You don’t have to do daily trades to achieve your long-term financial goals. Buying and holding reliable stocks for many years can lead to outsized returns and move you closer to retirement. Investors have to remain patient and hold onto promising corporations during good times and bad times.
Stock market corrections test the mettle of many investors. Some investors mistakenly sell stocks just because they are going down. There are reasons to sell stocks, such as a significant change to the company’s fundamentals or growth opportunities, but a correction alone isn’t enough of a reason to sell reliable companies.
Investors who can weather the storm with these long-term stocks have the potential to grow their portfolios.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) didn’t receive as much love to start the year as AI blunders got overblown. The stock has rebounded and is up by 11% year-to-date.
It’s no secret that Alphabet makes most of its revenue from advertising. While it’s better to have well-diversified revenue streams, ad revenue is working well for the company. Google and YouTube helped the company achieve 13% year-over-year revenue growth in Q4 2023.
Google Cloud attributed to more than 10% of the company’s revenue and looks like it can be a solid business segment for the company moving forward. Alphabet is one of the largest cloud computing providers. Google Cloud looks poised to become a larger percentage of total revenue each quarter. It wouldn’t surprise me to see Google Cloud revenue become more than 20% of the company’s total revenue within the next 1-2 years.
Revenue growth has been good, but net income growth has been even better. The company reported 52% year-over-year net income growth in Q4 2023. Cost-cutting measures can support higher profit margins and make the company’s 29 P/E ratio look more enticing.
American Express (AXP)
American Express (NYSE:AXP) exceeded expectations in the first quarter of 2024 while attracting Millennials and Gen Z. Those two cohorts made up 60% of the company’s new cardholders who came in during the first quarter.
The financial firm delivered on the high-end of its revenue guidance and surprised investors with its net income growth. Revenue grew by 11% year-over-year. It’s a growth rate the firm believes it can achieve beyond 2026. Net income growth captured more attention. While the firm suggested mid-teens EPS growth beyond 2026, the firm reported 34% year-over-year net income growth in the quarter. That translated into a 39% year-over-year growth in diluted EPS.
The stock has a reasonable 20 P/E ratio given its current financials and long-term growth prospects. People will continue to use credit and debit cards during any economic cycle. American Express stands to benefit from that trend and is more reasonably valued than its peers.
Walmart (WMT)
Many consumers turn to Walmart (NYSE:WMT) when they want to save money on various products. The retailer has established a strong reputation for itself for more than 60 years. The company continues to expand and delivered 5.7% year-over-year revenue growth in Q4 2023.
Walmart has a few catalysts that can support higher growth rates and improved profit margins. The first catalyst is the rising cost of goods and services. Higher prices will entice more people to shop at Walmart to save money. The company has been making a push to attract a higher quantity of wealthy customers.
The second catalyst is the company’s advertising network. The global advertising business grew by 33% year-over-year and the acquisition of Vizio will strengthen this segment. A focus on advertising will increase profit margins and may have contributed to the company’s 9% dividend hike.
The final catalyst is e-commerce growth. Global e-commerce sales grew by 23% year-over-year in the fourth quarter. Full-year e-commerce sales exceeded $100 billion. The company can exhibit better top and bottom lines as e-commerce revenue makes up a larger percentage of total revenue.
Elf Beauty (ELF)
Elf Beauty (NYSE:ELF) is in the middle of a deep correction that has made the stock more attractive for long-term investors. Shares are down by more than 25% from their all-time highs and currently trade at a 70 P/E ratio.
The beauty firm has a high valuation because of its impressive financial growth. Elf Beauty continued the trend with 85% year-over-year net sales growth in Q3 FY24. The company significantly raised its fiscal 2024 outlook. The company hiked its net sales range from $896-$906 million to $980-$990 million. Net income came in at $26.9 million on a GAAP basis which is up by 41% year-over-year.
Elf Beauty has achieved 20 consecutive quarters of sales growth. Those results have helped the stock surge by more than 1,100% over the past five years. Analysts are feeling bullish on the stock and have rated it as a “Moderate Buy.” The average price target suggests a 31% upside from current levels.
Costco (COST)
Costco (NASDAQ:COST) has established itself as a wholesaler that offers affordable prices for various products. The recent monthly sales report indicates the corporation is doing well. The company generated a 7.7% year-over-year comparable sales growth rate in the retail month of March. The company also reported 5.2% year-over-year growth over the past 31 weeks.
E-commerce growth also came in hot at 28.3% year-over-year for the retail month of March. The “retail month of March” is the five weeks ended April 7, 2024. Costco has steadily outperformed the stock market with a 189% gain over the past five years. The corporation trades at a 46 P/E ratio and offers a 0.655 dividend yield.
Costco makes it possible to do all of your shopping in one place, and that advantage has resulted in plenty of bullishness from analysts. The stock is rated as a “Strong Buy” with an average price target that suggests an 11% upside.
FICO (FICO)
FICO (NYSE:FICO) measures credit risk and is the golden standard for credit scores. Many financial institutions use FICO scores to assess a consumer’s level of risk before giving out loans.
The company has two business segments that both grew year-over-year in the first quarter of fiscal 2024. Scores revenue increased by 8% year-over-year. This segment includes the company’s B2B scoring solutions and B2C solutions.
Software revenues jumped by 14% year-over-year. This segment consists of the company’s analytics and digital decisioning technology. Annual recurring revenue grew by 43% year-over-year.
Overall revenue increased by 11% year-over-year, but net income growth was more impressive. Earnings were 24% higher compared to the same time year-over-year and resulted in a 31.7% net profit margin. The stock has handily outperformed the market with a 300% gain over the past five years. The stock is rated as a “Moderate Buy” and has a projected 20% upside from current levels.
SoFi (SOFI)
SoFi (NASDAQ:SOFI) has been a roller coaster for long-term investors. The stock is down by 25% year-to-date and has dropped by 31% over the past five years. However, the company is up by 18% over the past year and has a projected 24% upside from current levels.
The digital bank offers many services you would expect from traditional banks. The fintech firm offers bank accounts, loans, credit cards, investment accounts, and other resources. It’s an all-in-one resource for people who want to manage their finances in one place.
A good platform isn’t enough to justify buying the stock. However, SoFi recently switched to profitability and has a compelling long-term outlook. The firm grew its revenue by 35% year-over-year in Q4 2023 while reporting $47.9 million in GAAP net income. That’s a big shift compared to the $40.0 million GAAP net loss posted in Q4 2022.
SoFi expects 20%-25% compound revenue growth beyond 2026. The company also expects to generate $0.55 to $0.80 in GAAP earnings per share in 2026. The firm also expects 20%-25% compounded EPS growth beyond 2026.
The stock currently trades at roughly $7/share. A $0.55 EPS implies a 12.7 P/E ratio while an $0.80 EPS suggests an 8.75 P/E ratio. We have to wait until 2026 to see if guidance plays out as expected. However, the company’s long-term goals and recent financial growth highlight a stock with great potential.
On this date of publication, Marc Guberti held long positions in GOOG, ELF, and SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
