3 High-Quality Stocks That Will Never Put You in the Red


  • These high quality stocks with proven business models and strong fundamentals can provide steady returns and growth over the long term.
  • Cencora (COR): A leading pharmaceutical distributor benefiting from secular growth in healthcare.
  • Heico (HEI): Diversified aerospace, defense, and electronics company riding multiple megatrends.
  • Old Dominion Freight Line (ODFL): One of the largest North American LTL motor carriers, poised to benefit from infrastructure investment and onshoring trends.
quality stocks - 3 High-Quality Stocks That Will Never Put You in the Red

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Every portfolio needs a solid foundation of high-quality stocks that can provide steady returns through all market environments. While I often discuss more speculative growth and penny stock plays in my articles that some view as high-risk, high-reward bets, the core of your portfolio should revolve around a select few tried-and-true companies. We all know the big tech giants and other household names that seem to keep climbing higher. But today, I want to look beyond those ubiquitous stocks and highlight three under-the-radar companies with strong fundamentals that can generate high-quality returns to rival even the biggest players.

These companies have real staying power, proven business models and the ability to deliver consistent profits and growth over a multi-year period. In other words, they are unlikely to ever put you in the red if you hold them long-term. I won’t be covering the Microsofts and Apples of the world that you can read about anywhere – what’s the fun in that? Instead, I’ll shine the spotlight on three hidden gems you may not know about but deserve a place in any rock-solid portfolio. Let’s have a look!

Cencora (COR)

Illustration of a biopharma company. Doctor standing in front of various medical icons.
Source: Billion Photos / Shutterstock

Cencora (NYSE:COR), also known as AmerisourceBergen, is a leading pharmaceutical distributor in the U.S. It supplies brand-name, generic, specialty pharmaceuticals, over-the-counter healthcare products and home healthcare supplies to healthcare providers. It also offers pharmaceuticals and pharmacy services to patients requiring specialty drugs. The healthcare industry is a secular growth area, and demand is relatively inelastic because treatments are necessary for people. Cencora is one of the higher-growth companies in this space and directly benefits from these tailwinds.

The stock has been generating “exponential” yet stable returns for the past four years but remains undervalued. We’re looking at 8-12% annual EPS growth and a 5-10% sales growth rate. Cencora aims to become the underlying healthcare infrastructure for all institutions and organizations. I see no reason why this momentum will stop anytime soon.

Heico (HEI)

The website for Heico is shown with a magnifying glass enlarging the company's logo.
Source: Postmodern Studio / Shutterstock.com

Heico (NYSE:HEI) is a technology-driven company specializing in aerospace, defense and electronics. It designs, manufactures, and sells global aerospace, defense and electronic products and services. The company provides replacement parts for jet engine and aircraft components, thermal insulation blankets and parts and specialty components.

Heico is a well-diversified company benefiting from multiple megatrends in aerospace and defense. The stock has been delivering excellent performance over the years, and I believe HEI is unlikely to disappoint in the long run. I like its minimal 0.1% dividend yield, which has room to grow significantly, and EPS is projected to increase nearly 20% annually on average going forward.

The aerospace segment is up-and-coming and I believe it can drive substantial growth. As I’ve noted before, Trump’s tax cuts allowing people to write off private planes as a business expense spurred a boom in aerospace. Unsurprisingly, Heico’s revenue grew 44.4% year-over-year in the January 2024 quarter.

Old Dominion Freight Line (ODFL)

ODFL logo on the side of a train
Source: Andriy Blokhin / Shutterstock.com

Old Dominion Freight Line (NASDAQ:ODFL) is one of the largest North American less-than-truckload (LTL) motor carriers. It provides regional, inter-regional and national LTL services. In addition to its core LTL offerings, the company offers expedited logistics and household moving services.

We all know about the supply chain problems that occurred immediately after the economy slowed in late 2021. Freight businesses have recovered significantly, with many even profiting from it since much was caused by rising demand. Moreover, demand for companies like ODFL, driven by infrastructure investment and onshoring trends, continues to increase.

The stock’s long-term performance has been stellar, and I don’t believe a recession would knock down a freight company like ODFL for long. We’d likely see it recover in less than a year. We’re looking at 8-16% annual EPS growth in the future and nearly 10% sales growth per year. The premium you pay for that growth isn’t very high, and the 0.49% dividend yield also sweetens the deal.

On the date of publication, Omor Ibne Ehsan did not hold (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.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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