Are you ready to take the plunge on new stocks even if headlines are less than bullish? Good. While the economy as a whole may not be everything we'd like it to be right now, there are still plenty of stocks out there with reliable long-term potential. Here's a closer look at five of them you can feel good about adding to your portfolio today.
Lamb Weston
Even if you only eat French fries on a semi-regular basis, odds are good that at least some of them have been supplied by Lamb Weston (LW 1.57%). The company is one of the world's biggest frozen potato outfits, serving the restaurant and the consumer retail markets. Other vegetables and appetizers are also in its repertoire.
It's not a growth business, and it probably never will be. Food is in consistent demand, though; people have to eat.
Lamb Weston is a particularly smart investment right now given the economic backdrop. Namely, between above-average inflation, the prospect of a recession, and the possibility that high prices and economic malaise could last for a long while, consumers are looking for value. Potatoes provide it. That's why its sales are expected to grow to the tune of 30% this year, and more than 28% next year.
Better yet, with producers' inflation cooling faster than consumer prices are, food companies like Lamb Weston are positioned to squeeze out some healthy profit growth. Its per-share earnings are projected to more than double last year's figure of $2.08, soaring to $4.48 en route to an expected $4.96 per share next year.
McKesson
The healthcare business seems forever in flux thanks to never-ending regulatory change and tough competition. There is one constant for the industry, though. Like the food business, the world always needs healthcare, and is always willing to pay for it.
Enter McKesson (MCK 0.89%). It's not exactly a household name. It isn't a biotech or a pharmaceutical maker. It doesn't operate hospitals. Rather, McKesson is a middleman, supplying prescription drugs and medical consumables to the people and organizations that operate on the industry's front lines.
And McKesson is great at it. With the exception of a tiny blip in early 2020 -- when the COVID-19 pandemic was sweeping across the world -- the company reported year-over-year sales growth in every quarter for seven consecutive years.
Profit growth isn't nearly as strong, but it is decidedly improving. Last year's operating income of a little over $4 billion is well ahead of the top line of nearly $2.4 billion just 10 years back. That's not bad at all for a company of this ilk.
MCK Revenue (Quarterly) data by YCharts
The kicker: McKesson recently has raised its long-term operating profit outlook, pointing to "strong execution against our strategic initiatives [and] operating momentum" and "building on our differentiated assets and capabilities."
TJX Companies
If you take a quick glance, it looks like the entirety of the brick-and-mortar retail industry is slowly dying. Bed Bath & Beyond is just the latest in the long line of store chains to implode, for instance, joining the likes of JCPenney, David's Bridal, Neiman Marcus, Sears, and Stein Mart, just to name a few.
But take a closer look at the business. It's not dying -- it's just changing. People are still shopping; some of them are even still splurging. They're just doing so in a different way. Folks are looking for value now, and they don't care where they shop to find it.
It's a dynamic that plays right into the hands of TJX Companies (TJX 0.18%).
TJX Companies is parent to discount apparel and home goods stores T.J. Maxx, Marshalls, HomeGoods, Sierra, and HomeSense. At one point these were fringe venues that many shoppers rolled their eyes at while driving past them on their way to the mall. Now these are destinations in and of themselves.
Outside of 2020's pandemic-prompted shutdowns and last year's tough comparison to 2021's reopening spending surge, TJX Companies hasn't once failed to produce year-over-year sales growth in over a decade. And the slow meltdown of conventional retailing is actually a boon for the discount area of the market.
Ford Motor
There's certainly no shortage of critics of automaker Ford Motor Company (F 0.23%). Most of them point to continued steep losses of its budding electric vehicle business. And to be fair, the concerns are legitimate.
They largely miss the point, however. While Ford admittedly has got a massive amount of work to do on the EV front, keep it in perspective. The company's only genuinely been in the electric vehicle business since 2021, and it's still only scratched the surface of the opportunity. Less than 2% of last quarter's top line of $39 billion was attributable to EV sales. There's simply nowhere near enough EV scale yet to presume the worst about its electric car efforts.
In the meantime, the market's mostly missing the rest of the story -- namely, the fact that its combustion-powered vehicle business is not only growing again, but is also firmly profitable. Operating cash flow reached $2.8 billion last quarter, reversing negative cash flow of $1 billion in the comparable period of 2022.
And that's with lingering supply chain problems making new cars outrageously expensive. As the supply of parts continues to improve and the costs of materials continue to cool, look for more long-term sales and earnings growth.
Don't misunderstand -- Ford's still got a lot to figure out. With shares priced at less than 7 times this year's projected per-share profits of $1.74, though, the market's pricing in a worst-case scenario that just doesn't seem likely to take hold.
International Business Machines
Last but not least, add International Business Machines (IBM 1.28%) to your list of stocks you can confidently buy if you've got an extra $500 burning a hole in your pocket.
You know it better as IBM, of course -- the company that was once a titan of the tech world, but failed to fully evolve in the era of cloud computing, cybersecurity, and mobility. It's been years since many investors have even thought of the organization, which saw its revenue peak all the way back in 2012.
But you just might want to put this fading icon back on your radar. It's making itself relevant again. Its 2019 acquisition of cloud computing powerhouse Red Hat put it squarely in the cloud computing market.
Now, it's turning up the heat on artificial intelligence (AI). At its annual Think conference earlier this month, IBM announced it would be leveraging its Watson AI platform to enter the generative AI arena, joining Microsoft and Alphabet's Google. Meanwhile, the company continues to ease its way into more marketable industries like cybersecurity and automation at the same time it's promoting its vibrant consulting services.
It's unlikely IBM will ever fully regain its former glory; this year's projected top-line growth of 3% is the new norm. These are sales that support reliable cash flow, though, which in turn supports its healthy dividend yield of 5.4%. That dividend, by the way, has been paid every quarter since 1916 and raised every year since 1995.
