9 Stocks With Big Long-Term Returns

by: Invest Chief

The stock market and the economy are presently filled with uncertainty. The debt bill is still being debated and voted on, GDP came in lower than expected, unemployment is above 9%, housing is still in the depths and the list goes on. It is hard to find the good news when you are surrounded by all the bad news.

The best thing to do is to look towards the long term. The long term looks brighter as long as this recovery is still intact. Holding stocks that will be long term winners is a great strategy right now, especially with all this bad news lately. It is also recommended that you use the tactics from my last article, Keep Calm and Carry on: Surviving the Next Few Days, to help protect you from short term uncertainty.

The stocks I am about to share with you are a diversified group and have a bright future ahead, if the economic recovery continues. The nine stocks that will pay big returns over the long term are: Express Scripts (NASDAQ:ESRX), Bank of America (NYSE:BAC), Amazon (NASDAQ:AMZN), Clean Energy Fuels (NASDAQ:CLNE), Research in Motion (RIMM), Toll Brothers (NYSE:TOL), Apple (NASDAQ:AAPL), Westport Innovations (NASDAQ:WPRT), and Ford (NYSE:F).

Express Scripts' recent acquisition of Medco will place the company in second place in terms of market share in the prescription services sector. Express Scripts and Medco said they will be able to cut $1 Billion in costs
when the two companies come together, making this deal very nice for shareholders. Valuation-wise, the stock is decently cheap to future earnings with a forward P/E of 14. The stock is undervalued compared to sales with a P/S of .64. The company has nice cash flow and a ROE of 47. However, the company does carry some debt; Total debt/equity is around 223. That is higher than the industry average and is troubling. However, I believe the Medco deal will help Express Scripts propel business and increase revenue of the next year or so, while cutting costs.

Bank of America is one of the infamous "too big to fail" banks from the 2008 Great Recession that almost went under. Three years later the company is still trying to get back on its feet. But a recent reported record loss in Q2 has certainly not given investors much confidence. Stock price wise, the company once traded around $50 in 2007, dove to $3.14 in early 2009 and currently sits under $10. BofA is not a bad company, it is just a company that has lost its way and is trying to find the path to recovery. This is a great opportunity to get back into
BofA because I believe this is the bottom. There isn't much more bad news that Bank of America can experience, that is one of the advantages of hitting rock bottom. All the bad news is already priced into the stock and things could start turning around. One good piece of news from the banking industry is loan growth is starting to pick up again. BofA is a great opportunity to play the rebounding banking sector. The stock can't get cheaper in terms of valuation. Get into some BAC.

Amazon has been called the online Wal-Mart because of its dominating presence and low prices. Amazon is also a leader in the e-reader fight with its successful Kindle, which allows you to buy and read electronic books. Amazon dates back to the Internet boom where it stood out and led the pack. Over 10 years later, Amazon is still an internet powerhouse.
Barron's recently said that Amazon was a "religion stock" which means you either love it or hate it. Judging by the commentary of Barron's analysis on Amazon, they are a believer. Amazon's latest area of growth is its cloud component. Amazon has some high flying customers for its cloud system, including the U.S government. The stock is not cheap but has huge potential for growth with no debt.

Clean Energy Fuels converts natural gas into a useable alternative fuel. This stock certainly has a bright future due to the amount of activity by the U.S. government and business partner Chesapeake Energy (NYSE:CHK). President Obama announced a plan to slash oil imports by a third by 2020 to focus on a domestic alternative fuel. The Nat Gas Act of 2011 which is floating around Congress will promote natural gas as a fuel for the U.S., if passed. On the other hand, Chesapeake
recently invested $1 Billion in companies that use technology to covert gasoline engines into natural gas engines. Clean Energy Fuels got a chunk of that $1 Billion to build natural gas truck fuel stations across the U.S. It should be mentioned that T. Boone Pickens has a sizeable stake in Clean Energy and Chesapeake. He is also for the Nat Gas Act. Pickens believes by 2015, natural gas will start taking over gasoline. Whether you agree with Pickens or not, there is no doubt natural gas will begin to play a larger role.

Research in Motion, the creator of the Blackberry phone, has fallen on hard times. The stock has tanked, management has been ousted and now company leadership is bowing to private equity companies that are telling management how to run the company. It isn't hard to be bearish on RIM but at some point you have to face the facts. Believe it or not, RIM is still a profitable company. RIM is launching seven new smartphones over the next year. That seems a bit overdone and we will need to keep an eye on that. The most important thing we need to watch about RIM is how its new phones are received by consumers. Also, it will be important to see whether or not RIM can regain some of that lost market share from Google's (NASDAQ:GOOG) Android and Apple's iPhone. I believe over the long term, RIM will be able to get back on its feet once management begins making rational business decisions and begins to look at how it can defeat the competition.

Toll Brothers designs, builds, markets new homes. The housing market has been a disaster since 2007 and has recently double dipped. One thing people may not realize is that housing will return. The economic recovery is a cause and effect chain. People need jobs to earn money so that they are able to spend it on consumer goods and housing. You can't expect the housing market to rebound when unemployment sits above 9%. Once the jobs recovery gains momentum, look for housing to begin recovery. Toll will benefit nicely from this recovery, just as most housing stocks will, however I like Toll Brothers the most. Housing stocks are cheap, get in before the recovery begins.

Apple: Everyone knows what Apple does. The super innovative tech company with a cult following may just be beginning. Recently, Apple surpassed the U.S. Treasury in cash holdings. This company is huge and has one of the largest market caps in the world. This stock may have more upside as the iPhone 5 and iPad 3 are released later this year and next year. In a recent article addressing a possible deal with China Mobile, (It's Huge: Apple's Possible Partnership With China Mobile) Apple could be introducing the iPhone 5 to China via the largest mobile phone carrier in the world, China Mobile. That would certainly increase revenue quite a bit. Apple is one of those stocks where you get a growth stock with the safety of a value stock.

Westport Innovations makes engine and fuel conversions to turn gasoline engines into natural gas run engines. This stock has a bright future to say the least. Although it is not profitable yet, the company has recently closed out quite a few deals with major companies. Westport is benefiting from that $1 Billion investment from Chesapeake, as we said earlier with Clean Energy. UPS (NYSE:UPS) recently began converting its trucks into natural gas-fueled using Westport's technology. It has also been recently discovered
that car companies such as GM (NYSE:GM) and Chrysler have been in talks with Westport discussing how their lineup of autos can be converted to natural gas. Once again, T. Boone Pickens is a big believer in this company which should help in getting the attention of smart money. Look for more contracts with Westport over the next few years.

Ford is an American automaker. Ford is the only American car company that took no bailout from the U.S. government in 2008. Ford's sales have been gaining momentum over the past year but have temporally stalled due to high gasoline prices and unemployment. Ford is the maker of the F-150, the best selling pickup 30+ years, Mustang, and fuel efficient cars such as the Focus and Fusion. Ford has a great line up of cars and trucks which will help put it above the pack as the economic conditions improve. The stock has a P/E of 7 and a P/S of .36. However, the company does have a sizeable debt load. Look past the short term hurdles and you will find the value is in the long term prospects.

In this market, the short term to intermediate term can look scary. Ultimately, it is best to position yourself for long term gains while protecting yourself in the short term. Short term losses can be protected and minimized while long term gains can be plentiful if the economy can continue its recovery. These stocks mentioned will be profitable over the next year and longer if the economics can be there to support a recovery.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.