Being a long-term investor means owning stocks in good times and in bad times. In financial terms, that means during bull markets and bear markets.
And while 2023 is off to a much better start than last year, investor sentiment remains bearish. However, just as the seasons come and go, investor sentiment will eventually swing back into bullish mode.
The question investors should be asking themselves today is simple: What stocks should I buy now -- before the market takes off? Here are three I have my eye on.
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United Parcel Service
A leader in delivery and logistics, United Parcel Service (UPS 2.42%)benefits from numerous secular trends, including the growth of e-commerce and the increasing complexity of modern supply chains. Its business soared during the pandemic, and shares doubled in value.
But UPS is more than just a package delivery company; it has diversified its revenue stream by offering supply chain management, freight services, and customized logistics. However, with its obvious connection to e-commerce and the health of the world economy, the company is vulnerable to a recession.
Nevertheless, UPS boasts a solid operating margin of 13% and is generating $10.67 per share of free cash flow, which should help see it through a downturn. Moreover, with a price-to-earnings multiple of 14.9, the stock is trading well below its 10-year average of 29. Throw in a dividend yield of 3.4%, and I'm sold. UPS is a great long-term buy-and-hold stock.
Schlumberger
Another name investors should consider ahead of the next bull market is Schlumberger (SLB 0.08%), a leading oil-field services provider. While the company's stock often moves in sympathy with volatile energy prices, it's important to remember that Schlumberger doesn't make money by selling oil and gas but by providing technical support to the companies that do. Therefore, its business is -- to some extent -- more predictable. And those predictions are pointing in a positive direction.
Analysts expect the company to grow revenue by 16% this year and by another 11% in 2024 as oil and gas producers invest some of their recent profits back into exploration and production.
What's more, Schulmberger's return on equity (a measure of efficiency) has jumped to 21%. That's the highest level in more than a decade, and it demonstrates that management is effectively growing profits while improving the company's balance sheet by paying down debt.
That's a recipe for long-term success, and it's why Schlumberger is a stock to own ahead of the next bull market.
Tesla
Tesla (TSLA 1.85%)is the king of the electric vehicle (EV) market, but it's important to remember that there are other reasons for investors to own shares.
Specifically, the company is one of the leaders in the solar and energy storage industry. On April 9, Tesla announced it was building a new factory in Shanghai with the capacity to produce 10,000 Megapack batteries per year. Those batteries -- designed for large-scale, utility-level use -- can be used to store power generated by renewable sources such as wind and solar. During peak hours, the batteries can be tapped, reducing strain on the grid.
Granted, most of Tesla's growth over the next few years will come from rising vehicle production rather than its battery business. However, I'm bullish on the company's vehicle prospects, too. Recent price cuts will advance Elon Musk's goal of making Tesla the top worldwide vehicle maker by volume by 2030. Plus, its first Cybertruck deliveries are slated for the second half of 2023 and its Semi production figures are expected to ramp up throughout 2023 and 2024.
Financially, Tesla's recent quarterly earnings results were mixed, with revenue rising but gross margin falling. However, I'm not concerned. The world economy remains in a fragile state, but over the long term, the EV specialist remains a reasonable bet to become the world's largest automaker. I'm happy to load up on Tesla shares now -- ahead of the next bull market, when its stock will truly shine.
