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When it comes to serious savings and funds for long-term needs, investors shouldn’t be afraid to pay a premium for blue-chip stocks. However, there’s nothing better than buying quality stocks at relatively low prices.
Here are three high-quality, low-cost value stocks that meet that criteria. You can buy a significant amount of stock now and hold it for years.
US Bancorp
meanwhile US Bancorp (NYSE: USB) is one of the 10 largest financial institutions in the country, but smaller than the others. JP Morgan Chase or american bank, And they don’t do as much business in the specific areas that big banks are best known for. For example, corporate financing, institutional trading, and asset management are not primary sources of revenue for U.S. Bank. This limits revenue and profit growth prospects, especially when the economy is firing on all cylinders.
But in many ways, a simpler set of products and service offerings is an advantage for US Bancorp investors. The most important of these is that banks will be able to focus on doing what they do well, such as consumer lending. Also, the results are less periodic and therefore more predictable.
The graph below shows this. While the subprime mortgage collapse and the COVID-19 pandemic clearly hurt the company’s revenue and earnings, it’s also clear that US Bancorp has quickly recovered from both and returned to its long-standing growth trajectory. . Not all major banks can say the same.
boring? a bit. But that’s the point. If you’re going to hold a stock for many years, you want to be able to count on the underlying company to improve. US Bancorp logs reliably, even if it’s not blazingly fast. And shareholders always collect a certain amount of dividends. At the current stock price, the yield is 4.4%, which is better than average.
New entrants will enter US Bank stock at a P/E ratio of 13.1x, but only 10.4x forward earnings.
pfizer
shares of pfizer (New York Stock Exchange: PFE) It may not be as cheap as US Bancorp. The pharmaceutical company has a price-to-earnings ratio of 15.5 times, with a forward price-to-earnings ratio of just under 12 times. Still, these valuations are cheap and certainly below the average for pharmaceutical companies. Current stock price evaluation.
It makes no sense to ignore the 800-pound gorilla in this room. The government has effectively scaled back its vigorous efforts to combat the coronavirus. Demand for vaccines and treatments is declining even as new variants continue to surface and a seasonal surge in new cases continues. Pfizer’s third-quarter sales fell 42% from a year ago, and the entire drop was due to weak sales of the company’s coronavirus products. Don’t be surprised if this weakness remains, at least for a while.
If you’re ultimately considering opening a new position in Pfizer stock, don’t wait too long. This quarter should be the last to see a significant year-over-year decline in sales as people become less concerned about the virus. Starting in early 2024, Pfizer’s performance will primarily reflect demand for everything else in its portfolio and pipeline.
That’s certainly exciting.
Pfizer owns the blood thinner Eliquis, the cardiomyopathy drug Vindakel, the pneumonia vaccine Prevnar, and the cancer drug Ibrance, to name a few. These are all blockbuster drugs that have yet to reach their full potential due to the pandemic. Never mind pipelines like Oxbrita for sickle cell disease, erlanatamab for multiple myeloma, and marstacimab for hemophilia. Overall, Pfizer believes its current pipeline could generate the equivalent of $20 billion a year in revenue by 2030, and thanks to its recent acquisition of Seagen, the company could generate annual sales worth up to $84 billion a year in the same year. I believe that it will contribute to Going forward, the company intends to return its focus to these long-term opportunities.
The kicker: We have a credible plan to simultaneously start reducing annual costs by at least $4 billion.
If you’re really looking ahead a few years, there’s a lot not to like here.
Taiwan semiconductor manufacturing company
Last but not least, please add Taiwan semiconductor manufacturing company (NYSE:TSM) Add it to your list of value stocks to buy now and hold for years.
It’s not a very common name. In fact, there’s a good chance you’ve never heard of this company, which is also known as TSMC. However, there is also a good chance that you are now using technology manufactured by Taiwan Semiconductor without even realizing it.
Big tech likes it, but intel and Nvidia Although many companies are starting to take charge of their own manufacturing, much of this work is still outsourced to third parties who can mass produce silicon designed by more familiar players. Taiwan Semiconductor Manufacturing Company is more than just a contract manufacturing company. It is the largest in the world, accounting for more than half of the third-party semiconductor manufacturing market.
The company, like other companies, was hit hard by the COVID-19 pandemic, which not only shrunk demand but also disrupted supply chains. The disruption is still impacting business. Analysts expect Taiwan Semiconductor to decline nearly 9% for the year.
Supply issues caused by the pandemic are also motivating some big tech companies to become more self-sufficient. For example, Intel in the United States he has invested billions of dollars to build two different chip foundries. micron has earmarked a budget of up to $100 billion to build what it calls a “mega fab” in central New York.
But despite these efforts, the world still needs third-party chip foundries. This will continue to be the case for some time, if not forever. In fact, Taiwan Semiconductor is so confident that its advanced capabilities and services will remain in demand for the foreseeable future that it is building its own production facility in Arizona. And that’s probably the right call, considering the company expects its earnings to grow 19.5% next year. This is a sign that the chip business is recovering, and that Taiwan Semiconductor is getting in on the action.
TSMC trades at a forward price/earnings ratio of 16.6 times, which isn’t exactly impressive. However, it is below the ticker’s recent average return, and below the valuations currently posted by many of its peers.
Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?
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of Motley Fool Stock Advisor Our analyst team has identified what they believe Best 10 stocks What investors can buy right now…and Taiwan Semiconductor Manufacturing was not among them. These 10 stocks have the potential to generate impressive returns over the next few years.
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JPMorgan Chase is an advertising partner of The Motley Fool’s Ascent. Bank of America is an advertising partner of The Motley Fool’s Ascent. James Brumley has no position in any stocks mentioned. The Motley Fool has positions in and recommends Bank of America, JPMorgan Chase, Nvidia, Pfizer, Taiwan Semiconductor Manufacturing, and US Bancorp. The Motley Fool recommends Intel and recommends the following options: January 2023 long-term $57.50 calls on Intel, January 2025 long-term $45 calls on Intel, and February 2024 calls on Intel. $47 short call. The Motley Fool has a disclosure policy.
Do you have $5,000?Keep buying these 3 value stocks for years to come” was originally published by The Motley Fool
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