Those investing with their retirement nest egg in mind could be looking at what to buy and hold for the long run, whether they’re stocks or funds. Those more conservative may be looking at funds to buy in the interests of diversification. “I’m a fan of using diversified managed products — like index funds — as retirement saving vehicles rather than holding individual stocks,” said Susan Dziubinski, investment specialist at Morningstar. She pointed out that diversified funds are also low-cost ways to get broad exposure to the market. “They require less ongoing monitoring than a basket of individual stocks would, too. They’re great tools for accumulating wealth,” she added. But investors with a greater risk appetite or a longer runway to retirement can consider stocks. Specifically, Dziubinski told CNBC Pro , she would pick the stocks of companies with “significant advantages and reliable cash flows when their stocks are undervalued.” “While these aren’t necessarily stocks to own forever (because there’s no such thing; stocks require monitoring!), these are companies that, given their competitive advantages, should be around and fighting off competitors for the long term,” she wrote in an email response. CNBC Pro asked the experts what stocks they would buy that are suited to long-term investing for retirement purposes. Dziubinski named three stocks which she says look undervalued but will make “great long-term investments” at current prices. Vijay Marolia, chief investment officer of Regal Point Capital, also shared his picks. Starbucks Dziubinski says Starbucks ‘ brand and pricing power have earned it a wide economic moat rating, which according to the firm refers to a company’s durable competitive advantage. “[It] means we think the company will remain competitive and out-earn its cost of capital for 20 years or more,” she said. In the short term, however, Morningstar’s analysts believe that its prospects are “cloudy.” “But Morningstar doesn’t think we’ve hit ‘peak Starbucks’: We believe that the firm’s long-term prospects remain eminently possible,” she said. Starbucks is currently trading at 17% below Morningstar’s fair value estimate of $96. Kenvue Consumer health company Kenvue , formerly Johnson & Johnson’s consumer unit, was spun off and publicly listed in May 2023. “Although Kenvue does business in what Morningstar considers to be a fragmented industry with intense competition and ever-changing consumer preferences, many of Kenvue’s brands are the global leaders in their respective segments,” said Dziubinski. Brands under its portfolio include Tylenol, Listerine, Aveeno and Neutrogena. Morningstar analysts forecast that Kenvue’s five-year compound annual growth rate of sales will hit 3.1% by 2028. Its stock is currently trading at 28% below Morningstar’s fair value estimate of $25.50. Nike Nike , the largest athletic footwear and apparel brand in the world, faces “significant competition” but Morningstar believes it can maintain market share with its branding, reach, products and digital strategy. “Morningstar analysts believe it will continue to maintain premium pricing and generate economic profits for at least the next 20 years,” Dziubinski said. Morningstar forecasts that the company’s compound average sales growth will be at 5% over the next 10 years. “Despite some recent challenges, we still think there’s plenty of revenue growth opportunity for Nike in emerging markets, too,” she added. Wheaton Precious Metals Regal Point Capital’s Marolia named Wheaton Precious Metals as a stock with long-term potential. He says it’s set to gain as he believes the world is only still in the early stage of a long-term bull market in precious metals. He noted that Wheaton has a unique business model: it’s not a miner but it’s a lender to the mining companies. “Although we’ve already seen precious metals rally, I think we’re still early in the long term bull market,” said Marolia, adding that inflation is here to stay for the foreseeable future, partly because of the U.S. fiscal situation of too much debt with higher interest rates. Blackstone Group Another stock he named is alternative asset manager Blackstone Group , which he described as “smart and solidly consistent” in the world of private equity. These attributes make for “the best kind of intangible asset” in investing for the long term, he added. “Their ability to borrow with fantastic terms and close on time allows them to have continuous deal flow. Their ability to improve operations and sell off non-performing / non-core assets helps them maintain attractive [internal rate of return],” Marolia said.
Planning for retirement? Pros say buy and hold these stocks long term
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