Investors in US stock markets head into the last month of 2021 having experienced a pretty solid year so far.
Despite the start of a sustained (and at times violent) sell-off in growth stocks last week, the S&P 500 Index finished November down just 0.8%. The key index has a year-to-date return of a solid 21.6%.
Meanwhile, the Nasdaq actually ended November up marginally by 0.3%. That brought its 2021 returns to 18.4%.
However, the first few days of December were ugly for investors in high-growth stocks. Exchange-traded fund (ETF) investors will be sitting pretty after watching some of the most expensive growth stocks come crashing back to Earth.
Yet amid crisis there is always opportunity – at least for the long-term investor. So, here are five stocks that any investor with a long time horizon can buy and hold.
1. Nvidia
While Nvidia Corporation (NASDAQ: NVDA) shares are up over 130% so far in 2021, the semiconductor specialist is just getting started in terms of its addressable market.
As organisations continue to move to the cloud to meet their computing needs, Nvidia is going to be there to supply state-of-the-art chips to meet that demand.
In fact, over the past seven quarters (so in less than two years), Nvidia has more than doubled its revenue from chips for both data centres and gaming.
While Nvidia is also known for its “metaverse” potential, this company has optionality with regards to the ongoing “digital transformation” of the global economy.
2. MercadoLibre
Whenever we think about e-commerce stocks in Emerging Markets, we naturally think of Latin America-focused MercadoLibre Inc (NASDAQ: MELI).
While it might not be as prominent as its Southeast Asian counterpart Sea Ltd (NYSE: SE), the company still has a formidable growth track record.
Fusing an e-commerce platform, payments ecosystem and first-party logistics service, MercadoLibre has managed to show an exceptional ability to execute well on its strategy.
In fact, its net revenues expanded by 73% year-on-year in the third quarter of 2021 to US$1.86 billion.
Even more impressive is the fact that for Mercado Pago, its payments platform, more and more of the total payment volume (TPV) flowing through it is “off-platform”, i.e. not on MercadoLibre’s e-commerce site (see below).
Sources: MercadoLibre Q3 2021 earnings presentation
That is evidence of the service’s stickiness and how the company offers up optionality to investors.
Trading at nearly 50% off its all-time highs of US$2,000 a pop (and down 30% over just the past month), MercadoLibre shares look like a solid buy for any long-term investor.
3. Lowe’s
Focusing too much on growth can leave us to neglect companies that are still growing (albeit at a slower pace) but which also offer investors dividends.
Lowe’s Companies Inc (NYSE: LOW) is a perfect example of this. The home improvement chain is actually a dividend aristocrat and has paid a stable or increasing dividend for 46 consecutive years.
While sales only increased by 2.2% year-on-year in the third quarter of 2021, this was already ahead of expectations that sales would fall given the surge in demand for its wares during the depths of the Covid-19 pandemic last year.
With a rock-solid business that is increasingly moving into the “pros” segment of servicing professional builders, Lowe’s looks set to keep winning.
4. ARK Innovation ETF
If investors are keen on accumulating a basket of growth stocks as they plunge, but still also believing strongly in their long-term potential, then the ARK Innovation ETF (NYSE: ARKK) could be a great fit.
Cathie Wood’s flagship fund has not been performing well of late and is down nearly 25% in the past month alone.
Incidentally, that also matches its year-to-date performance. With some of the big names you’d expect in there – such as Tesla Inc (NASDAQ: TSLA), Palantir Technologies Inc (NYSE: PLTR) and Roku Inc (NASDAQ: ROKU) – if you’re big on disruptive innovation over the long term then her fund provides a solid play on those trends.
5. Tractor Supply
When we think of rural, agriculture goods it’s understandable if we don’t get excited. However, Tractor Supply Company (NASDAQ: TSCO) has made its business appealing to investors.
The firm runs a chain of retail stores that offer products for home improvement, agriculture, lawn and garden maintenance, and all sorts of farm needs such as goods for livestock or necessities for farmers and ranchers.
Its latest quarterly earnings saw diluted earnings per share (EPS) increased over 20% year-on-year to US$1.95.
The third quarter was also the sixth consecutive quarter in which Tractor Supply’s comparable store sales was over 10%.
With a total return of over 270% over the past five years, Tractor Supply shares have proved to be a solid long-term holing, whatever the environment.
Growing despite the bloodshed
While our investments can take a hit in the short term, it’s always wise to remember that sharp falls in stock prices (like we’ve just witnessed) do not in any way reflect the health of the underlying business.
These sustained sell-offs can also present opportunities for long-term investors. Meanwhile, it’s also a stark reminder that we should be responsibly diversified in our portfolios between both growth stocks and dividend stocks.
That stability from more established (and less expensive) businesses can provide both ballast to returns and peace of mind for investors who may panic at seeing a sea of red in their portfolios.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares in Nvidia Corporation, MercadoLibre Inc, Sea Ltd and Lowe’s Companies Inc.
