7 Long-Term Stocks That Will Reward Patient Investors
While it’s difficult to consider bidding up enterprises in the equities sector during this troubled period, long-term stocks to buy may eventually yield significant rewards for patient investors. True, the banking sector implosions don’t do much for confidence. And sure, the federal government will backstop depositors’ money. However, they’re giving the cold shoulder to investors, which will probably send a chill down the entire space.
Further, the Federal Reserve has ample factors to consider ahead of its monetary policy decisions. If it raises the benchmark interest rate, more cogs in the financial gear can break. However, if it reverses course with a dovish policy, it may spark untold (and lasting) consequences for the economy. It’s at this point where long-term stocks may provide some much-needed confidence.
Though not the most exciting enterprises available, these fiscally stable companies focus on getting the job done. Moreover, they’re undervalued, offer passive income and may enjoy significant capital gains potential. So, if you’re willing to tread these waters, below are the long-term stocks to buy.
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A manufacturer of flat and long steel products, Ternium (NYSE:TX) owns production centers in Argentina, Brazil, Mexico, Guatemala, Colombia and the U.S. It’s the leading steel company in Latin America with highly integrated processes to manufacture steel and value-added products. It’s a robust performer this year, gaining over 41% of equity value since the Jan. opener.
Further, plenty of evidence indicates that it may continue to attract investor attention. For starters, Ternium enjoys a robust balance sheet thanks to its robust cash position relative to debt. Operationally, the company commands a three-year revenue growth rate of 17.2%, outpacing 80% of the industry. Also, its net margin pings at 10.77%, above 80.86% of the underlying sector.
Notably, the market prices TX at a trailing multiple of 4.69. As a discount to earnings, Ternium ranks better than 75.32% of the competition. Also, it offers a forward yield of 4.25%, beating the materials sector’s average yield of 2.82%. Finally, Wall Street analysts peg TX as a consensus strong buy. Their average price target stands at $47.93, implying over 13% upside potential. Thus, it’s a compelling idea for long-term stocks.
United Microelectronics (UMC)
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Based in Taiwan, United Microelectronics (NYSE:UMC) focuses on semiconductors. Notably, the company provides solutions for the global 5G rollout, with its innovations undergirding smartphones, virtual reality, 5G infrastructure and more. As well, UMC supports integrated utility for the mobility sector. Since the start of the year, UMC gained almost 28% of equity value. However, it trades at a relative discount in the trailing year, down 6%.
Financially, United benefits from a strong balance sheet. In particular, its cash-to-debt ratio pings at 3.54 times, outpacing 60.47% of its peers. Operationally, UMC features a three-year revenue growth rate of 15.1%, beating out 64.3% of the competition. As well, the market prices UMC at a forward multiple of 11.65. As a discount to earnings, UMC ranks better than 84.17% of its rivals.
On the bottom line, UMC’s net margin comes in at 29.46%. This helps undergird the company’s dividend yield of 7.27%, according to TipRanks. Lastly, covering analysts peg UMC as a moderate buy. Unfortunately, few have given a price target. That said, Goldman Sachs’ Bruce Lu believes UMC will hit $9.90, implying over 17% upside potential. Therefore, it’s one of the long-term stocks to buy.
ICL Group (ICL)
A multi-national manufacturing concern, ICL Group (NYSE:ICL) develops, produces and markets fertilizers, metals and other special-purpose chemical products. Further, the company serves three markets: agriculture, food and engineered materials. Despite its relevance, ICL has been volatile. Since the Jan. opener, it dipped over 3%. In the past 365 days, it cratered nearly 34%.
Still, those seeking long-term stocks to buy may gravitate toward ICL’s undeniable relevance. Moreover, the company features a wealth of positive fiscal attributes. In fact, investment resource Gurufocus.com notes that ICL has seven green flags with no red nor yellow flags. Significantly, the enterprise features a three-year revenue growth rate of 23.6%, above nearly 81% of the field.
Also, its net margin is 21.56%, boxing out 88.6% of its competitors. Presently, the company features a forward yield of 13.84%. Now, whether that yield holds or not presents questions. However, covering analysts believe ICL can hit $8.83 per share. If so, this forecast would imply upside potential of over 25%.
HNI Corp (HNI)
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One of the largest office furniture manufacturers in the world, HNI Corp (NYSE:HNI) presents speculation on a forward-looking narrative. With coronavirus pandemic fears fading and social behaviors normalizing, HNI may benefit from the return-to-office trend. Granted, it’s a risky storyline and it shows in the charts. Since the beginning of Jan., HNI fell over 7%. Also, it’s down 30% in the trailing year.
Objectively, though, the company brings some positive attributes to the table. While it doesn’t have the most stable balance sheet among long-term stocks, its Altman Z-Score pings at 3.44, indicating low bankruptcy risk. Also, the market prices HNI at a trailing multiple of 9.08. As a discount to earnings, HNI Corp ranks better than 83.89% of the industry.
Although its net profitability is middling, it’s still on the right side of the equation at 5.25% up. Invariably, this stat supports HNI’s forward yield of 4.78%. This ranks much higher than the consumer discretionary sector’s average yield of 1.89%. Lastly, Sidoti’s Gregory Burns pegs HNI as a buy. The expert’s price target stands at $34, implying 27% upside potential. Thus, it’s an attractive example of long-term stocks for risk-tolerant buyers.
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Representing the largest producer of long steel in the Americas, Gerdau (NYSE:GGB) owns steel mills in Brazil, Argentina, Canada, Colombia Dominican Republic, Mexico, Peru, Uruguay, Venezuela and the U.S. According to its public profile, Gerdau has an installed capacity of 26 million metric tons of steel per year. It offers the underlying commodity for the civil construction, automobile and industrial sectors, among others.
Over the trailing-year basis, GGB lost 4% of equity value, which isn’t terrible considering the broader circumstances. Moving forward, it may symbolize one of the long-term stocks to buy amid the troubles. For one thing, Gerdau enjoys a stable balance sheet, with an Altman Z-Score of 3.49 indicating fiscal resilience. As well, the market prices shares at a forward multiple of 5.66. In contrast, the sector median value comes in at a lofty 8.02 times.
The steel specialist’s net margin pings at 16%, undergirding its forward yield of 2.99%. Conspicuously, Gerdau’s payout ratio sits at 22.47%, reflecting confidence in yield sustainability.Turning to the Street, covering analysts peg GGB as a consensus moderate buy. Moreover, their average price target stands at $6.57, implying almost 28% upside potential.
Himax Technologies (HIMX)
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A fabless semiconductor manufacturer, Himax Technologies (NASDAQ:HIMX) provides display imaging processing technologies to consumer electronics, digital applications and automotive electronics worldwide. To be sure, HIMX suffered from the tech fallout last year, losing 27% of equity value in the past 365 days. However, it’s on a recovery path in the new year, gaining nearly 21%.
While the underlying sector may be challenged, Himax presents attractive financials, making it one of the long-term stocks to consider. Operationally, the company features a three-year revenue growth rate of 20.8%, outpacing 75% of its peers. Also, its book growth rate during the same period is 26.6%, above 80.19% of the field. On the bottom line, Himax posts a trailing-year net margin of 19.73%. This helps boost the firm’s massive forward yield of 16.32%. However, yield sustainability is questionable considering its payout ratio of nearly 177%.
That said, Robert W. Baird’s Tristan Gerra pegs HIMX as a buy. Further, the expert targets $10 per share, implying nearly 31% growth potential.
HF Sinclair (DINO)
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A company with arguably the most creative ticker symbol, HF Sinclair (NYSE:DINO) represents a diversified energy company. Specifically, it manufactures and sells products such as gasoline, diesel fuel, jet fuel, renewable diesel and specialty lubricants, among other relevant products. Despite the concerted political and ideological push for renewable energy transitions, hydrocarbons will likely be relevant for years thanks to their underlying energy density.
Unsurprisingly, DINO represents a strong performer, gaining nearly 33% of equity value in the trailing year. However, it may rise even higher, making it one of the long-term stocks to buy. Financially, the company enjoys decent stability in the balance sheet. Operationally, HF Sinclair comes to life, particularly with its three-year revenue growth rate of 21.8%, which beats out 80% of its peers.
On the bottom line, the hydrocarbon specialist posts a net margin of 7.65%, which is decent for the industry. As well, the profitability contributes to HF’s forward yield of 3.82%. Notably, its payout ratio sits at 25.16%, facilitating yield-sustainability confidence. Finally, Wall Street analysts peg DINO as a consensus moderate buy. Their average price target stands at $61.40, implying upside potential of over 30%.
On the date of publication, Josh Enomoto did not have (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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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