the company’s upcoming Entresto and Cosentyx drugs are likely to improve sentiment over time. That’s because Entresto, a medication for blood pressure, is expected to bring in $5 billion of revenue in the years to come. Additionally, predictions are that Cosentyx, a monoclonal antibody aimed at treating psoriasis, could bring in $7 billion in top-line revenue. These are not menial numbers.
Novartis, like Pfizer, is a large-scale and slower-growth company that many investors may like to see. However, from a stability and defensiveness standpoint, I like this company. It’s hard to find a company with a meaningful yield but also an attractive long-term growth outlook in this market. However, Novartis fits the bill right now.
Top Long-Term Stocks: StoneCo (STNE)
Finally, we have StoneCo, a financial technology provider, to cap off this list. Perhaps the riskiest pick on this list for longer-term investors, those taking a more speculative approach may like the value behind this company.
First of all, SoneCo is an omnichannel play for retailers, particularly in the Brazilian market, to integrate physical, online and mobile sales. In essence, StoneCo helps retailers become truly integrated into the online economy and has seen previous surges in interest during the onset of the pandemic.
However, the past year has not been as friendly to this company. That’s because technical delays and the suspension of a key product lowered the company’s net margin outlook. From a fundamentals standpoint, there’s some hair with this stock, and investor sentiment remains depressed.
However, those taking a longer-term view of this stock may look past the company’s recent negative earnings and slower-than-expected growth. In the high-growth Brazilian market, StoneCo is growing its market share among small and medium sized businesses. Accordingly, those taking the really long-term view may want to consider this niche growth player, now trading at a discount of more than 80% from its 52-week high.
On the date of publication, Chris MacDonald 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.
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.