TSLA - 3 No-Brainer Stocks to Buy for the Next Decade
2023-12-05 11:45:00 ET
Investing in the stock market may seem risky, given the volatility associated with this asset class. But over the long term, equities have created game-changing wealth for investors, allowing them to outpace inflation consistently.
It’s evident you need to remain invested in quality stocks for at least a decade if not more, to benefit from the power of compounding. Keeping this in mind, here are three no-brainer stocks you can buy for the next 10 years.
Tesla stock
One of the largest electric vehicle (EV) manufacturers in the world, Tesla ( NASDAQ:TSLA ) has already returned 2,380% to shareholders since December 2013. Valued at US$750 billion by market cap , shares of the EV manufacturer are also down 43% from all-time highs, allowing you to buy the dip.
In recent quarters, Tesla has been wrestling with an uncertain macro economy, lower gross margins, rising competition, higher interest rates, and elevated inflation. However, it continues to expand its product portfolio and enter new markets, which should be a key driver of top-line growth.
Further, the EV market is forecast to grow at an attractive pace, and sales of battery-powered vehicles in the U.S. soared 50% year over year in the third quarter (Q3). Moreover, Tesla ended the quarter with a share of 50%, showcasing its leadership position.
Tesla is likely to maintain its market share as legacy auto manufacturers such as Ford are expected to slam the brakes on their EV expansion plans as customer spending remains sluggish.
Magna International stock
Valued at $21 billion by market cap, Magna International ( TSX:MG ) designs, manufactures, and sells modules and subsystems for original equipment manufacturers of vehicles as well as light trucks.
In Q3 of 2023, Magna International increased sales by 15% to $10.7 billion, while adjusted earnings rose 33% to $1.46 per share. Magna’s results showcase its competitive moat and pricing power, given global light vehicle production was up just 4% in the September quarter.
Magna is among the cheapest stocks on the TSX and is priced at 10.2 times forward earnings . Comparatively, adjusted earnings are forecast to rise by 35% annually in the next five years.
The company also offers shareholders a tasty dividend yield of 3.3%, and these payouts have risen by more than 10% annually in the last 18 years.
Hammond Power Solutions stock
The final stock on my list is Hammond Power Solutions ( TSX:HPS.A ), which has returned a whopping 23,890% to shareholders in the past two decades after adjusting for dividends. A transformer manufacturing company, Hammond Power is valued at $950 million by market cap.
Hammond Power reported revenue of $179 million in Q3, an increase of 20.5% year over year, while net income surged 25.2% to $14.4 million.
According to Hammond Power, strong demand across its portfolio of products and services allowed it to report record quarterly sales in Q3. It emphasized demand was driven by custom power units that serve renewable and data centre applications.
It continues to invest in capital expenditures to meet demand in its core industrial markets, which should drive future cash flows higher.
Despite its market-thumping gains, HPS stock trades at 14.6 times forward earnings, which is quite cheap. Moreover, Hammond Power pays shareholders an annual dividend of $0.60 per share, indicating a dividend yield of just 0.8%. These payouts have tripled in the last 10 years.
The post 3 No-Brainer Stocks to Buy for the Next Decade appeared first on The Motley Fool Canada .
Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool recommends Magna International and Tesla. The Motley Fool has a disclosure policy .
2023