The stock market is still in the process of absorbing the many macro concerns that have been top of mind so far in 2022. This may make investing in today’s environment frustrating. However, the best course of action may be to take advantage of the uncertainty and consider loading up on the best long-term stocks to buy and hold until 2023.
Why? The market may be on the verge of hitting a bottoming-out moment. In large part, this is due to a possible change in one factor that’s played a big role in the market’s selloff: rising interest rates. After raising rates to curb inflation, the Federal Reserve could next year lower rates to soften the blow of a recession.
Admittedly, it’s too early to say a rate cut next year is a given. A comeback for stocks could also take time to play out. Even so, now may be the time to scoop up high-quality names that continue to trade at very favorable valuations.
With that in mind, consider these seven long-term stocks to buy and hold until 2023. Each one earns an “A” rating in my Portfolio Grader.
| ATKR | Atkore | $89.06 |
| DDS | Dillard’s | $237.01 |
| LPX | Louisiana-Pacific | $60.70 |
| MRO | Marathon Oil | $21.99 |
| NRZ | New Residential Investment | $10.89 |
| NUE | Nucor | $136.86 |
| ZIM | ZIM Integrated Shipping Services | $49.63 |
Long-Term Stocks to Buy and Hold: Atkore Inc. (ATKR)
Based in Harvey, Illinois, Atkore (NYSE:ATKR) is a supplier of electrical infrastructure products. Unless you’re familiar with the industry, you might not know much about the various products this company manufactures.
But when it comes to ATKR stock, all you really need to know is that this is a high-quality business that in recent years has produced high amounts of cash flow. Better yet, at current prices, the market has heavily discounted likely future results.
Even as earnings per share, or EPS, is expected to fall next fiscal year, Atkore trades for just 7.2x estimated 2023 EPS of $12.77 per share. Given there’s a strong chance robust demand continues due to the big increase in infrastructure spending, the company stands to continue generating high earnings. As the market realizes these results are not a one-and-done event, this low-priced stock could gradually move toward a higher valuation.
This stock earns an “A” rating in my Portfolio Grader.
Dillard’s (DDS)
Dillard’s (NYSE:DDS) is another situation where the market is overly skeptical about future earnings. The department store chain, which operates mainly in the Southern and Southwestern United States, saw a tremendous rise in its profitability during the pandemic recovery.
This resulted in an epic move higher for DDS stock. After briefly trading for less than $25 per share during the worst of the pandemic in 2020, by 2021, when the “reopening” was in full swing, it traded for as much as $400 per share. Since then, though, shares have pulled back considerably on inflation and recession worries.
So, with this sentiment shift, why is this one of the best long-term stocks to buy and hold? Between the possibility that a post-recovery drop in earnings is less dramatic than expected and the company’s aggressive share buyback plan (which will give EPS a lift), Dillard’s could re-hit its high-water mark in the coming years.
This stock earns an “A” rating in my Portfolio Grader.
Long-Term Stocks to Buy and Hold: Louisiana-Pacific (LPX)
Louisiana-Pacific (NYSE:LPX) is a well-known building products provider. Last year’s housing boom was a boon for shares, but so far this year, the stock has fallen by around 20%.
Given the sharp rise in interest rates has resulted in a housing market cooldown, reducing new construction activity, the recent performance of LPX stock is not surprising. However, trading for just 4.7x estimated 2022 earnings, it’s possible investors are overreacting, pushing shares to too low of a valuation.
Yes, building products is a cyclical business. As such, it makes sense for such a stock to command a relatively low earnings multiple. Still, a 4.7x multiple may be overdoing it — especially since the U.S.’s unresolved housing shortage suggests the current housing market downturn may be far less severe than prior downturns. Earnings over the next few years could come in much stronger than currently anticipated.
This stock earns an “A” rating in my Portfolio Grader.
Marathon Oil (MRO)
If you’re bullish on energy prices remaining well above prior-year levels, Marathon Oil (NYSE:MRO) is still one of the best ways to make that wager. As I’ve discussed previously, this oil and gas exploration and production (E&P) company has a fairly simple bull case.
Assuming crude oil stabilizes after its recent dip, the company will continue to report high earnings and cash flow. In turn, management intends to return much of this cash back to shareholders, mainly with its big stock repurchase plan. It has bought back 11% of outstanding shares over the past ten months. Back in May, the company upped the total amount of Marathon shares it can buy back.
Not only does this put cash in the pocket of MRO stock investors. It will also help to boost EPS in future years. In turn, this is driving the energy stock’s next big move.
This stock earns an “A” rating in my Portfolio Grader.
Long-Term Stocks to Buy and Hold: New Residential Investment (NRZ)
It’s easy to infer New Residential Investment (NYSE:NRZ) is a real estate investment trust, or REIT. Yet while its name also implies it simply owns a portfolio of residential real estate properties, it’s more of a mortgage REIT. That is, it holds a portfolio of mortgage and mortgage-related securities.
While rising interest rates may create new challenges for mortgage REITs, NRZ stock so far has been able to hold steady. This makes sense, given the sell-side forecasts its earnings will go up in the coming year. A big factor that may be behind this rise in earnings growth is the REIT’s move to internalize its management.
Bringing management in-house will boost annual earnings for New Residential by 12 cents to 13 cents per share. Yielding 9.2% and trading at a low forward multiple of 6.8x to boot, now’s a good time to buy it.
This stock earns an “A” rating in my Portfolio Grader.
Nucor (NUE)
2021 was a banner year for the steel industry. Earnings for major names zoomed due to the pandemic recovery, and Nucor (NYSE:NUE) was no exception. In 2021, it reported around $6.8 billion in earnings versus just $721.5 million in 2020.
Strong operating performance has carried on into 2022. Thanks to booming steel demand exacerbated by economic sanctions against Russia, earnings for NUE stock are expected to jump considerably. So, why have shares taken such a big dive since April? Blame it mostly on global recession worries.
Nevertheless, this is yet another situation where the market may be overestimating how much a recession will affect its future results. Not only that, as a “mini-mill” operator, this steelmaker has numerous cost and operational advantages compared to old-school steel producing peers. Already starting to recover, you may want to jump in.
This stock earns an “A” rating in my Portfolio Grader.
Long-Term Stocks to Buy and Hold: ZIM Integrated Shipping Services Ltd. (ZIM)
ZIM Integrated Shipping Services (NYSE:ZIM) is a global operator of container ships. The supply chain crisis has been a tailwind for ZIM. Since 2020, it has seen its earnings surge many times over.
Again, like other stocks that have seen earnings windfalls from recent events, the market is skeptical. That’s why ZIM stock today trades at a staggeringly low valuation of just 1.1x this year’s estimated earnings (yes, you read that correctly.)
Sure, as the situation with shipping normalizes, earnings for ZIM Integrated could take a big hit. One analyst forecasts EPS will fall to just $6.10 per share next year. Even if that were to happen, such results wouldn’t be bad, given at present this stock trades for around $50 per share. Putting its earnings to work to grow the business, it is likely to continue reporting strong operating results.
This stock earns an “A” rating in my Portfolio Grader.
On the date of publication, Louis Navellier had a long position in ATKR, DDS, LPX, MRO, and NUE. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.