The best long-term stocks are the kind of investment you can buy and forget about almost immediately. The stock market is filled with chatter about how different events might impact long-term prospects. However, companies that have solid foundations, a compelling product or service and boatloads of cash can ride out just about any storm.
If you’re looking for long-term picks, it makes sense to consider defensive industries. Most sectors tend to rise and fall alongside the economy, but there are a handful that tend to see strong demand no matter the economic conditions. A good place to start is the defence sector. This is considered an essential spend for most governments— in the United States, President Joe Biden’s 2024 defense budget request was $100 billion higher than 2023 levels.
Another good way to find solid long-term stocks to buy is looking in beaten-down sectors. Often, the long-term picks in sectors that have been abandoned are undervalued because investors have thrown the baby out with the bath water, so to speak.
The tech sector is worth visiting in this capacity. Although tech stocks have made an impressive comeback since the start of the year, they’re still well below their 2021 highs. Higher interest rates mean valuations started to look lofty in the sector. However, there are still some solid picks in the sector that are absolutely worth buying and forgetting. In this sector, its important to look for companies that have solid cashflow and plenty of experience reinventing themselves. It’s tempting to pick up a hot new stock that’s capitalizing on the next big tech trend. However, if the aim is to buy a stock and hold on to it for the long-term, larger, more established bluechips like these are the way to go.
Long-term Stocks to Buy: Microsoft (NASDAQ:MSFT)
Microsoft (NASDAQ:MSFT) has been around for decades, and its no stranger to reinvention, making it a strong pick among long-term stocks to buy. However, it boasts a business with several strong segments. Having siad that, when one part starts to struggle, the others can pick up the slack. Currently, it’s personal computing that’s lagging, reflecting the challenging consumer environment. However, Microsoft’s cloud business has been able to offset this weakness.
Cloud is likely to be Microsoft’s growth engine for the next few years, but CEO Satya Nadella is keen to continue building out AI as a future growth platform. For now, it remains a shiny new toy with little commercial value, but that’s likely to change as the group embeds it into its existing suite of products.
Plus, Microsoft is sitting on a net cash pile of more than $50 billion. That means the group will have no trouble maneuvering through a tricky economic climate while still returning cash to shareholders.
BAE Systems (NASDAQ:BAESY)
The defence sector boasts plenty of long-term stocks to buy, and BAE Systems (NASDAQ:BAESY) is no exception. BAE makes military equipment like aircraft carriers and fighter jets, so demand for these products is relatively stable. The current environment has meant most governments are keen to increase spending in this area. BAE has been able to snag many of those dollars.
What’s nice about the defence space is revenue visibility. The contracts tend to stretch far into the future with revenue spread across many years. BAE’s order book was sitting at around £59 billion ($79 billion), and that’s only expected to rise as orders increase.
While defence is insulated, it’s not immune to ups and downs. Elevated defence budgets are a feature of geopolitical turmoil. Once resolved, we could see orders slow down. Howeer, BAE’s using the current influx of cash to build out strategic parts of the business like Cyber & Intelligence. With a dividend of close to 3% and plenty of cash running through the business to cover it, BAE is a strong pick for long-term investors.
Apple (NASDAQ:AAPL)
Apple (NASDAQ:AAPL) has long been at the top of investors’ list when it comes to long-term stocks to buy. The group has its finger on the pulse of what consumers want, and it has created an ecosystem that’s difficult to escape. The result has been a band of loyal followers who are consistently willing to upgrade their phones despite the premium. This was evident in the most recent results, which showed that despite lacklustre product sales, iPhone sales were at record highs. Given the handsets make up more than half of revenue, this was undoubtedly a good thing.
However, Apple’s keen to build out other parts of the business. Services are the next frontier, with the group’s streaming, music and fitness services all acting as new growth engines. Growth here is stoked by strong iPhone sales— the more people with Apple phones, the more people caught up in the group’s net.
Apple’s also got a strong balance sheet that supports the group’s commitment to returning cash to shareholders. Buybacks have been a feature for Apple investors and that’s not expected to stop anytime soon.
On the date of publication, Marie Brodbeck held BAE and Apple. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
