Even the pros on Wall Street are having a tough time navigating this current market. So investors should not feel bad about having trouble finding easy investment ideas. Finding stocks to buy and hold is trickier than usual. Today, I will suggest three that will work for the rest of the year and into next.
The overall consensus is bearish. Yet, for the most part, company profit and loss statements have not deteriorated. The anticipation of tougher times is causing investors to hold back. The confusion is stemming from unusual price actions. I contend that what’s happening is normal, but inside of an abnormal environment. For example, yesterday, the U.S. Federal Reserve (Fed) delivered bad news. However, equities rallied in relief. This morning, markets fell 2.5% on the back of a surprise Swiss rate hike. Ridiculous of course, but it’s headlines like these that add to the confusion.
In reality, when the indices lost the Feb. 24 support, they triggered bearish patterns. Those are playing out perfectly and are nearing their targets. Until then, rallies will not likely sustain and the bulls will be flighty. Nevertheless, there are still some socks to buy and hold through this mess. These would be quality companies that have fallen enough to have reasonable further downside risk.
Technical targets for the indices still make room for another 10% drop. Therefore, investors who are going all in now are making a mistake. The better idea is to take partial positions now and add more shares when the bottom is in. That will not be a flashpoint in time, but rather a bottoming process.
There is not yet evidence that we have formed a trough with the S&P 500, for example. The Fed declared its intentions to continue raising rates until they see several months of improving inflation. That’s not likely to happen anytime soon, so hunker down on that front.
With all that in mind, here are three stocks to buy and hold for long-term profit potential:
|PENN||Penn National Gaming, Inc.||$29.17|
|TTD||The Trade Desk, Inc.||$46.50|
Stocks to Buy and Hold: Block (SQ)
Everything around us is going digital, so money will too. This is the trend, so financial technology will be relevant forever. Block (NYSE:SQ) stock is one way to bet on that thesis, so it’s our first pick of the day. The sector includes old giants like Visa (NYSE:V) and MasterCard (NYSE:MA). There are other new entrants, like PayPal (NASDAQ:PYPL), SoFi (NASDAQ:SOFI) and Affirm (NASDAQ:AFRM).
Block is not the largest company, but it is a leader and trendsetter among them. You wouldn’t guess that by looking at its chart. It has lost almost 80% of its value from last summer’s peak. In all fairness, the rally was insane, so the selloff was not too surprising. However, it has retraced all the way back to the middle of the pandemic crash. These are levels that were relevant in 2018 and 2019.
Unless we’re going back to pushing pen and paper, it’s reasonable to expect that it is near a bottom. Therefore, it deserves a spot on our list of stocks to buy and hold even now.
Penn National Gaming (PENN)
Penn National Gaming (NASDAQ:PENN) doesn’t get enough attention from investors. The sector fan favorite is DraftKings (NASDAQ:DKNG). However, both stocks have suffered in similar fashions. PENN stock is down 74.4% from its 52-week high of $114.09, but it is nearing a bottom. I say this because the long-term support lines are close and it has a successful business.
Unlike Draftkings, Penn National currently has viable financial metrics. Last year, they generated $1 billion in cash from operations and a net profit. They also maintain a very respectable revenue growth rate. And thanks to the stock price drop, it now has a price-to-earnings ratio of 13. Unless the equity markets are going to collapse, I’d expect that the upside potential is larger than the downside. According to Yahoo Finance, the experts have higher hopes for it, too. I’d be willing to add it to my basket of stocks to buy and hold for a 2022 to 2023 recovery rally.
Stocks to Buy and Hold: The Trade Desk (TTD)
The recent migration of media consumption suited The Trade Desk (NASDAQ:TTD) business well. Their intermediary role for advertising is becoming even more interesting with the evolution of content streaming. Netflix (NASDAQ:NFLX) set the trend at a furious pace. But contenders like Disney (NYSE:DIS) and Amazon (NASDAQ:AMZN) are sprinting after it, as well. All this hoopla makes TTD part of my posse of stocks to buy and hold into next year.
TTD stock rallied too much out of the pandemic, but such was the case for the whole market. The exuberance exceeded reasonable levels and the consequent drop fixed this anomaly. Since the levels were so extreme on the way up, the floor may not yet be in. But if markets hold up, TTD stock should have better support now. It sits about 60% below the ridiculous highs and 60% above the pandemic base. And if we simply straight line the prior stock trend growth, we could expect decent upside in the long run.
Fundamentally, it is not cheap, but its financials are solid. It is cash positive from operations and is overall profitable. The revenue growth has been consistent even through the pandemic. That year was the lowest and barely below 30%-plus year-over-year result. There are other reasons to expect good things from TTD, especially if streamers launch their ad-supported services.
On the date of publication, Nicolas Chahine 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.