It’s not every day you come across stocks that have the same stabilizing effect as a strong pair of suspenders. These gems have the potential to prop up a portfolio, even in the face of market gyrations. It’s the kind of resilience you’d expect from well-engineered girders, and every long-term investor should be keeping a close eye on them.
Let’s take a closer look at these seven stocks that are as steady as the northern star, even in a market that’s shooting for the moon.
These are businesses I feel confident owning through market ups and downs. They have strong underlying fundamentals, competitive advantages that help hedge against disruption, and histories of leadership that instill trust. In short, they are as close to “surefire” as the stock market offers.
Microsoft (MSFT)
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Microsoft (NASDAQ:MSFT) has been executing extraordinarily well under CEO Satya Nadella’s leadership since 2014 as the newly crowned largest company by market capitalization.
By refocusing efforts on cloud, AI and subscription-based software, Nadella has transformed this once-struggling PC software giant into a trillion-dollar innovator spanning far beyond its Windows and Office origins.
Microsoft competes in almost every area of technology, from productivity software to cutting-edge AI to cloud infrastructure and more. This diversified revenue stream across software, hardware, cloud, AI, browsers, and operating systems provides stability and optionality.
While other tech giants remain concentrated, Microsoft’s “all-in” approach sets it up nicely for long-term out-performance.
Smart investments into AI leader OpenAI have captured incredible hype as well. As seen by the viral sensation of chatbot ChatGPT, AI promises to disrupt nearly every industry over the next decade.
With Azure backing these models and Mesh allowing them to interact with the physical world, Microsoft is an early leader in democratizing and monetizing this transformative technology.
I believe Microsoft has all the ingredients of a “forever stock.” Nadella and the team are innovating across too many critical technology segments not to continue compounding wealth. Calling this a “must-own” seems obvious given its broad reach.
Amazon (AMZN)
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Although Amazon (NASDAQ:MSFT) trades at a lofty valuation, its proven ability to penetrate and dominate new markets makes it a top “must-buy stock” in my book.
Founder Jeff Bezos’ customer obsession has powered this e-commerce site into a trillion-dollar empire spanning far beyond online retail.
While retail growth is maturing, Amazon Web Services cloud and advertising present the next frontiers. AWS sales grew over 13% to $24 billion in Q4 2023, proving its dominance versus competitors.
High-margin advertising also totaled $14.6 billion as brands flock to sponsored placements. With most advertisers now using Amazon’s Demand-Side Platform, a significant market share remains.
Beyond cloud and advertising, emerging areas like healthcare, brick-and-mortar retail, digital media, and AI chip design provide optionality. Amazon certainly doesn’t shy away from entering new markets, often successfully. Despite economic uncertainty, Q4 results beat expectations as net sales grew 14% and operating cash flow improved 82% year-over-year.
trading at 40x forward earnings, this is no definitive bargain. However, proven innovation and 30-40%-plus annual earnings growth projections make this a premium I’m willing to pay. Cloud leadership, advertising gains, and Bezos’ relentless expansion into new markets should continue compounding shareholder value over any long-term horizon.
Alphabet (GOOG, GOOGL)
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Alphabet
Big Tech and Industrial Titans Hold Promise in the Face of Market Uncertainty
Despite the recent chill in interest around Google’s parent company, analysts are excited about the prospect of Alphabet Inc. (NASDAQ:GOOG, NASDAQ:GOOGL) making a strong comeback in 2024. With shares still just 4% off 2021 highs, investors consider this a compelling entry point for the AI and digital advertising leader.
Rising Above Setbacks: Alphabet Inc.’s AI and Advertising Strengths
Alphabet Inc. faced initial concerns post-Bard’s rocky debut, but its subsequent launch of more powerful language models like Gemini has demonstrated the company’s AI prowess in comparison to competitors like OpenAI. Additionally, the recent introduction of the “Gemma” family of lightweight, scalable models indicates Google’s commitment to providing democratized access through API availability. These efforts solidify the company’s determination to stay at the forefront of the AI race.
Besides AI, Google’s core search and YouTube businesses continue to dominate the digital landscape. While short-term results have been impacted by advertising spending slowdowns, digital marketing remains one of the highest ROI channels for brands. Google’s properties should continue to attract ad dollars as the #1 and #2 most visited sites globally.
There is especially high potential for monetization on YouTube. Banning ad blockers and introducing higher-priced, premium tiers are just the beginning of efforts to unlock profits from this popular digital video platform. Further plans for additional subscription bundles, 4K video streaming exclusives, and enhanced targeting capabilities have the potential to drive above-market growth for years to come.
Opportunity Amidst Adversity: Analyzing the Responses of the Recent Earnings Season
Turning to Palo Alto Networks (NASDAQ:PANW), the cybersecurity leader faced a significant challenge with its latest earnings disappointment, causing shares to tumble by nearly 30%. Despite this setback, the company’s tempered guidance for the next quarter indicates a slowdown in sales growth on the horizon.
However, the prevailing headwinds bring about a buying opportunity. Although the near-term guidance is disappointing, Palo Alto still managed to beat Q2 FY24 adjusted EPS estimates by 12.2% and revenue estimates by 0.19%. The company expects full-year revenue growth of 15% to 16%, which hardly reflects signs of a business in crisis.
High-quality companies like Palo Alto Networks might face periods of underperformance, but they often present opportunities to acquire quality assets at a discount. Despite the expected volatility until growth re-accelerates, confident investors still see value in Palo Alto’s long-term trajectory.
Steady as It Goes: Linde’s Position in the Industrial Gas and Engineering Sector
As an industrial gas and engineering leader, Linde (NASDAQ:LIN) has developed strong competitive advantages that few rivals can match. While a recent 7% year-over-year decline in Q3 sales initially raised concerns, strategic execution managed to expand net margins by 33% through pricing actions, lower costs, and long-term customer contracts.
Linde’s focus on profitability and strategic contract structures has resulted in the growth of operating margins across all business segments this quarter, excluding cost pass-through items. Over the long run, this steadfast focus should compound shareholder wealth, highlighting the company’s resilience in the face of market fluctuations.
Fortitude in Turbulence: FTAI Aviation’s Staying Power
Unlocking the Engine of Success: FTAI Aviation and Union Pacific
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Unlike the industrial giants above, FTAI Aviation (NASDAQ:FTAI) brings a more focused business model catering to global engine leasing and maintenance. But with shares up 300% over five years and 125% in the past year alone, this small-cap has rewarded shareholders a lot.
FTAI Aviation: Soaring to New Heights
As demand for engine maintenance solutions has grown globally alongside expanding air travel, FTAI has captured share. Quarterly revenue jumped 26% year-over-year to $291 million on broad-based gains, driving expectations for almost 65% full-year growth. EPS projections doubling from 2023-2025 show strong profit growth ahead.
Bulls will point toward high barriers to enter this specialty maintenance field alongside secular tailwinds from air travel’s resurgence. Following pandemic declines, carriers now face shortages of both planes and the engines needed to power growth. By providing comprehensive engine solutions that encompass sourcing, leasing, and repair, FTAI Aviation addresses a lucrative, underserved global niche.
I expect shareholder gains to continue compounding over the years by solving these complex challenges airlines face. FTAI deserves consideration as a high-upside growth candidate for aggressive investors.
The Unwavering Backbone: Union Pacific (UNP)
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As freight volumes grow globally alongside economic expansion, Union Pacific’s (NYSE:UNP) rail infrastructure backbone deserves more investor attention. By sharing a duopoly with BNSF over key Western US transcontinental routes, UNP is uniquely positioned to transport goods efficiently across thousands of miles through America’s heartland.
UNP raised its dividend by 11.2% annually in the past five years and repurchased 3.5 million of its own stock in 2023. Operating ratios also improved year-over-year last quarter as volume gains and higher prices boosted profits.
UNP faces economic cyclicality concerns if a downturn reduces freight demand soon. However, trade flows over multi-year timeframes correlate with rising GDP as population and consumption grow. And infrastructure investments aimed at alleviating supply chain bottlenecks should provide added tailwinds.
So, while UNP rarely captures upside like high-flying tech stocks, patient investors focused on essential industries can lock in reliable returns. I expect more wealth compounding in the years ahead as Union Pacific keeps American commerce rolling.
On the date of publication, Omor Ibne Ehsan did not hold (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.
