It's still far too early to tell how the market will fare in 2023, but the experts aren't hopeful. A recent Bloomberg poll indicates the nation's economists believe there's a 70% chance the U.S. economy will slip into a recession this year. Clearly, that's not a bullish indicator for stocks.
And yet, it's also not a major worry for true long-term investors thinking five to 10 years into the future. The market's recent turbulence, in fact, shows all the signs of being a long-term buying opportunity. The trick is simply identifying companies you can feel comfortable owning in an unclear, distant future. Here are three of your best bets to consider.
1. Apple
Are Apple's (AAPL 2.48%) highest-growth days in its past? Probably. Worldwide annual sales of smartphones are slowing as we move toward market saturation. Indeed, they've all but stagnated, according to numbers from IDC and Counterpoint Research. The iPhone isn't immune to this headwind, nor is it adding to its share of this stagnating market. The continued growth of Apple's services business is offsetting some of the impacts of this slowing growth, while higher selling prices for its iPhones are doing the same. That's not a growth driver the company can count on forever, though.
It matters simply because the iPhone still accounts for roughly half of Apple's top line. That's one of the key reasons Apple shares are uncharacteristically down to the tune of 25% since late 2021.
Largely overlooked in the midst of this weakness, however, is that this is Apple. Not only is the $2 trillion giant the world's biggest and most profitable company, but it's also one of the world's most respected and best-recognized brands. If nothing else, Apple should be able to leverage that.
That being said, while it may not necessarily boost sales, the organization is making moves that will increase profit margins on its biggest moneymaker. By 2024 the company plans on manufacturing its own screens for its mobile devices, and it is also reportedly working on an internal chip foundry that will be up and running by 2025.
It's not clear to what extent this strategy will reduce its dependency on third-party suppliers, who may also be competitors. But there's no denying the complex strategic shift will ultimately provide Apple with greater flexibility and profitability.
2. Walmart
Apple isn't the only great long-haul stock to step into here, of course. You might also want to consider Walmart (WMT 0.13%) as a potential semi-permanent pick for your portfolio.
Walmart is the world's biggest retailer, operating more than 10,000 stores; roughly half of them are in the United States. The company does nearly $600 billion worth of sales every year, dwarfing all of its brick-and-mortar rivals' top lines.
That's a key piece of the long-term bullish argument.
Although Walmart may never dish out the sort of annual revenue growth Apple can, it can drive steady, reliable growth. Consumers always need groceries, after all, and they usually need life's basics, like towels, school supplies, diapers, kitchen utensils, and more. Walmart sells it all. It's also got enough sheer size to outmuscle its competitors.
And now it's adding some finesse to this brute force.
While interest in the service has just been so-so (with estimates ranging widely from a little less than 10 million to as many as more than 40 million people), the subscription-based shopping/shipping services known as Walmart+ is at least successful enough to give Amazon pause. It's not just free shipping of online orders, though. The company's inching its way into primary healthcare with surprisingly complete stand-alone clinics, and Walmart.com is a fast-growing third-party online marketplace. The retailer's even entered the premium wine market with its own private-label products.
None of these initiatives will ignite rapid growth for the company. Collectively, though, they're the sort of add-on offerings increasingly making Walmart a lifestyle choice rather than a mere retailer.
3. Merck
Finally, add drugmaker Merck (MRK -0.82%) to your list of stocks you can feel good about jumping into for the long haul.
Investors that know the company well will know the blue-chip pharmaceutical name doesn't always grow its top and bottom lines. There was a stretch between 2012 and 2018, for example, when its sales slumped slightly -- the period after asthma drug Singulair's key patent expired and before sales of its cancer-fighting Keytruda really started to take off in earnest.
The company's been firing on all cylinders since Keytruda's been greenlighted for more and more uses. The multiyear sales lull, however, still illustrates that not even powerhouse Merck is immune to the pharma business's biggest headache. That's the need for constant and expensive innovation, even if innovation has to be acquired.
The thing is, when you're as big and well-funded as Merck, creating growth opportunities like the one supplied by Keytruda -- now Merck's top seller -- is relatively easy to do. Indeed, the pharmaceutical giant is in the process of making a tender offer for Imago BioSciences as a means of bringing a couple of new, promising oncology candidates into the fold. Keytruda wasn't developed in-house either, for that matter. Merck acquired it when it acquired Schering-Plough back in 2009, which had developed the drug up until then.
The point is, given the never-ending need for pharmaceuticals and the big spending required to create new ones, it ultimately takes a major player like Merck to balance the risk and cost of being in the business with the likely reward.
