It's a tricky thing: investing for the long term at the very top of what has been an eight-year-long bull market in stocks. Financial advisors tell us to "invest and forget," but the simple fact of the matter is that, historically, the market has experienced a drop of at least 20%, termed a "bear market," every (that's right, you guessed it) eight years. So, with this obvious contradiction in mind, here are three stocks you can own for the long term and sleep well at night owning, even if the worst should happen and the bear market starts to rear its ugly head.
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Ma Bell ringing in consistent returns
With roots dating back to 1885, AT&T (NYSE: T) is the world's largest telecommunications company by revenue. Based in Dallas, AT&T is one of the top mobile-phone providers (second only to Verizon in terms of customer count), a top landline phone provider, and an increasingly large player in cable television as well.
When looking for a safe stock to own for the long haul, investors seek a history of adapting to changing environments mixed with an eye toward the future. These are two traits AT&T has in spades. With beginnings in the late 1800s, AT&T has clearly seen it all. Its U-verse cable offerings are highly rated and continue to make inroads into new markets, and earnings have continued to tick upward over the last decade. Although investors looking for explosive growth will likely be disappointed, AT&T has a lot to offer anyone casting a wary eye to the current valuation assigned to the broad stock market.
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Analysts polled by S&P Global Market Intelligence expected earnings per share of $2.52 in fiscal year 2017. Furthermore, thanks to the company's growth initiatives, the bottom line is projected to grow to approximately $3.03 by FY 2021. With shares trading at $42 and a dividend yield of 4.6%, AT&T is a perfect stock for an aging bull market.
Loading up on oil and gas for the long term
The world's fourth-largest oil company by proved reserves, Chevron (NYSE: CVX) has a lot to offer investors looking for some stability. First, we are at what is likely to be a "bottom of the cycle" for oil stocks. Anyone who fills up their gas tank has no doubt noticed that oil prices have been sagging over the last two years, but with OPEC cutting production and natural declines taking their toll, the status quo for energy pricesis likely closer to the bottom than the top.
Also, as one of the many pieces of what was once the Standard Oil puzzle, Chevron is built to last. It sports a solid balance sheet, with some $260 billion in assets and $113 billion in liabilities as of Dec. 31, 2016, and it managed to essentially break even (reporting a GAAP loss of just $500 million) last year despite the absolute carnage in the oil and gas markets. Wall Street analysts think the company will earn $4.54 per share this year, and this number is projected to grow to $7.63 per share by FY 2020. Lastly, as an added cushion, Chevron's stock currently yields 3.95% -- which should more than pique the interest of conservative investors.
A history of innovation
There are few pharmaceutical companies as respected or as integral to American healthcare as Pfizer (NYSE: PFE). Pfizer has approximately 100,000 employees, and it possesses a winning portfolio of drug brands that includes Lipitor, Lyrica, and Prevnar. It also continues to expand its offerings, having recently received approval from the FDA for the treatment of eczema with its Eucrisa ointment. Eucrisa alone is projected to have potential annual sales of $2 billion, proof that Pfizer is not simply resting on the laurels of its older winning drug brands.
Although its management lowered its annual earnings guidance in a November 2016 conference call, EPS is still expected to come in at $2.38 to $2.48 for the current fiscal year. A bright spot in recent quarters has been its oncology offerings, with its Ibrance brand for the treatment of metastatic breast cancer leading the way.
With a long history of healthcare innovation stretching back over 160 years, and with analysts projecting EPS to grow from $2.55 to $3.27 from FY 2017 through FY 2021, Pfizer is an ideal stock to consider eight years into a secular bull market.
Foolish final thoughts
Investing, according to Warren Buffett, is "simple, but it's not easy." One of the myriad difficulties investors inevitably experience is buying stocks throughout a plethora of unique environments. We are now eight years into a bull market, nearly a decade from the lows of the Great Recession. The economy continues to expand for now, which is great, but history tells us that we are beginning to live on borrowed time before the market begins to take away what it has given. This is not to say a crash is on its way; it just means investors need to become increasingly selective as to where they put their money. The three companies above represent great buys in any market, thanks to their adaptability, the strength of their businesses, and the continued foresight of their management teams. For investors looking for the best of both worlds, these stocks are a great start.
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*StockAdvisor returns as of March 6, 2017.The author(s) may have a position in any stocks mentioned.