Some companies clearly have what it takes to remain leaders in their sectors. Many will never face meaningful competitive threats. They have very strong brands and are well-positioned to grow, making them some of the best long-term buy and hold stocks. Additionally, these companies provide products or services that are indispensable. Even better, most are well-managed, have strong balance sheets, and always deliver strong financial results. These seven long-term buy and hold stocks have all of those characteristics.
|BAC||Bank of America||$28.26|
Bank of America (BAC)
One of the top long-term buy and hold stocks is Bank of America (NYSE:BAC), one of America’s “too-big-to-fail” financial institutions. Helping, even billionaire Warren Buffett has been buying shares of BAC. That’s thanks in part to the bank’s ability to generate positive operating leverage. Something it has managed to do consistently since 2015. Even better, bank earnings have been solid. Despite challenges, it still saw EPS jump to 94 cents last quarter from 80 cents, year over year.
In addition, RBC Capital raised its price target on BAC stock to $35 from $34, with an outperform rating. The Fly reported that RBC Capital praised BAC’s “diversified business model [which] continues to demonstrate its ability to navigate through uncertain times.
American Express (AXP)
American Express (NYSE:AXP) is another one of the long-term buy-and-hold stocks that Warren Buffett loves. In fact, he’s owned the shares for almost 20 years.
The Oracle of Omaha is reportedly enamored with AXP stock because the credit card network focuses on wealthy customers, making it resilient to economic downturns. Additionally, he’s pleased with its exposure to payment networks and subscription fees, which makes its overall business model more diverse and less likely to be hammered by changes in the macro environment.
Also noteworthy is that Morgan Stanley recently contended that the 15% decline was overdone, creating a buying opportunity. The bank is upbeat about the company due to its high exposure to wealthy consumers and services. Finally, Morgan Stanley expects the company’s revenue to grow about three percentage points faster than its expenses in 2023 and 2024. Research firm Trefis estimates that the fair value of AXP stock is $182, well above the price of $157.24 at which it closed on May 26.
Chipotle (NYSE:CMG) has clearly become one of America’s most successful fast-food companies. For one, CMG reported strong first-quarter results, as its traffic grew about 5% year-over-year. Chipotle’s comparable sales, meanwhile, soared nearly 11% year-over-year. Operating income came in at 15.5% of its sales, up from just 9.4% during the same period a year earlier. Moreover, its restaurant-level margin jumped nearly five percentage points year-over-year.
Better, Pershing Square just noted that CMG is “an extremely compelling, long-term investment” and said that the fast-food company has enjoyed “a fairly spectacular start to the year.” Pershing also said it expects the company to meaningfully improve its operations going forward.
WingStop (NASDAQ:WING) has become a very popular offering among Americans, much like Chipotle. In the first quarter, WING’s system-wide sales soared 30.4% year-over-year to $105 million. Same-store sales soared 20% year over year. Digital sales were up 65%, and EPS came in at 60 cents. After WING reported its Q1 results, investment bank TD Cowen hiked its price target on the name to $235 from $210. The firm says that the company has “many upcoming catalysts,” including its intent to increase its ad spending by 20%+ and its decision to hire a new ad agency. Wingstop’s rapid growth and strong brand clearly make it one of the best stocks to buy and hold.
PayPal (NASDAQ:PYPL) is clearly benefiting from the transition to digital payments. Despite the weakness of e-commerce, the company still expects its earnings per share to expand at a compound annual growth rate of over 20% this year to nearly $5. If the company’s profits are climbing rapidly despite e-commerce’s issues, imagine how quickly its bottom line will surge once e-commerce begins to recover. Also positive for PYPL stock is the fact that the well-known billionaire investor, Ray Dalio, increased the number of the company’s shares he owned to 1.55 million in Q1 from 971,000 in the previous quarter.
First Solar (FSLR)
As of May 26, First Solar (NASDAQ:FSLR) stock was up 87.6% in 2023. All thanks to optimism about solar energy and the large tax breaks the company will receive from the U.S. government. Moreover, FSLR is well-positioned to benefit from additional, strict mandates on clean energy from state governments and European nations that will be implemented in the coming years.
Showing how lucrative solar energy is poised to become, investment in the sector will surpass the amount of money invested in the oil sector this year for the first time, the International Energy Agency recently estimated. Helping, investment bank Piper Sandler recently increased its price target on FSLR stock to $250 from $225, citing the company’s ability to benefit from U.S. tax breaks. Given First Solar’s multiple, strong catalysts, it’s definitely one of the best stocks to buy and hold over the long term.
Visa (NYSE:V) is well-positioned to benefit from the continued shift to credit cards and away from cash. In addition, in a recent interview with an analyst, Visa Chief Product, and Strategy Officer Jack Forestell stated that a high percentage of transactions around the world still take place in cash, in areas such as Japan, Germany, and Latin America. As a result, Visa can still grow a great deal in the coming years as higher percentages of transactions in these areas are carried out using credit cards.
As of the date of publication, Larry Ramer’s wife owned shares of BAC and AXP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.