Stock market downturn? 3 companies to buy and keep for the long term

Against the backdrop of the global pandemic, rising inflation, and efforts to control that inflation, the stock market responded by selling dramatically in 2022. Nasdaq Composite down 26% since the beginning of the year, while Standard & Poor’s 500 It lost 18% of its value during the same period. Almost every industry has been affected to some degree, but often for entirely different reasons.

While the decline in the stock market has given many a desire to downgrade and run, long-term investors know that weak stocks of trusted companies won’t stay low forever. They also know that a downturn in the market provides a great opportunity for impatient investors to buy shares at bargain prices so that they can reap the rewards later.

Let’s take a look at three reliable stocks that are traded at a discount that offer the potential for big gains in the long run.

1. Disney

Walt Disney‘s (DIS 2.36%) The stocks certainly have had two volatile years, trading 29% year-to-date and 39% lower than last year. This sharp decline is related, in part, to the ongoing negative effects of the pandemic, as well as uncertainty about the economy and a possible recession. Disney has used the situation to make some adjustments (principally to its theme parks) and add new services (such as the streaming service Disney+) that it expects to take advantage of in the coming years. Some evidence of the positive effects of the changes (as well as easing concerns about the pandemic) can be seen in the recent earnings report which noted a 70% year-over-year increase in park revenue and total subscribers streaming from three major services (Disney+, Hulu and ESPN+) of 221.1 million, exceeding Netflixsum.

Disney’s price-to-earnings ratio, which has risen significantly due to lower profits associated with the pandemic, has returned to more normal levels, indicating that the company is getting to its historic level. strong financial Back on more casual. For example, Disney’s fourth-quarter revenue rose 26% year over year, exceeding market expectations.

Disney has Lots of promising developments In the pipeline, including gains from price increases across all streaming services, an ad-supported streaming tier that can invite new subscribers and increase the average company rate per user, and a long list of blockbuster theatrical films that are sure to make big money at the box office ( In addition to keeping subscribers interested in broadcast products). A return to revenue growth that beats expectations and a thriving streaming business indicates that the company (and the stock) has renewed potential to outperform in the coming years.

2. apple

apple (AAPL 0.93%) It has proven to be one of the most innovative companies in history, making it a safe bet for impatient investors looking to capitalize on those innovations. Investment legend Warren Buffett is certainly intrigued by the stock, as Apple is the biggest company he owns Berkshire Hathaway By a large margin. In fact, approximately 41% of Berkshire’s portfolio is currently restricted to Apple (895 million shares valued at $122 billion as of June 30).

Apple as a stock has proven resilient in the past year, with its stock dropping less than 1% over the past year despite the Nasdaq’s down 24.3% in the same period. The continuous increase in the company’s revenues and net income reinforced the stability of its shares. Despite the pandemic and some potential declines in recession-affected consumer spending, Apple’s net sales rose from $260.2 billion in fiscal 2019 to $365.8 billion in fiscal 2021, an increase of 40.6% (Apple’s fiscal years end in late September). Net income rose 71.3% in the same time frame, reaching $94.7 billion in fiscal year 2021. The company continued its growth streak in 2022, reaching a record $83 billion in revenue in the third quarter – up 2% year over year. Apple has demonstrated its ability to continually increase revenue and profits by producing a seemingly endless supply of promising products and services launches, making for an excellent long-term inventory.

3. Discover Warner Bros.

Warner Bros. Discovery (WBD 0.40%) It is the result of this year’s merger between Discovery and Warner Media AT&T. Since the merger was completed in early April, the stock of this multinational media and entertainment group has fallen nearly 48%. The stock’s performance may make you wonder why this stock is being shown today.

The stock’s recent performance is a reflection of the market’s response to CEO David Zaslav’s efforts to cut the $55 billion in debt that the newly merged company saddled with at its launch. The cuts included canceling a number of international projects, laying off executives, halting production of semi-completed films, and writing off millions of dollars.

The latest cuts may seem drastic, but Warner Bros. still has. Discovery is a profitable content library, popular streaming platforms, and gaming business. The potential of what you’re still working with means it won’t be down forever.

Zaslav cuts have already allowed Warner Bros. Discovery so Reduce its debt by $6 billion In the first five months of operations, which is an impressive achievement considering the short time frame. A company may appear to be shrinking its business, but in reality it is shrinking to eliminate risk and prioritize profits until it has a better financial foundation.

The price-to-earnings ratio for Warner Bros. Discovery is currently 6.5, which is a historical low for the company (or its predecessor, Discovery). The figure suggests that the company’s earnings are much more promising than its current share price, and investors may be unnecessarily cautious about the company. Still ahead of Warner Bros. Discovery is a long way to go before gaining Wall Street’s confidence, but its business is promising, indicating that investors may be able to see significant gains if they are willing to continue for the long term.

Danny Cook He has no position in any of the mentioned shares. Motley Fool has and recommends positions at Apple, Netflix and Walt Disney. The Motley Fool recommends Warner Bros. Discovery, Inc. It recommends the following options: long calls in January 2024 worth $145 on Walt Disney, long calls in March 2023 worth $120 on Apple, short calls in January 2024 worth $155 on Walt Disney, and short calls in March 2023 worth $130 on Apple. Motley Fool has a profile Disclosure Policy.

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