Stock prices are plummeting across the board, and the economy is getting shakier and shakier. The Fed keeps talking about “forceful and rapid” actions on inflation, but people are worried. And rightly so.
Luckily, the stock market itself isn’t going anywhere. To put it bluntly, this isn’t the world’s first economic crisis and won’t be the last. The average person might be worried, but then again, the average person isn’t actively investing. And it’s not like investing is for the faint of heart.
Now, the market might seem scary, with all these companies dropping lower each day. But it’s essential to keep things in perspective. First, bad times can’t last forever. The economy will eventually recover because, well, it just always does. And besides, multiple factors “under the hood” (like all beginners who jumped into the market before and during the last couple of years) make this situation seem much worse than it is.
So, what we’re doing right now is we’re sticking to our tried-and-tested strategy of looking at the long term. Meaning, we’re looking at solid and reliable companies with proven track records. Companies that are important enough to not just survive a bad period but also strong enough to come out ahead. We’re keeping a close eye on the share prices, and whenever we see a good opportunity, we swoop right in and add to our positions, with the intent of holding for as long as possible.
Here are top five stock choices for September 2022
So, first up, we’ve got our all-time favourite tech stock…
That’s right, it’s time for Tesla again!
- Current Price: $270.21 ((today change: -6.95 (-2.51%))
- Market Cap: 846.70B
- PE Ratio: 96.85
- EPS: 2.79
Now, we know that this last year was a pretty crazy time for Tesla stock – they hit three big highs and then suffered some pretty low lows. But that’s just how it goes with Tesla – they’re a company that’s trying to innovate in a world that’s not necessarily ready for what’s being brought to the table. Couple this with Musk’s quirky personality, and you’ve got yourself a recipe for volatility. The typical innovative tech volatility is just the icing on the cake here, really. Even with the ideal economic conditions, Tesla’s stock charts would look just as wild.
The 3-to-1 Split
Currently, Tesla is a bit more affordable because of their 3-to-1 stock split. This is great for retail investors because it makes owning full shares easier. But, of course, if you’ve owned your shares for a while, you’re still retaining your value – you’re just getting more shares.
The EV Industry
As other automobile manufacturers struggle to adapt to the EV market (like Ford laying off 3000 employees with their transition to EVs), Tesla is still going strong. Tesla’s numbers keep going up – a 30% increase in revenue year-over-year and a 47% increase year-over-year in gross profits.
And all of this is to be expected. With governments across the globe working to facilitate the switch to EVs, we expect things to look better and better for Tesla. We’d go as far as to say that Tesla is the definitive leader and face of the EV industry in the west, and we believe they will hold this position for the foreseeable future.
Now, for the runner-up for this month, we’re taking a look at…
- Current Price: $270.21 ((today change: +5.16(+3.28%))
- Market Cap: 2.504T
- PE Ratio: 25.75
- EPS: 6.05
Despite taking some heat from consumers about their content policy changes, Apple (ticker symbol AAPL) is still going strong. And this is clearly reflected in their Q3 Report:
- Record-breaking revenue of $83 billion (2% increase year-over-year)
- Quarterly earnings per diluted share $1.20
- Over 860 million paid subscriptions across all services (160 mil increase year-over-year)
Now, Apple breaking their own records is nothing new, but it demonstrates just how solid of a company they are. When we think “Apple”, we think growth, consistency, reliability and brand presence.
This is further highlighted by the subscription numbers mentioned above – those 860 million subs are spread across iCloud, Apple News, Apple TV+ and their other services. This is yet another stability signal because subscriptions are unlikely to drop off, especially with a business model like Apple’s. Netflix or Google users pick their service providers due to convenience. Apple users pick Apple because it’s Apple. For them, it’s more than a brand – it’s an experience package. And that’s an incredibly unique moat that most companies can only dream of achieving. So naturally, this subscription revenue can (and will) be leveraged to boost growth in Apple’s other products and services to deliver an even better experience to its existing user base.
Now, we’re not the only ones seeing this. As of June 2022, Apple makes up a stunning 40.76% of Warren Buffett’s Berkshire Hathaway investing portfolio. And if there’s one thing everyone knows about Buffett is that he’s always looking at the long-term.
Moving on to our third idea for September, we’ve got…
Procter & Gamble (PG)
- Current Price: $137.16 ((today change: -2.48 (-1.78%))
- Market Cap: 327.195B
- PE Ratio: 23.61
- EPS: 5.81
Procter & Gamble, ticker symbol PG, is a newcomer to our portfolio. A US-based international consumer goods corporation, Procter & Gamble, is one of those businesses that just scream “recession-proof” from the get-go. They’re a well-established industry leader that’s a staple in many households – not just in the US but also worldwide. And, let’s face it, folks – recession or no recession, people will need their consumer goods. Conditioners, shampoos, toiletries and cleaning solutions – there’s just no avoiding these in a modern household.
PG’s latest report shows a net income growth of $2.9 billion year-over-year, despite the loss of sales volume due to lockdowns and reduced operations in Russia. Or, in other words, they can sustain healthy growth numbers, despite circumstances outside their control. This is because their products are essential for consumers to continue doing business.
So, essentially, we have a company with a proven track record, steady revenue growth and a well-established brand. Looking at the long-term picture, Procter & Gamble represents a solid and reliable company with over 180 years in business.
Adyen N.V. (ADYEN.AS)
- Current Price: $1,504.80 ((today change: -15.80 (-1.04%))
- Market Cap: 46.608B
- PE Ratio: 89.95
- EPS: 16.73
Adyen NV, ticker symbol ADYEN.AS, is a payment platform based in the Netherlands. They focus on working with globe-spanning multi-billion dollar franchises like McDonalds, Etsy and Uber, which allows them to stand out in the sea of fintech companies. The company provides big business with competitive rates, superb commercial integration and, most important of all – security.
The Q1 2022 report:
- 60% year-over-year Increase in processed payments
- 37% net revenue growth
- 59% EBITDA margin (Earnings before interest, taxes, depreciation, and amortisation)
- Over 5.5 billion Euro in cash
- Basically no long-term debt
While interesting, Adyen’s business model is vulnerable to economic uncertainty, as businesses might experience a decrease in payments due to low consumer confidence. However, the choice of focusing on big business implementations, coupled with decreased take rates, makes for a promising long-term target.
And speaking of payment processors, let’s not forget everyone’s favourite…
- Current Price: $91.13 ((today change: -1.53 (-1.65%))
- Market Cap: 105.39B
- PE Ratio: 52.68
- EPS: 1.73
Despite the (expected) slowdown in 2022, PayPal (ticker symbol PYPL) is still the number one payment processor for consumers worldwide.
PayPal is one of the businesses that benefited massively from the lockdowns because people were mostly shopping digitally, with everyone stuck indoors. And you can’t really beat the convenience and security offered by the world’s largest payment processor.
After things have sufficiently quieted down and our lives have (mostly) returned to normal, PayPal’s forecast is sitting at a mere 10% revenue improvement. As a result of the above, combined with the unfavourable market environment, PayPal’s shares are down roughly 50% year-to-date… Which is an excellent thing in any long-term investor’s books.
To put things in perspective – unless the unimaginable happens, PayPal isn’t going anywhere. And besides, even if a significant portion of users did decide to change their payment processor, PayPal CEO Dan Schulman noted that roughly 80% of the platform volume comes from just 30% of the active user accounts.
On the one hand, this is a great safety net, where even if the numbers dwindle, the volume will likely not take a significant hit. But, on the other hand, this is also an incredible growth opportunity if the management can bump engagement and frequency, especially in the “most active” portion of their user base.
Bonus Idea: Google (GOOG)
- Current Price: $108.68 ((today change:-1.87 (-1.69%))
- Market Cap: 1.412T
- PE Ratio: 20.13
- EPS: 20.13
So, the bonus suggestion for this month shouldn’t come as a surprise to anyone. The world’s biggest search engine needs no introduction and very little explanation. What we’ve got here is the definition of “too big to fail” – for the average user, Google IS the internet. And while that isn’t technically true, the tech giant is probably one of the few companies in the world that are nearly impervious to economic conditions.
The simple fact of the matter is that businesses need Google. Every single relevant website out there is not only optimised but built with Google in mind. Everyone buys and relies on Google ads. Google Drive and Gmail are the leading choices in the field. And all of this is without even getting into YouTube or Android and its app store. As long as there is business on the internet, Google will remain relevant.
This makes the company an exceptionally resilient investment target, especially for periods of uncertainty. As a result, Google is a staple of our “absolutely must buy & hold for as long as possible” list.
We’d like to close out today’s blog with a reminder – the bad times never last. But there’s always a light at the end of the tunnel. And, as long as you don’t give in to irrational fears, you can not only get through the bad times but also come out ahead.
Here, on this platform, we’re all about the long-term. The resilience. The stability.
And we build our investment strategies with this in mind. We seek out and invest in businesses we’d like to hold for at least 5, if not 10 or 15 years. So a short-term hassle like some minor economic hiccup will not discourage us from doing what we do. And we believe that every investor out there can benefit from this mindset.
Now, if you’d like to learn more about long-term investing and our strategies, you definitely want to check out our Private Investing Group. There, we share in-depth knowledge, tips and tricks and insights into the long-term mindset. We’ve also got a bunch of free courses, e-books and materials exclusive to our members. If you’d like to check us out, follow the link down in the description.
Oh, and as always, if you enjoyed this blog, don’t forget to let us know by giving it a like and sharing it with your friends. Signup to our newsletter for more updates. You can check out also our relevant posts such as “Top 3 Stocks Super Investors Are Buying Right Now“.
Thank you all for being with us today, and until next time!
Recommended books for further reading:
- Intelligent Investor: The Definitive Book on Value Investing – A Book of Practical Counsel
- The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits
- The Financial Times Guide to Investing:The Definitive Companion to Investment and the Financial Markets: The Definitive Companion to Investment and the Financial Markets
- A Beginner’s Guide to the Stock Market: Everything You Need to Start Making Money Today
- Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future
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