I believe that every investor should have a portfolio that’s divided into two segments. The core portfolio should have stocks that are worth holding for the long term. A dynamic portfolio can be focused on an event-based investment strategy. The focus of this column is on a core portfolio of stocks for investors over 30 to buy and hold.
Even in the long-term portfolio, there needs to be diversification. First, in the form of exposure to different industries. Furthermore, in the form of balanced exposure to growth and blue-chip dividend stocks.
Growth stocks for investors over 30 to buy and hold are typically names that will emerge as blue-chip stocks in the coming years.
With the markets facing headwinds related to inflation and GDP growth, several quality stocks are available at mouth-watering valuations. It’s therefore a good time for a core portfolio creation that comfortably beats inflation and boosts retirement savings.
Chevron Corporation (CVX)
The International Energy Agency believes that the world faces its first truly global energy crisis. It’s likely that oil prices will remain above $80 per barrel in the coming years. Chevron Corporation (NYSE:CVX) is a quality stock to buy and hold for dividend growth and capital gains.
With a net-debt ratio of 4.9%, Chevron has an investment-grade balance sheet. Additionally, for Q3 2022, the company reported operating cash flow of $13.7 billion. With oil at $80 per barrel, the company has an annual cash flow visibility of $40 billion. This is a key reason to like CVX stock.
Chevron also has high-quality assets. The company has plans to invest $15 to $17 billion annually through 2026. This will ensure robust reserve replacement and will continue to boost the company’s cash flow visibility.
Pfizer (NYSE:PFE) is a deeply undervalued stock that can create value for shareholders in the coming years. At a forward price-earnings ratio of 7.4, the 3.38% dividend yield stock is a screaming buy.
Recently, Pfizer won a nod from the U.K. for a second omicron booster. It was also reported that Pfizer’s antiviral pill reduces the risk of long covid by 26%. While growth has decelerated for the company’s covid vaccine, the business will continue to deliver healthy cash flows.
Pfizer’s bull story is also not just limited to the covid vaccine. The company has a deep product pipeline and strong financial flexibility to launch new drugs on a sustained basis. For the year, Pfizer plans to invest $11.5 to $12 billion in research and development.
The pharma company has also been active on the acquisition front. This will help in boosting the product pipeline. Pfizer expects to add $25 billion in risk-adjusted 2030 revenue through business development.
Costco Wholesale (COST)
Costco Wholesale (NASDAQ:COST) stock has been sideways for the last 12 months. This seems like a good accumulation opportunity with the stock offering dividend growth at a CAGR of 12.35% in the last five years.
It’s also important to note that consumer spending is the key GDP growth driver in the U.S. Costco is therefore a core portfolio stock as policymakers will continue to focus on policies for boosting retail spending.
Amidst headwinds for the retail sector, Costco has possibly been the best performer in terms of growth. Once inflationary pressure wanes, meaningful EBITDA margin expansion seems likely.
For the nine weeks ended October, the company reported 7.7% comparable store sales. With an improving omnichannel presence, the company’s comparable store sales growth has remained robust.
In terms of recurring revenue, Costco reported $4.2 billion in membership fees in the last 12 months. With a 92.6% renewal rate in U.S. and Canada, the membership fee provides clear cash flow visibility. Further, as Costco expands in the U.S. and internationally, membership fees will continue to swell.
It’s been a challenging year for Tesla (NASDAQ:TSLA) stock with a correction of 52%. I still recommend the high-beta stock for the core portfolio at current valuations.
It’s just the tip of the iceberg when it comes to the adoption of electric vehicles globally. For investors who are bullish on the EV theme, TSLA stock remains the top pick. The company has ambitious growth plans with a target of selling 20 million EVs annually by 2030. With government support globally for EV adoption, this seems realistic.
Tesla also has strong financial flexibility to achieve this target. As of Q3 2022, the company reported $21 billion in cash. Additionally, for the first nine months of 2022, the company reported operating cash flow of $11.4 billion. Therefore, adding gigafactory to new regions is unlikely to be a challenge from a financing perspective.
Tesla is also known to be an innovator. Intense competition poses a challenge for the company. However, the innovation factor is likely to help Tesla in maintaining market leadership position.
It might seem surprising that I am including Pinterest (NYSE:PINS) among stocks for investors over 30 to buy and hold. I however believe that PINS stock is undervalued and a quality e-commerce play with global presence.
For Q3 2022, Pinterest reported revenue of $684.6 million. While revenue growth was 8% on a year-on-year basis, monthly active users were flat for the comparable period. Marginal revenue growth was therefore driven by an uptrend in average revenue per user.
With Pinterest making the platform shipping friendly, it’s likely that advertising revenue will increase. This will boost the company’s ARPU in the coming years. Another point to note is that Pinterest reported cash and equivalents of $2.5 billion as of Q3 2022. Additionally, the company reported operating cash flow of $411 million for year-to-date 2022.
With a strong balance sheet and the business having the potential to generate healthy cash flows, financial flexibility is robust. This will allow Pinterest to continue investing in product development and global expansion.
Newmont Corporation (NEM)
Newmont Corporation (NYSE:NEM) is a solid company and NEM stock offers investors a dividend yield of 5.0%. After a correction of almost 25% year to date, NEM stock is worth buying.
Even with depressed gold prices, I don’t have any credit concerns for Newmont. The company has an investment-grade balance sheet with a net-debt-to-adjusted-EBITDAX of 0.5. Strong cash flows and a total liquidity buffer of $6.7 billion will ensure dividends sustain along with steady investments.
From an asset perspective, Newmont has proved reserves of 92.8 million ounces. With a robust reserve replacement, Newmont expects to sustain production well into the 2040s. This provides clear cash flow visibility even if gold trades around $2,000 an ounce in the next few years.
Lucid Group (LCID)
Lucid Group (NASDAQ:LCID) is among the top growth stocks for investors over 30 to buy and hold.
It’s true that Lucid has disappointed investors in 2022 with weak guidance. However, business development remains positive, and Lucid is investing in innovation.
Lucid already has 34,000 reservations for its first model and it implies potential revenue of $3.2 billion. Further, the company has purchase commitments from the Saudi government for 100,000 electric vehicles.
The model line-up for the next two years includes Lucid Air Sapphire and Project Gravity SUV. This will ensure that deliveries growth accelerates meaningfully. Once supply chain concerns ease, LCID stock is likely to trend higher.
Cash burn in the next few years is unlikely to be a concern. Lucid is well positioned financially with cash and equivalents of $3.85 billion as of Q3 2022. This is sufficient to cover the cash burn through 2023. Recently, Lucid raised $1.5 billion in funding implying that it has ample liquidity through 2024.
On the date of publication, Faisal Humayun 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.