We are well into 2022 and already into the first week of March. The market is in turmoil. Have you identified your best long-term stocks to buy now?
The yea rhas several dominant factors serving to shape the market. Covid-19 is still a dominant market force to be sure. It will serve to dictate where the market goes, without a doubt. But it is hardly the only issue to overcome. The economy is dealing with ongoing supply chain issues that have affected our daily lives. And then Russia’s invasion of Ukraine has oil prices at all-time highs.
Consumers are well aware of the real-world consequences this year will bring. We see it in car prices, for one. A report from January noted that the average new car price crossed above $47,000, an all-time high. Then there are groceries. According to IRI the price of kitchen staple foods increased by 9% in 2021. With Russia having officially invaded Ukraine, experts suggest those prices could rise even further.
Those prices are part and parcel of inflation that sits at 40-year highs. Markets will continue to be volatile but finding the best long-term stocks to buy is a strategy to weather the storm. Here are a few to consider.
- MasterCard (NYSE:MA)
- Shell (NYSE:SHEL)
- Louisiana Pacific (NYSE:LPX)
- Pfizer (NYSE:PFE)
- Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
- ASML (NASDAQ:ASML)
- Kraft Heinz (NYSE:KHC)
MasterCard is ubiquitous. It is accepted in more than 210 countries by millions of merchants. Anywhere you can use debit or credit you’ll likely be able to use MasterCard. The company derives revenue by acting as an intermediary payment processor, charging a fee on transactions.
The more open the economy, generally the better MasterCard’s revenues become. More accurately, the stronger the economy, the stronger MasterCard is. MasterCard’s share price held up very well during the pandemic even with the in-person economy shuttered to a significant degree. That’s testament to the ongoing strength of the company which essentially holds a duopoly over processing along with Visa (NYSE:V).
At the same time, long term investors have to think strategically. MasterCard isn’t the same company it was a decade ago. The landscape has changed and fintechs pose a serious threat to its traditional business. At least one prominent fund believes that the potential negative impact of fintechs has been overstated. The thesis is that these companies depend on the ‘rails’ for electronic payments that MasterCard and Visa control.
As cross-border payments pick up MasterCard remains in a strong position to see increased revenues and its electronic payment position may be more secure than bears have previously suggested.
Shell, formerly Royal Dutch Shell, is undergoing changes that benefit long-term investors. I see it as an energy stock at the confluence of great opportunity. The stock ticker may appear different to some readers. The new SHEL ticker identifier combines former RDS.A and RDS.B shares but doesn’t alter any holdings. Basically, Shell has simplified its structure in order to better respond to taxes and climate pressure as its headquarters are now in London.
The company remains at the confluence of great forces that benefit it in the short and long term. In the short term, Shell has strong tailwinds in the form of rising gas and oil prices. Nearly $9.7 billion of the firm’s $20.1 billion in net earnings in 2021 was derived from its upstream business. Shell won’t be a green energy dominated company for a long time yet. That’s a positive for short-term revenue generation.
And at the same time Shell continues to define its alternative energy strategy with several moves in Q4 alone. Over time this will smooth revenue spikes which energy companies often suffer. It completed the sale of its Permian business in the U.S. in December. It also acquired solar and energy storage developer Savion in the same month. Then, in January Shell started up a hydrogen hydrolyzer with 20 megawatts of capacity.
Louisiana Pacific (LPX)
Louisiana Pacific Corp. is a company to watch for its position in the housing market. The company produces engineered wood products that are integral to new home construction and remodeling. That’s important because there’s an ongoing supply gap in the housing market. Builders are moving quickly to close that gap, which means Louisiana Pacific sits in position to benefit.
And it has. New home construction is surging with new home sales hitting a nine-month high in December.
Sales increased by 63% throughout 2021. And Louisiana Pacific intends to invest those strong results in an effort to create an even stronger 2022. CEO Brad Southern noted, “To meet customer demand for our specialty products and accelerate our strategic transformation, LP plans to invest over $400 million in capital projects in 2022, growing our capacity to produce SmartSide, ExpertFinish, and value-added Structural Solutions products.”
Indications are that LPX stock could rise significantly through 2022. It currently trades at $65. However, it carries an average target price of $85. It sits in prime position to continue to benefit from a building boom that shouldn’t slow as long as the housing supply gap persists.
Best Long-Term Stocks to Buy: Pfizer (PFE)
Pfizer is a clear winner among Covid-19 stocks. Investors might be hesitant to invest in Pfizer under the misguided idea that its Covid-19 revenues lie in the past and not the future. Pfizer did record $36.8 billion in 2021 sales for its Covid-19 vaccine, known as Comirnaty, after all.
What might surprise investors is that 2022 looks even brighter on that front. While Comirnaty sales are anticipated to reach a lower $32 billion in 2022, Pfizer also has its Covid-19 pill, Paxlovid. Its sales are anticipated to reach $22 billion in 2022, up from $76 million in 2021. All totaled, this implies Pfizer will realize $54 billion in Covid-19 treatment sales in 2022, up from roughly $36.9 billion in 2021.
That means Pfizer can expect in the neighborhood of $100 billion in revenues in 2022. In turn, Pfizer should be able to reinvest into strengthening its pipeline of future therapeutics.
Pfizer efforts to do so are already well underway. It recently announced partnerships to bolster its burgeoning mRNA business. The company will direct its windfall toward early and late-stage firms in practice areas where it already has significant expertise. Pfizer is anticipating that these efforts will result in $25 billion in additional annual revenue by the year 2030.
The knocks against Alphabet persist. It is arguably too large and too pervasive for our modern society. Google’s outsized influence on our lives buzzes as a constant background deterrent against investing in the company’s shares. I won’t argue that those claims have no merit. They very well could. However, I’ll argue that Alphabet as a stock is simply too strong to ignore.
The point of a business is to make money. That is something that GOOG stock does as well as any company ever. Alphabet’s primary driver, Google Search, had a stellar 2021. Revenues reached $148.9 billion, up from $104 billion a year earlier. YouTube ad revenue increased 45.9% in 2021, reaching $28.85 billion.
The company’s net income numbers were equally impressive. Net income reached $76 billion, more than doubling 2019’s $34.3 billion in net income. There is hardly a cogent argument to be made against investing in Google based on fundamentals. The overall picture remains outstanding for the company and its shares.
ASML Holdings (ASML)
Investors who aren’t aware of ASML Holdings and its position in the semiconductor industry should take note. With semiconductors becoming increasingly important to our modern world investors are generally perking up to investing in chip stocks. In fact, the semiconductor industry is expected to reach $680.6 billion in worldwide revenues in 2022, up 11% from a strong 2021.
Investors who fear they missed the boat on early semiconductor gains have little to worry about. And ASML Holdings is a company with stock investors ought to consider for the long term. The Netherlands based firm produces lithography machines which are large complex systems used to manufacture chips. These machines account for the greatest capital expenditures at semiconductor companies.
A recent example really reiterates the potential. Intel (NASDAQ:INTC) recently placed an order for one such machine from ASML. That machine cost $340 million. An average cutting edge plant requires roughly a dozen of ASML’s $150 million lithography machines.
ASML stock is very highly regarded on Wall Street and its dominant position as a one of a few global lithography machine producers reinforces that notion.
Best Long-Term Stocks to Buy: Kraft Heinz (KHC)
Kraft Heinz is worth investing in for the long term based on the idea that you follow those who best understand long term investing. Who better to follow in that regard than Warren Buffett?
Kraft Heinz recently exceeded expectations with its earnings. Its 79 cent EPS on $6.7 billion in sales bested the 73 cent EPS expected on the heels of $6.6 billion in expected sales. Kraft Heinz is a consumer staple stock that should perform well in an inflationary environment as consumers flock to its products despite rising costs.
Analysts at Consumer Edge Research have given KHC stock an outperform grade and a $48 target price implying reasonable upside in addition to its strong dividend.
On the date of publication, Alex Sirois 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.