Can you really hold any stock forever? We took a look at 4 companies with durable competitive advantages that could be considered buy-and-hold forever stocks. As always use the list below as a starting point for your own due diligence.
Intel Corp (NASDAQ:INTC) Intel traded recently at a price of $19.77, which is 20% off its 52 week high ($23.75). One point to be considered in our investment decision is that even though the company is the leader in the server microprocessor sector with almost 93% market share followed by Advanced Micro Devices (NASDAQ:AMD), the company is trying to diversify its products. According to a press release last month, the company has agreed to acquire Fulcrum Microsystems which designs ethernet switch silicon for data centers. This acquisition will enable the company to enter into other data center avenues beyond microprocessors.
The company has a strong solid foundation. It has an operating margin of 33.55% compared to 6.54% for AMD. It has earnings per share of $2.18 compared to $1.12 of AMD. As we can see the numbers show that the company is in excellent competitive position. Given the present economic situation in the market, it seems the downward trend will continue over the coming weeks.
I estimate that the Intel shares could fall to $18. Given the company’s foundation, a target price should be around $18.50 to buy. The important point to consider is that the investment horizon should be at least one year in order for the stock to reach its 52 week high.
Altria Group Inc. (NYSE:MO) The stock has gained 4.39% for the year. Taking into consideration that the company has interest in products like cigarettes, smokeless products, wines and financial services, the stock should be affected if this unstable situation in the stock market and the economy continues. The stock market will show a downward trend given the fact that the stock is trading at 10.13 times book value. If the company´s outlook predicts a growth rate in the diluted earnings per share and the stock has been flat this year, it will be a good idea to buy it .
Abbot Laboratories (NYSE:ABT) The stock closed today at $48.87 showing a year to date increase of only 2%. The company is investing $230 million to build a state of the art nutrition manufacturing facility in China. It will help the company attend to the more than 17 million children that are born every year in China.
In terms of median target, the stock should reach a price of $55.50 , which is practically an expected increase of 13.57%. If we compare the P/E ratio, ABT has one of the best in the market. It is 14.9 compared to 33 from Merck (NYSE:MRK) and 14.2 from Astra Zeneca (NYSE:AZN). There is an expected annual growth in earnings of 11.09%.
Given the fact that the stock market is extremely volatile, there is a possibility that the stock could decrease in the following days. It will be a good idea to buy this stock at this level with the intention of holding it, taking into consideration the low price now and the solid foundations of the company.
General Motors Co. (NYSE:GM) The stock closed at $23.60, showing a year to date decrease of 35.97 %. According to analysts the price range should be between $25 and $50. Taking into consideration this low price, let’s look at the financial statements to see if this valuation is fair or if there is a possibility of good returns.
The company is trading significantly below analyst estimates. General Motors has a median price target of $42 by fifteen brokers and a high target of $50. The last up/downgrade activity was on Aug 15, 2011, when Ticonderoga upgraded the company from Neutral to Buy.
If we look at the P/E ratio, GM has the lowest ratio of 4.97 versus 5.98 from Ford (NYSE:F) and 39.37 from Toyota (NYSE:TM). The revenue growth comparison shows that the company is improving its situation. It showed an increase of 18.70% versus 1.30% from Ford and a decrease of 29.40% from Toyota.
The numbers show that the company’s financial situation has shown quite an improvement. Taking into consideration the low price today and the economic situation in the country, the stock could rally in the next 12 months. The stock price today can generate good profits in the near future. A moderate estimate would be that the stock could go up to $30 in the long run. Click here for more great dividend ideas.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.