The one question we get asked more than any other is which stocks every investor should hold in their portfolio. It is not an easy question to answer as each investor has their own investing style and level of risk tolerance.
It is a tough question but there are many high-quality stocks in the market that are solid buys across the board and offer both value and growth potential. We prefer to seek out strong sector leaders that operate in sectors expected to remain strong and in demand for the foreseeable future.
Recent profit growth is important to see, but expected future growth is just as important, if not more so. Wall Street buys into stocks expecting to see growth, so when you see a company’s growth come into question you can expect to see shares trade lower.
Regardless of whether you are an investor in your early 20’s just getting started, or a seasoned veteran, here are four big name stocks you should consider having in your portfolio for the long-term.
Tech titan Microsoft (MSFT) struggled as the world went more mobile and the company was unable to compete in the smartphone and tablet market. Microsoft redeemed itself by identifying the cloud market and becoming a leader in the sector. Cloud computing is the fastest growing area in tech, and Microsoft’s leadership has and will continue to drive earnings growth. The company is expected to grow earnings by 14.8% annually over the next five years, which is just slightly below the 15.3% growth from each of the last five years. The company is also a leader in video games and recently announced a new Xbox console. The stock offers a 1.4% yield and has boosted its dividend each of the last 15 years. MSFT trades at $131.03 with an average price target of $138.29.
Alphabet (GOOGL) is an easy pick for stocks every investor should own. The online search market is huge and Google is the undisputed king of the sector, with just Facebook (FB) managing to pose any real competition. The company continues to grow at a rabid pace, with earnings forecast to rise 15.8% per annum over the next year, which is higher than 14.6% for the last five years. While most of corporate America is expiring a slow down in earnings growth, Google continues to grow. GOOGL trades at just 20 times future earnings, which is low considering the company’s growth story. The stock trades at $1,073.75 with an average price target of $1,330.13.
There are few things more American than McDonald’s (MCD). When consumer taste began to shift away from fatty fast food McDonald’s identified the trend and began to revamp its menu and offer all-day breakfast menu items to improve U.S. sales. The changes have worked, and as U.S. have improved the stock risen to new highs. Earnings are expected to rise at a 6.7% annual rate over the next five years. McDonald’s is in a highly competitive market, but smart management decisions in recent years has helped it remain the biggest fast food chain, and the clear leader in the sector. This is unlikely to change any time soon. MCD trades at $205.25 with an average price target of $209.00.
Credit card company Visa (V) is the leader in the payment processing space, which continues to grow as society moves more cashless. Despite its maturity, Visa continues to post impressive earnings growth with profits forecast to rise 15.7% per annum over the next five years. The ongoing trade war between the U.S. and China does pose a threat of a global economic slowdown which would negatively impact consumer confidence and spending, but for now consumer confidence remains strong and consumer credit card balances are near record levels with an average household balance of around $8,200. Consumers tend to use credit and debit cards versus cash in their daily lives, and even the crypto-currency market relies on payment processors to handle a portion of deposits and withdrawals. Visa is recognized around the world and should continue to grow as populations expand and cash is used less frequently. Analysts have an average price target of $177.87 and shares are currently trading at $171.32.