Finding long-term stocks isn’t always easy. Avoiding meme stock mania, FOMO, and value traps is difficult in any economy but particularly troublesome today. At the same time, forecasting short-term monetary policy and economic headwinds is nearly impossible for retail investors.
Of course, you could always pick a handful of quality index-based ETFs. Yet, many are looking for long-term stocks to build generational wealth. That sentiment creates a dual mandate for portfolios that’s difficult to overcome.
But if you’re willing to be patient and execute due diligence, gems are hidden in today’s rough economy. These three long-term stocks represent value and diversification. Each has short-term potential but, more importantly, are positioned to capture long-term trends that will serve your portfolio well.
Medtronic (MDT)
Medtronic (NYSE:MDT) is a stock to buy and hold that appeals to a range of investor preferences. Artificial intelligence (AI) enthusiasts, healthcare bulls, and income-focused dividend investors all find something to love about Medtronic.
In the short term, Medtronic is set to win the healthcare AI race. The company’s long-standing partnership with AI juggernaut Nvidia (NASDAQ:NVDA) is developing the first wave of AI-integrated medical hardware. Nvidia’s healthcare vice president, Kim Powell, shared positive words about the partnership with Medtronic.
“(It will) accelerate AI innovation by enabling a software-defined business model, with the goal of improving clinical decision making, reducing medical variability and driving better patient outcomes,” said Powell. Judging from Nvidia’s industry dominance, any company closely tied to Nvidia’s success will reap the benefits.
Furthermore, Medtronic will capitalize on the long-term demand for medical devices, which is projected to explode in the next decade. The medical device industry is set to grow to $795 billion by 2030, a steady 5.2% CAGR since 2015. Medtronic has one of the largest market shares within the medical device industry. It is surpassed only by diversified firms selling pharmaceuticals like Mckesson Corporation (NYSE:MCK).
Finally, Medtronic is a value investor’s dream – perfect when exploring long-term stocks. The company’s price-to-book ratio is a sustainable 1.86, and the stock offers a respectable 3.94% total yield.
General Motors (GM)
General Motors (NYSE:GM) is having a tough year, but recent turbulence represents a perfect entry point for those looking for long-term stocks. The company’s current price-to-book ratio is a shockingly low 0.52, and its P/E ratio is an equally low 3.87.
At the same time, the stock’s current total yield is a healthy 6.92%, considering the 5.06% payout ratio. Skeptics might claim GM is a value trap in light of ongoing labor concerns. But few car companies can match GM’s long-term potential.
GM is set to capture 14% of the US electric vehicle (EV) market share by 2026. While this lags industry giant Tesla (NASDAQ:TSLA), it represents an important inroad as the legacy vehicle manufacturer stakes a claim and secures a foothold within the growing market. Critically, GM is looking to reduce its reliance on China, a sticking point for many EV companies.
This week, the company announced a partnership with small startup Niron Magnetics. The partnership will help GM develop and deploy electric motor magnets free from rare earth elements, primarily sourced from Chinese production firms. While reducing reliance on China, this move is another pivot to greater sustainability.
Ultimately, GM is here to stay despite falling nearly 20% since January. Combine its low relative valuation and strong outlook. And you have one of the best long-term stocks to buy and hold in an evergreen portfolio.
Berkshire Hathaway (BRK-A, BRK-B)
If you don’t want to pick single long-term stocks, its hard to beat the best. To that end, you can follow Warren Buffett’s wealth generation strategy by simply investing in Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B).
Berkshire Hathaway holds more than 50 companies within its portfolio and invests in many more. Companies span industries including real estate, transportation, energy, and consumer goods. Surely, Berkshire Hathaway is a way to diversify easily without buying a ton of stocks yourself.
Likewise, investing in Berkshire Hathaway can capture the Oracle of Omaha’s personal investment strategy and market outlook. For example, Buffett is a bit bearish and is selling off a stake in Chevron (NYSE:CVX) and other losing stocks to build a strong cash position. This internal “rebalancing” can help shield your portfolio from negative economic effects. At the same time, you can ride the Buffett wave back up as he inevitably deploys that cash in search of deals as companies begin struggling further.
Investing in Berkshire Hathaway is ultimately the easiest way to follow the smart money. Few investment managers have a successful track record in picking and managing companies as Buffett and his team. That makes Berkshire Hathaway a top stock to buy and hold forever.
On the date of publication, Jeremy Flint held a long position in Medtronic. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
