Long-term investing is the smartest approach to invest in the stock market as per many experienced investors. One of the greatest, Warren Buffet too agrees and followed the long-term investment part. The only key to long-term investing is to have patience and to invest and forget. This post will discuss some stocks that you might want to consider for your long-term investments in order to receive profitable returns at some point in the future.
Let’s take a look at the list of these stocks first –
|Name of the Stock||Market Capitalization|
|Tata Consultancy Services||151.33 Billion USD|
|Hindustan Unilever Limited||70.83 Billion USD|
|Infosys||78.93 Billion USD|
|Reliance Industries||195.67 Billion USD|
Before we discuss the favourite four mentioned above in a little more detail, we first need to have a general view of how can one identify a good stock to invest in for the long term.
How to select a stock?
The real power of compounding can only be realised when long-term investments are made. And to get it right, it is essential to identify the right stock to get the right and best results. Here are a few aspects that you must consider before investing in a stock –
The most important factor for any category of investment is the profitability of the company. How consistent the company has been in the past in giving profits. The companies have consistency in their profits along with a regular rise and development are rated among the top and are on the investment radar.
Companies that are at the top in their industry or are among the top in their category for a long time, are stable and have achieved a stage that is long to stay in the market. Such companies have huge market capitalizations, and can also be defined as too big to fail.
When you see a company constantly building on its foundations, bringing in new research and investing in them, walking along with the need of the market, these companies prove to be the top players of the future since they are aware of the constantly demanding market and keep changing themselves.
The performance of stock also depends on the overall performance of the sector the stock belongs to, and how the industry is doing not just in India but globally. So, keeping a check on the performance of the industry as a whole is also important and will give the investor an idea of the performance of a particular company too.
Now, we shall have a look at the stocks that can be good for your long term investment goals.
Best stocks for long-term investing
1. Tata Consultancy Services
The IT sector is clearly the ever-green sector of our economy. Given the constant advancements and support from the government, the sector has had and will continue to have a good time in the future too. When we mention TCS, we can also mean the most efficient company in the sector. TCS has been keeping up with the demands of the investors, with regular dividends, good work ethics, giving out returns and to its employees too.
On the quantitative parameter too, TCS has been rising in both revenue and profit aspects. The company has also been able to reduce its debt to an extent in the past few years. Continuing on the never-ending list of setting standards, TCS has also started to take steps to get into the AI market and figure out its potential, not to mention that they are already supplying software for such AI-based facilities and making a mark.
2. Hindustan Unilever Limited
Even if one does not know the name, which also means living under the rock, the person will have at least one product in their daily household pantry. The company has so many products and varieties that it has become almost impossible to avoid their products from entering our doors. We can safely say that the consumer goods industry is the industry that sustains life. The basic products we need from day to day are here. The industry has recently shown enormous growth in rural areas, where product demands are now rising. While in the urban area, the demand has never dropped.
Taking specifically HUL, the revenues of the company had a negligible effect on the sales of the company. The EPS of the company to has been on a rising spree since 2018, giving out consistency goals. Having almost no debt is also a clear indicator of the company’s healthy cash flows.
Infosys is the 2nd largest IT company after TCS. The company has successfully established itself in the consulting, tech and outsourcing businesses. They are also involved in next-generation digital services to enable clients to execute strategies for digital transformation. Having 57% of its revenue from digital services, they are also into AI-based analytics, big data, and IoT to modernize legacy tech systems and implement advanced cyber-security procedures.
Now that we have this stock in the list, it is obvious that the company satisfies the first criterion, which is consistency in profits. Infosys has been giving out profits since 2018, and the revenue to has been growing year by year, recommending that the company is in a healthy state. And continuing the record, the company is also debt free with the perfect current ratio of 2. Long-term investment in such companies is successful with time and patience.
4. Reliance Industries
The last company on the list today is Reliance, a name we can probably never forget and will carry on for many generations to come. A majority i.e, 57% of their revenue comes from the oil to chemicals segment under which they refine crude oil to extract transportation fuels, polymers and elastomers, intermediates and polyesters. The refining capacity they have is 1.4 Million per day. Other major segments they are into are Retail, giving 23% of the revenue and digital services with 11% of the revenue.
Their net profits have been rising for a long now, and have also shown consistency in their research and development, constantly trying to bring up new technologies and ideas to the stage. The PE Ratio of Reliance too has been rising for some years now, indicating a rising trend for the stock, which may make it a little overvalued, hence immediate buying or waiting for a low at the present shall be a good option to put in the money.
While choosing stocks for investment can be intimidating and time-consuming, and we understand your pain, this is a list of the top stocks that you can consider for your long-term investments to get the compounding to work for you. This is definitely not an exhaustive list. India has many stocks, and many of them are good, but these are the top-quality stocks that you can go for.