For investors, 2021 has turned out to be a year of surprises as the world opens up from the Covid-induced lockdowns of 2020.
Yet the stock market’s continued rise throughout this year has defied expectations for those who continued to buy stocks of winning companies.
While September was a rocky month, with the benchmark S&P 500 Index down 4.8%, it’s still up 14.8% so far in 2021.
Meanwhile, the tech-heavy Nasdaq-100 Index had an even worse September, falling by 5.7%. However, it too (like the S&P 500) is still up a respectable 14% so far this year.
September saw news of China Evergrande Group (SEHK: 3333) dominate headlines with the property giant’s debt woes.
For investors focused on the long term, though, the businesses that are thriving continue to thrive. With that in mind, here are five stocks any long-term investor can pick up shares of in October.
1. ASML
Anyone interested in the semiconductor space will no doubt have heard of ASML Holding NV (AEX: ASML) (NASDAQ: ASML).
Dual-listed in Amsterdam and New York, ASML is a Dutch firm that specialises in producing extreme ultraviolet (EUV) lithography machines – essentially the kit used to manufacture cutting-edge chips that the likes of Taiwan Semiconductor Manufacturing Co (TPE: 2330) (NYSE: TSM) have to purchase.
Given it’s at the top of the semiconductor value pyramid (there’s no other company in the world that can produce EUV machines), ASML’s competitive moat is relatively secure.
With the company reporting a second-quarter 2021 revenue of €4 billion, what impressed the market more was the fact that ASML management guided for between €5.2-5.4 billion in third-quarter revenue.
ASML shares are up 48% so far in 2021 but have fallen around 14% in the past month and sit around 17% off its all-time high.
For investors still bullish on the chip industry in general longer term, ASML is a must-have holding.
2. Accenture
Consulting giant Accenture (NYSE: ACN) has been a leader in the business of “digital transformation” for enterprises of various sizes.
With the onset of Covid-19, understanding how to turn your business into one that’s “digital-first” was crucial.
There’s no surprise, then, that Accenture has benefitted. In its latest fourth-quarter fiscal year (FY) 2021 earnings, Accenture reported revenue of US$13.4 billion – up 24% year-on-year.
Its operating margin continues to impress, at 14.6% and up 30 basis points year-on-year, while the firm also repurchased US$915 million in shares and raised its quarterly dividend by 10% to US$0.97.
While shares are up 27% year-to-date, for any firm trying to navigate a post-pandemic business environment, consulting experts are likely to be part of the solution.
3. Zscaler
Cybersecurity is big business, particularly given the shift to the online world during the Covid-19 pandemic. One of the big winners from this is Zscaler Inc (NASDAQ: ZS).
The cloud-native cybersecurity firm is a leader in its field and its latest earnings prove that. In its fourth-quarter FY 2021 Zscaler saw revenue of US$197.1 million, up 57% year-on-year.
Meanwhile, its billings expanded by a whopping 70% year-on-year to US$332.2 million (see below).
Source: Zscaler August 2021 investor presentation
With the firm continuing to grow strongly and shares up a market-beating 34.2% so far in 2021, this is one cybersecurity stock that’s set to keep winning.
4. Infosys
Infosys Ltd (NYSE: INFY) is one of the leading Indian business consulting, IT, and outsourcing services providers in the world.
While Infosys is listed in India, its American Depositary Receipt (ADR) shares allow investors an opportunity to tap into one of India’s premier companies.
By providing next-generation digital services and consulting, Infosys is meeting a demand which is accelerating globally.
For its first-quarter FY 2022 earnings, Infosys saw revenue increase by 16.9% year-on-year (in constant currency terms) while its operating margin was a solid 23.7%.
All this translated into a 22.6% year-on-year bump in earnings per share (EPS).
Infosys shares in New York are up 29.5% so far in 2021 and provide a level of geographic diversification to investors who want global exposure to growth.
5. Brookfield Infrastructure Partners
Finally, we have Brookfield Infrastructure Partners LP (TSX: BIP) (NYSE: BIP), a Canadian infrastructure-focused limited partnership that is listed in both Toronto and New York.
The “bread and butter” business of Brookfield Infrastructure is to manage and generate contracted cash flows from a variety of infrastructure assets that it owns, from data centres and gas pipelines to railways and commercial electricity distribution.
In the firm’s latest quarter, it generated funds from operations (FFO) of US$394 million, up from US$333 million in the second quarter of 2020.
This visible, contracted cash flows allows Brookfield to pay a solid dividend which has been growing at an average of 10% per year over the past decade.
Brookfield Infrastructure shares are up 14.6% so far in 2021 and yield 3.6%.
Additionally, given the taxation treaty between Canada and Singapore (Brookfield Infrastructure is domiciled in Canada), dividends paid out to shareholders here are only taxed at 15% instead of the typical 30%.
Stay calm and buy long-term stocks
There will always be “noise” out there. Evergrande. Inflation. Interest rates. However, that shouldn’t stop us from investing for the long term.
The best way to filter out the distractions is to buy quality firms that continue to win. With ASML, Accenture, Zscaler, Infosys and Brookfield Infrastructure Partners, investors have five companies that possess solid long-term prospects.
Disclaimer: ProsperUs Head of Content & Investment Lead Tim Phillips owns shares in Brookfield Infrastructure Partners LP.
