One of the secrets to wealth creation in the markets is to start early. If I had to create a long-term portfolio, there are several attractive stocks for investors over 30 to buy and hold.
The worst time to start investing is in a bull market. Fortunately, the markets have faced macroeconomic headwinds and several stocks have witnessed a deep correction. These stocks can create immense value in the coming years.
It’s worth noting that when we consider growth stocks for the portfolio, it involves higher risk and several uncertainties. Seemingly good growth stories can fail due to unexpected industry or macroeconomic developments.
However, the same is not the case with blue-chip stocks. There are high-quality names that have rewarded investors on a consistent basis for years. In some cases, decades. This column focuses on blue-chip stocks for investors over 30 to buy and hold.
Newmont Corporation (NEM)
Newmont Corporation (NYSE:NEM) is possibly the best proxy for exposure to gold.
In the last 20 years, gold’s investment demand has grown at a CAGR of 15%. With the correction in gold, NEM stock has plunged by 50% in the last six months. This is a good opportunity to consider exposure to this dividend stock.
Specific to Newmont, there are two reasons to be bullish for the long term. First, Newmont has an investment-grade balance sheet. As of Q2 2022, the company reported a net-debt-to-adjusted EBITDA of 0.3. Additionally, the company had $7.3 billion in liquidity buffer.
Further, Newmont has a quality asset base. As of December 2021, the company reported 96 million ounces of gold reserves. Newmont believes that the project pipeline will help the company sustain production into the 2040s.
Chevron Corporation (CVX)
The energy sector has also been in focus in 2022. Legendary investor Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B) has been overweight on oil and gas stocks. Chevron Corporation (NYSE:CVX) is among the top stocks for investors over 30 to buy and hold.
Strong fundamental is a key reason to like CVX stock. The company has an investment-grade balance sheet. Also, even at $80 to $90 per barrel of oil, Chevron is likely to deliver operating cash flow in excess of $30 billion.
Low break-even assets ensure that dividends sustain and Chevron can aggressively invest in sustaining production. As a matter of fact, Chevron plans to invest $15 to $17 billion annually through 2026. This will help in production and ensure a healthy level of reserve replacement.
Chevron has also been investing in lower-carbon businesses. By the end of the decade, the company expects to deliver cash flows in excess of $1 billion from this segment.
Lockheed Martin (LMT)
Global defense spending crossed $2 trillion for the first time in 2021. With ongoing geopolitical escalations, it’s likely that defense spending will continue to grow. Defense sector stocks can therefore be long-term value creators.
Lockheed Martin (NYSE:LMT) is my pick from the defense sector among stocks for investors over 30 to buy and hold. At a forward price-earnings of 15.3, LMT stock seems attractively valued. The stock also offers an annual dividend of $12 per share.
The order intake for Lockheed has been encouraging in the recent past. The company already has a backlog of $135 billion. This provides clear free cash flow visibility for 2022 and 2023. With Europe likely to ramp up defense spending, the outlook seems bright even beyond 2023.
Pfizer (NYSE:PFE) seems grossly undervalued at a forward price-earnings ratio of 6.5. PFE stock also offers a dividend yield of 3.8% and dividends seem sustainable.
It’s worth noting that Pfizer reported free cash flow of $29.9 billion in 2021. The cash flow bump-up comes from covid-19 vaccine sales. Even for the current year, FCF is likely to remain robust.
This has allowed Pfizer to aggressively pursue inorganic growth. At the same time, Pfizer will be investing nearly $12 billion in research and development for 2022. These investments will help in accelerating the deep pipeline of drugs.
Pfizer has steady growth visibility for the coming years as new drug candidates are commercialized. As cash flows swell, Pfizer will also be positioned to increase dividends.
Being a market leader and innovator, Tesla (NASDAQ:TSLA) stock is my long-term pick from the EV industry. In particular, after a correction of 45% for year-to-date 2022.
It’s worth mentioning that Tesla has set a target of selling 20 million EVs annually by 2030. To achieve this target, Tesla is eyeing 10-12 Gigafactories. While this involves some big investments, Tesla has been generating strong cash flows.
As of Q2, the company reported $18.3 billion in cash and equivalents. Further, Tesla generated operating cash flows of $6.3 billion for the first half of 2022. Financing aggressive investments are unlikely to be a concern.
In the medium term, Tesla has an attractive line-up of new models. This includes the Cybertruck, Roadster and Tesla Semi. New launches will ensure that deliveries remain strong. Also, as supply-chain concerns ease, TSLA stock is likely to trend higher.
Costco Wholesale (COST)
For year-to-date 2022, Target Corporation (NYSE:TGT) stock has declined by 33.5%. For the same period, Costco Wholesale (NASDAQ:COST) stock has trended lower by 17%. Even with relatively premium valuations, the stock has outperformed.
While the retail sector faces headwinds of inflation and a potential recession, Costco is likely to be a long-term performer. My view is underscored by the point that Costco continues to report strong comparable store sales growth.
For September 2022, Costco reported comparable store sales growth of 8.6%. With strong omnichannel sales capabilities, healthy growth is likely to sustain.
For the long term, consumer spending is a key economic growth driver. With policymakers focused on ensuring spending growth, Costco has a bright long-term outlook.
Costco opened 26 new warehouses in the last financial year. Opening a new warehouse coupled with membership fee growth are triggers for sustained top-line growth. Overall, COST stock is likely to remain a value creator with sustained dividends and potential for capital gains.
A relatively high-risk stock that’s worth holding for the long term for multi-fold returns is Nio (NYSE:NIO). The stock has corrected sharply by 61% for the year and looks deeply undervalued.
While NIO stock has been in a correction mode, deliveries growth has remained healthy. For Q3 2022, Nio delivered 31,607 vehicles. On a year-on-year basis, deliveries increased by 29.3%.
There are multiple reasons to believe that deliveries growth will remain robust in the coming years. First, Nio has an attractive line-up of new models. Product diversity will drive deliveries growth. Further, Nio has planned aggressive expansion in Europe with entry into several new countries.
From a financial perspective, Nio reported cash and equivalents of $8.1 billion as of Q2 2022. This gives the company ample financial flexibility to pursue aggressive expansion outside China.
With sustained growth in vehicle deliveries, I also expect Nio to report a healthier vehicle margin in the coming years. That’s another catalyst for stock upside.
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.