Short-term investing inherently carries greater risk. It is notoriously difficult to pick winning stocks with a short time horizon. In the current market environment that is perhaps doubly true. That said, there’s no shortage of media pundits calling a market bottom currently. Despite their credentials, experience or histories of calling previous market bottoms, their guesses remain guesses. A better strategy is to find long-term stocks to buy on the dip.
This strategy is more likely to provide reliable returns because it relies on the general notion that a rising tide lifts all ships. Given that we’re in a bear market a rise is as near a certainty as can be found when investing.
It simply requires patience and a willingness to commit to stocks in companies that are likely to grow over time.
| Ticker | Company | Recent Price |
| GOOG | Alphabet | $107.85 |
| QS | QuantumScape | $10.94 |
| AAPL | Apple | $153.82 |
| U | Unity Software | $36.28 |
| CHPT | ChargePoint | $13.83 |
| XPEV | XPeng | $24.53 |
| X | U.S. Steel | $19.70 |
Alphabet (GOOG)
Investors need to consider Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) stock when they think about the long term. If you’re thinking, “Hey, Google’s already grown so much, why should I invest now?,” then consider its strategy. Too often investors consider Alphabet solely for the current constituent components (Google search, YouTube, Google suite, Android, and Chrome) that drive GOOG stock as an investment.
The notion here is that much more of Google’s growth is behind it than ahead. In other words, Alphabet can’t continue to squeeze massive returns from those businesses indefinitely. But that misses the point of Alphabet: The company is structured such that it will remain relevant for a long time. Its “other” bets, including Waymo, Calico, Verily and others can become “Alpha” bets.
So, if the 23% annual returns over the last decade don’t continue for the next ten years, you can bet management will be working to rotate in the next cash cow.
QuantumScape (QS)
QuantumScape (NYSE:QS) stock has eroded in value throughout 2022. In fact, it’s down more than 50% year-to-date. Combine those facts with the idea that QuantumScape is attempting to be the first to commercialize solid-state batteries. Add to that idea that the firm projects commercialization won’t happen until at least 2024, if ever and the risk in QS stock becomes apparent.
That could reasonably lead investors to question its investment worthiness.
But consider that QuantumScape has continued to hit milestone after milestone in its quest to develop the holy grail of EV batteries. Most recently, that was evidenced by results for the results for its 16-layer cells. That cell showed improved characteristics over the company’s 10-layer cell and proved reliable over more than 500 charging cycles.
The company admits it remains far from commercialization, but it seems to be successfully iterating toward such a future.
Apple (AAPL)
Apple (NASDAQ:AAPL) stock has been one of the strongest long-term performers in recent memory. That has to be among the main reasons investors continue to flock to it even as tech remains subdued. And yes, those returns have been very strong at 23% annually over the past 10 years.
There’s little reason to believe the party’s anywhere near its end, though. Apple’s earnings expectations have been trending slightly downward over the last 3 months, moving from $1.37 to $1.32. And there were already rumblings that Q2 won’t be as strong as previous quarters.
But AAPL stock has plenty of room to continue to grow based on broad fundamentals. And that’s what investors should be focused on. Short-term catalysts that garner headline attention don’t matter, the long term does.
Unity Software (U)
The brief description of Unity Software (NYSE:U) is that it provides software to create 2D and 3D gaming content spanning the spectrum from mobile gaming to augmented and virtual reality devices.
Those last few words provide a clue as to why it has lost more than 50% of its value year-to-date: The metaverse has cooled. At least that’s the general feeling across the market.
But a report by McKinsey & Co. published in June says otherwise. The noted consulting firm estimates that the metaverse could reach $5 trillion in value by 2030. But while the market momentarily cools as Meta Platforms’ (NASDAQ:META) troubles affect the metaverse at large, trends remain clear: The metaverse is here to stay.
That means that Unity Software and U stock aren’t simply pandemic darlings. Rather, the company, which touches 50% of all games created today, will remain highly relevant. It’s going to be integral to the rapid development of the metaverse making it a buy today.
ChargePoint (CHPT)
ChargePoint Holdings (NYSE:CHPT) stock might be down roughly 30% this year. But that isn’t for lack of performance. The firm is doing just about as well as anyone could hope.
The EV charging and infrastructure firm reported $81.6 million in revenues in its most recent earnings report. That was far higher than the $75.7 million Wall Street was expecting on average. And it was well above the $77 million that management’s guidance had given at the high end of the range. So, you could argue that it’s doing even better than anyone could have hoped.
However, growth stocks have shifted out of favor as inflation runs rampant and the Federal Reserve hikes rates in response. So, the fact that ChargePoint posted a net loss of $89.26 million in the same quarter isn’t going to go over well in the markets.
Avoid that notion. Market cyclicality will play out, growth stocks will return to favor eventually, and patient investors will see CHPT stock increase in value as the leading EV charging firm in the U.S.
XPeng (XPEV)
Let’s imagine that an investor holds XPeng (NYSE:XPEV) stock through 2023 and a recession occurs. Let’s also assume that any such recession is shallow as many economists are now predicting.
If it’s a short and shallow recession XPEV stock could end up very strong sometime in 2023. The idea here is that a shallow recession comes and goes in 2023 and growth stocks experience some sort of renaissance.
Consider that XPeng should report roughly $6.2 billion in revenues this year and then more than $10 billion in 2023 and its attraction becomes obvious. It’s a risky proposition in the short term, but as a long-term investment XPEV stock is solid.
It is one of the leading EV manufacturers in China, the biggest EV market in the world. Investors who ignore that secular trend will kick themselves.
U.S. Steel (X)
At some point, the U.S. will have to address its crumbling infrastructure. When it does, shares in U.S. Steel (NYSE:X) stock surge higher. It’s likely already underway as U.S. Steel recently provided record Q2 guidance.
Right now, the company’s diverse customer base means it is benefiting from energy market customers. The company is projecting $1.6 billion in EBITDA, which leads to $3.85 earnings-per-share. That’s far above the $3.26 EPS Wall Street had earlier predicted. So, in the short term, X stock looks to be in prime position.
In the long term, the narrative shifts toward steel demand as the U.S. rebuilds its infrastructure.
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.
