With rise in trading activity coupled with interest in penny and meme stocks, investors, in general, are looking for quick gains. It makes sense to allocate some funds for short-term trading. However, there is little doubt on the point that best returns come from long-term stocks.
Talking about investing and the patience to hold quality stocks, data indicates that there is a gradual decline in long-term investing. The average holding period of shares on New York Stock Exchange has fallen to new lows. It’s currently at the lowest level since the 1930s.
Being a long-term investor is therefore taking a contrarian stance. I further believe that this contrarian approach is likely to deliver handsome returns. It invariably has.
Over a five-year period, Tesla (NASDAQ:TSLA) stock has delivered returns of just over 2,000%. During the same period, Nvidia (NASDAQ:NVDA) has delivered returns of 950%. These are just few examples. The list of multi-baggers in the last few years is significant.
Another important point to note is as follows — Apple (NASDAQ:AAPL) has returned 480% in the last five-years. This seems somewhat moderate as compared to Tesla or Nvidia. However, even 400% returns are significant over this period. No conventional asset class would give such stellar returns.
Let’s therefore talk about seven long-term stocks that are likely value creators with potential for multi-fold returns.
- XPeng (NYSE:XPEV)
- Marathon Digital (NASDAQ:MARA)
- Pfizer (NYSE:PFE)
- Tilray (NASDAQ:TLRY)
- PayPal Holdings (NASDAQ:PYPL)
- Target Corporation (NYSE:TGT)
- Chevron Corporation (NYSE:CVX)
Long-Term Stocks to Buy: XPeng (XPEV)
XPEV stock is among the top picks from the electric vehicle(EV) segment. The EV business has multi-year tailwinds and this provide scope for ample value creation. With technology as a differentiating factor, XPeng is positioned to survive and grow in the coming years.
XPEV stock has been sideways in the last 12-months. I believe that the price correction is a good time to accumulate. A strong break-out on the upside seems imminent considering the business developments.
For fourth-quarter 2022, XPeng reported vehicle deliveries of 41,751. On a year-on-year basis, deliveries were higher by 222%. It seems likely that deliveries will remain robust through 2022.
In October 2021, the company commenced customer delivery of its third production model, P5. Additionally, the company unveiled G9 in September 2021. The delivery of this SUV will commence in Q3 2022. The G9 will also be marketed in European markets.
These two models will ensure that deliveries remain robust in 2022 and 2023. It’s also worth noting that XPeng has bigger plans on the technological front. In 2024, the company plans to unveil a flying car that can also operate on roads.
Overall, with research and development on the forefront, XPeng is well positioned to create shareholder wealth in the long-term.
Marathon Digital (MARA)
The cryptocurrency world is still at an early growth stage. There is ample scope for expansion and diversification for early movers in crypto. Marathon Digital seems to be among the top long-term stocks to consider as a proxy for Bitcoin (CCC:BTC-USD) or crypto investment.
With the recent correction in Bitcoin, MARA stock has declined to $28. This seems like a good buying opportunity with the company positioned for strong growth through 2022.
For Q3 2021, Marathon Digital reported a hash rate of 2.7EH/s. With the miners on order, the company expects hash rate to increase to 13.3EH/s. This would imply multi-fold growth in revenue.
Marathon expects to mine 66 Bitcoin per day by mid-2022. Even if Bitcoin trades at $45,000, this would imply monthly revenue potential of $89.9 million. Furthermore, the annual revenue potential will be in excess of $1.0 billion.
A key point to note is that with aggressive expansion in mining activity, there will be significant growth in digital assets for the company. This would leave ample scope for expansion and diversification beyond 2022.
As an example, Hive Blockchain (NASDAQ:HIVE), a smaller peer, has diversified into Ethereum (CCC:ETH-USD) mining. Hive has also made strategic investments in the decentralized finance and non-fungible token (NFT) space. Marathon Digital is likely to be more than just a Bitcoin mining company in the next five-years.
Long-Term Stocks to Buy: Pfizer (PFE)
After an extended period of lower to sideways movement, PFE stock has witnessed a strong break-out. In the last six-months, the stock is higher by 41%.
With PFE stock still trading at a forward price-to-earnings-ratio of 11.07, I believe that there is more upside potential.
It’s also likely that the company will be a long-term value creator. I believe that there are two strong reasons to hold this view.
First and foremost, Pfizer is among the leading covid-19 vaccine players. This has boosted the company’s revenue and cash flows. Just for 2021, the company expects revenue of $36 billion from the vaccine. With booster doses and vaccination among teenagers, revenue from the vaccine is likely to remain strong in 2022. This will boost the company’s cash position for organic and acquisition driven growth.
Furthermore, Pfizer already has a robust product pipeline. As of November 2021, the company had 29 drug candidates in Phase three of trials and another 29 in Phase two. Excluding the impact of the vaccine, the company expects to deliver double-digit earnings per share (EPS) growth through 2025.
In December 2021, Pfizer announced the acquisition of Arena Pharmaceuticals. The acquisition gives the company exposure to development-stage therapeutic candidates in gastroenterology, dermatology, and cardiology. In November 2021, Pfizer also completed the acquisition of Trillium Therapeutics. The latter is developing therapies for cancer treatment.
Aggressive acquisition can further boost the EPS outlook for the coming years. PFE stock is therefore among the top names to consider in the list of long-term stocks.
The cannabis market in the United States is expected to swell to $100 billion by 2030. During the same year, the medicinal cannabis market is expected to be worth $53.88 billion. Therefore, there is a big market opportunity in the coming years.
If I had to choose one stock for exposure to the cannabis theme, it would be TLRY stock. The stock has been a massive under-performer in the last 12-months. However, with recent quarterly numbers, things seem to be poised for a turnaround.
For Q2 2022, there are several positives to note. Tilray turned profitable during the quarter and it was also the 11th consecutive quarter of positive EBITDA. Tilray has also made significant inroads in the medicinal cannabis segment and currently commands a market share of 20% in Germany.
In the recreational cannabis segment, the company already has a leading market share in Canada. With a possible Federal level legalization in the United States, the company is poised to accelerate growth.
It’s worth noting that in August 2021, the company’s CEO Irwin D. Simon shared a letter with shareholders. The objective was to share the plan for $4 billion in revenue by 2024. If this target is achieved, Tilray is positioned for stellar growth.
Long-Term Stocks to Buy: PayPal Holdings (PYPL)
PYPL stock has been in a correction mode in the recent past. The decline is however a good opportunity to accumulate for the long-term.
From a growth perspective in the next few years, there are two important points to note.
First, PayPal believes that the total addressable market is $110 trillion. This provides ample scope for revenue and cash flow upside.
Further, the company is targeting to achieve revenue of $50 billion by 2025. Revenue will therefore almost double from current annualized levels.
Additionally, for Q3 2021, PayPal reported free cash flow of $1.3 billion. This would imply an annualized FCF of $5.2 billion. If revenue doubles by 2025, PayPal will be positioned to deliver at least $10.0 billion in annual FCF.
PayPal has also been using acquisitions to make inroads in attractive markets. In September 2021, the company acquired Paidy. This significantly boosts the company’s presence in Japan.
It’s also worth noting that PayPal is already allowing users in the United States and United Kingdom to buy, sell and hold few cryptocurrencies. This is another growth area for the company in the next few years.
In the last five-years, PYPL stock has delivered returns of 350%. I would not be surprised if these returns are replicated in the next five-years.
Target Corporation (TGT)
The consumption sector is the key driver of U.S. economic growth. Within the consumption sector, retail spending plays a key role. It therefore makes sense to have a retail stock in the portfolio.
Target Corporation has been on a high-growth trajectory. For Q3 2021, the company’s comparable store sales increased by 12.7% on a year-on-year basis. Further, digital comparable sales growth accelerated by 29%.
Target has been building omni-channel sales capabilities. Over the next few years, the company plans to invest $4 billion annually. This investment will be towards new store openings, store remodels, and enhanced fulfillment services. With these investments, Target is positioned for sustained growth.
It’s also worth noting that TGT stock has a forward annualized dividend rate of $3.6. For the first nine months of 2021, the company reported operating cash flow of $5.6 billion and free cash flow of $2.1 billion. The company has ample financial resources to pay dividends and ramp-up share repurchase.
From a valuation perspective, TGT stock trades at a forward price-to-earnings-ratio of 18.15. The stock seems inexpensive considering the potential growth momentum.
Long-Term Stocks to Buy: Chevron Corporation (CVX)
CVX stock has been in an uptrend in the last few quarters. This does not come as a surprise with Brent trending higher. I believe that Chevron is among the top names in the oil and gas sector to consider among long-term stocks to hold.
One reason to like Chevron is low break-even assets. Even in 2020, when oil prices crashed due to the pandemic, the company reported positive operating cash flows.
For Q3 2021, Chevron reported OCF of $8.6 billion. This implies an annualized OCF of $34.4 billion. With strong financial flexibility, the company is positioned to make aggressive investments. It’s worth noting that between 2016 and 2020, the company reported a reserve replacement ratio of 99%.
Additionally, Chevron has an annual dividend pay-out of $5.36. Dividends are likely to sustain considering the cash flow potential.
Another big advantage of robust financial flexibility is that the company can aggressively invest in renewable energy assets. The company is planning multi-fold growth in renewable natural gas production in the coming years. Chevron is also investing in hydrogen fuel and carbon capture projects.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modelling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.