Whether you call the strategy buy-and-hold, long-term investing, or anything else, one thing is abundantly clear: Patience is required. Investors that buy stocks with the intent to hold them forever will experience volatility. But it’s also a time-tested truth that the markets always win over the long-term.
The current market is certainly volatile and undergoing a correction as the Federal Reserve increases rates. That is presenting opportunities for investors seeking stocks under $50.
Here are my top seven stocks under $50 to buy and hold forever:
|MO||Altria Group, Inc.||$49.35|
|F||Ford Motor Company||$13.48|
|BAC||Bank of America Corporation||$35.01|
Stocks Under $50: BP (BP)
I can give you two good reasons to consider investing in BP (NYSE:BP) stock for the long-term.
One, environmental, social, and governance (ESG) investors are cheering the firm’s February decision to exit its position in Rosneft, a Russian oil and gas company. That choice was catalyzed by Russia’s invasion of Ukraine and resulted in significant material losses. Rosneft accounted for around half of BP’s reserves and roughly half of production. In other words, the choice wasn’t made lightly.
It resulted in up to $25 billion in charges for BP, leading to a $20.4 billion loss in the first quarter (Q1) of 2022.
Two, BP investors should expect the firm to institute a particularly aggressive share buyback plan moving forward. That buyback plan, expected to be more aggressive than other energy firms’, could result in BP buying back more than 50% of shares over the next five years, according to an RBC analyst. That means investors who buy in now could very likely see their investments appreciate quickly in a relatively short period of time.
The strongest reason to invest in German chemical producer BASF (OTCMKTS:BASFY) stock is its position and alignment with future trends.
In terms of position, BASF flip-flops between being the biggest or second-biggest chemical firm worldwide most years. To that point, it was ranked second only to Dow (NYSE:DOW) based on net income in 2021. A year earlier, BASF led all chemical producers with $67.5 billion in sales.
The alignment between the chemicals BASF produces and future demand is equally important. Food security and agricultural production are increasingly important issues. The rising global population will require much more food in coming decades. BASF sells chemicals that increase agricultural production, with sales increasing 19.4% within its agricultural sales division in the most recent quarter.
Protein demand is rising, as well. Additionally, BASF recognized strong growth in its animal nutrition business. In short, BASF makes a lot of sense because its niche is critical to growth and it maintains a powerful position within that niche.
Stocks Under $50: Altria (MO)
Altria Group (NYSE:MO) stock has consistently traded very close to $50 for all of 2022. While the stock price sometimes comes in just above $50, Altria is a stock worth considering.
As a tobacco producer, Altria is considered a vice stock along with other so-called “unsavory” industries, including alcohol, gambling, and defense.
Investors who have no qualms with that should consider Altria, as a major shift is underway for the company. That shift has seen cigarette use decline and smokeless tobacco products, like vaping devices, explode in popularity.
Altria is navigating a transition to smokeless tobacco sales. Despite the fact that its IQOS brand is expected to be banned for the remainder of 2022, it has maintained earnings per share guidance. The bullish theory here is that it can establish itself as a preeminent force in new tobacco. For those investors who get on board now, the reward is a massive dividend, yielding 7.27%.
Any investors considering purchasing Ford (NYSE:F) stock for the long haul already know the bull thesis: Legacy auto manufacturers, including Ford, will use their might to shape the emerging auto industry. They benefited by being capable of watching from the sidelines as the early industry took shape. Now that it’s clear the future is electric, they can leverage their large resource bases to shape it further.
Ford is spending to make that plan a reality. The company has a plan to produce 2 million electric vehicles (EVs) annually by 2026. That will require it to spend $3.7 billion to support manufacturing across America’s heartland.
The company also announced that it plans to hire 6,200 new unionized workers to support that transition. Investors seem to be on board with the transition as F stock rose on the news despite less than rosy delivery numbers.
Stocks Under $50: Bank of America (BAC)
Proponents of a buy-and-hold strategy often refer to the strategy’s most visible backer, Warren Buffett. His wealth is used as justification for the strategy, and modeling one’s portfolio after that of Berkshire Hathaway (NYSE:BRK-B) is the route.
Bank of America combines retail banking and investment banking, which smooths performance in various environments. Bank of America investors should reasonably expect the firm to perform well, as interest rates continue to rise throughout 2022. That should equate to higher income.
But we must also consider the long-term, in which interest rates will move up and down. If the past is prologue, then BAC holders should rejoice: It has returned 19.05% annually over the past 10 years.
Yes, full commercialization isn’t anticipated for the next four to five years. That strongly implies that meaningful revenue won’t occur until then, meaning prices are unlikely to move much until that occurs.
While I agree that commercial viability is the ultimate litmus test for QuantumScape, that doesn’t mean significant returns will be a binary outcome. Even if the company fails, any positive progress between now and then will result in spiking share prices.
But buy-and-hold investors aren’t in it for those purposes. They desire commercial viability and all of its attendant benefits. That means significantly higher prices. QuantumScape simply looks like the best pure-play bet to achieve that goal and has significant backing from Volkswagen (OTCMKTS:VWAGY).
Stocks Under $50: Pfizer (PFE)
Like Altria, Pfizer (NYSE:PFE) stock continually flirts with that arbitrary $50 price threshold. It’s currently slightly above, but traded below $50 just a few weeks earlier.
That aside, the reason to consider Pfizer is the fact that it was among the vaccine winners. The development of a commercially viable vaccine has put it on track to have a behemoth year in which it should almost certainly exceed $100 billion in sales.
The bull thesis here is very straightforward: Pfizer will take its Covid-19 windfall and multiply that into future commercially viable blockbuster pharmaceuticals.
One such drug is Etrasimod, a therapeutic that is showing significant promise in treating ulcerative colitis. Etrasimod is on track to receive U.S. Food and Drug Administration approval later this year, meaning Pfizer already has another potential blockbuster drug on its hands.
On the date of publication, Alex Sirois 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.