While some investors like to manage their portfolios actively, others prefer to buy stocks for the long term. This means holding onto stocks for as long as thirty years to even forever. However, you can’t just hold any stock forever. Plenty of companies seem like a great bet one year, only to plummet the next. The types of stocks that you can hold forever must have sustainable business models, they should be leaders in their fields, and have long reputations as strong companies. They should also be growing and have solid balance sheets.
With the market continuing to hit new heights, many of the share prices of these companies are in the hundreds or even thousands. This makes it hard for investors with limited capital to purchase large quantities of shares.
However, there are still top companies that you can hold forever trading below $100. And while $100 is definitely not considered a low-priced stock, it is nowhere near the prices of companies such as Amazon (AMZN) and Tesla (TSLA). When you combine that price level with the power of our POWR Ratings system, you get great long-term picks such as Coca-Cola Company (KO), BHP Group Ltd. (BHP), and Pfizer Inc. (PFE).
Coca-Cola Company (KO)
KO is the largest non-alcoholic beverage entity globally, owning and marketing some of the leading carbonated beverage brands, such as Coke, Fanta, and Sprite, as well as non sparkling brands, such as Minute Maid, Georgia Coffee, Costa, and Glaceau. It has a market share of more than 40% in the non-alcoholic beverage industry.
The firm is evolving its business model to become a total beverage company due to the industry-wide flattening of soda sales. It has investments in healthier alternatives such as coffee, sparkling water, and sports drinks. This includes Coca-Cola Energy, Coca-Cola Plus Coffee, Powerade Ultra, and Powerade Power Water.
The company had a robust second quarter, where both revenue and earnings beat expectations. Sales bounced back from a decline in the prior year’s quarter. This was driven by increased consumer mobility and the reopening of the economy. These factors led to an increase in away-from-home channel sales.
KO also gained from an improved price mix, an increase in concentrate sales, and higher unit case volume. Due to this, management has raised guidance for the year. The company has an overall grade of B, which translates into a Buy rating in our POWR Ratings system. KO has a growth grade of B, which makes sense as earnings per share rose 61.9% year over year in the most recent quarter.
The company also has a Quality Grade of B due to solid fundamentals. For instance, KO has a current ratio of 1.4, indicating it has more than enough liquidity to handle short-term liquidity. The company is also highly profitable, with a net profit margin of 23.8%. We also provide Value, Momentum, Stability, and Sentiment grades for KO, which you can find here.
KO is ranked #11 in the B-rated Beverages industry. For more top stocks in this industry, click here.
BHP Group Ltd. (BHP)
BHP is a leading global diversified miner supplying iron ore, copper, oil, gas, and metallurgical. A 2001 dual-listed merger of BHP Limited (now BHP Ltd.) and Billiton PLC (now BHP PLC) created the present-day BHP. Major assets include Pilbara iron ore, Queensland coking coal, Escondida copper, and conventional petroleum assets, principally in Australia and the Gulf of Mexico.
It manages product distribution through a global logistics chain, which includes freight and pipeline transportation. BHP sells products through direct supply agreements with customers and on international commodity exchanges. Population growth and rising living standards should continue to generate demand for energy, metals, and fertilizers for years. This should help drive BHP’s growth.
The company is benefiting from higher copper prices, which have been gaining due to the pickup in industrial activity. Specifically, copper has gained this year due to an increase in demand from China and potential supply disruptions in Chile. BHP is also benefiting from an increase in Potash prices due to favorable farm conditions and constrained supply.
Plus, the long-term prospects for metal prices are solid. The growth in steel production, driven by urbanization, should increase demand for iron ore and help sustain prices. The need for nickel in electric vehicle batteries should also continue to grow. BHP has an overall grade of A and a Strong Buy rating in the POWR Ratings system.
The company has a Value Grade of B, which isn’t surprising with a trailing P/E of 14.13. Its price to tangible book ratio of 3.1 is also well below the industry average. BHP also has a Quality Grade of B due to a solid balance sheet. The company has a low debt to equity ratio of 0.5 and a current ratio of 1.4. For the rest of BHP’s grades (Growth, Momentum, Stability, and Sentiment), click here.
BHP is ranked #4 in the Industrial – Metals industry. For more top-ranked stocks in this industry, click here.
Pfizer Inc. (PFE)
PFE is one of the world’s largest pharmaceutical firms, with annual sales of close to $50 billion. While the company historically sold many types of healthcare products and chemicals, prescription drugs and vaccines now account for most sales. Its top sellers include pneumococcal vaccine Prevnar 13, cancer drug Ibrance, cardiovascular treatment Eliquis, and immunology drug Xeljanz.
The company has been benefiting from a surge in COVID cases. Management reported a solid second quarter, where earnings rose 73% year over year and sales surged 92%. The majority of its sales were from its COVID-19 vaccine, BNT162b2. The vaccine contributed $7.8 billion in global sales during the quarter.
The vaccine was developed in record time and is now approved for emergency use in several countries. The company expects to manufacture up to 3 billion doses by the end of the year and has agreements in place to deliver 2.1 billion doses in 2021. PFE is also evaluating the vaccine in younger patients and a booster vaccine dose.
It is also looking at an updated version of the vaccine specifically designed to target the Delta variant. In addition, the company expects strong growth in key brands such as Ibrance, Inlyta, and Eliquis. The company also boasts a sustainable pipeline with multiple late-stage programs that can also help drive growth. PFE has an overall grade of A, translating into a Strong Buy rating in our POWR Ratings system.
The company has a Value Grade of B as its forward P/E is only 12.94. Its price-to-free cash flow of 12.7 is also well below the industry average. PFE also has a Growth Grade of B as analysts expect revenue to surge 85.7% year over year in the current quarter and 92.2% for the year. Earnings are expected to jump 85.1% this year.
To access the rest of PFE grades, including Momentum, Stability, Sentiment, and Quality, click here. PFE is ranked #8 in the Medical – Pharmaceuticals industry. For more top stocks in this industry, click here.
Note that PFE is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
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This article was written by David Cohne, Chief Value Strategist for StockNews.com. David has helped investors find the most profitable stocks for over 20 years
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KO shares were trading at $55.96 per share on Monday afternoon, up $0.35 (+0.63%). Year-to-date, KO has gained 3.67%, versus a 19.77% rise in the benchmark S&P 500 index during the same period.
About the Author: David Cohne
David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...
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