3 Safe Long-Term Stocks to Ride Out the Volatility

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  • Coca-Cola (KO): The iconic beverage maker managed to grow its free cash flow by 30% in 2021.
  • Intuitive Surgical (ISRG): Worldwide da Vinci procedures are increasing due to growth in general surgeries and overseas markets.
  • Mastercard (MA): A reliable fintech stock with a 46% profit margin and 124% return on equity.
Source: Shutterstock

Wall Street has been nervous in 2022. As a result, market participants are looking for long-term stocks to protect portfolio gains of recent years and prevent drawdowns now.

Academic research has looked at the concept of quality companies, which can be considered safe long-term stocks. Such businesses typically have a high return on equity (ROE), low debt, stable earnings and strong free cash flow. Members of the Dow Jones Industrial Average (DJIA) index usually top the list of such names chosen as long-term stocks.

Meanwhile, others on Wall Street highlight the importance of environmental, social, and governance (ESG) criteria, which can be “used for red flagging and to manage risk… Although ESG investing puts a strong emphasis on non-financial dimensions of corporate performance, in reality it provides a stock selection screen.” In other words, companies that emphasize ESG principles are likely to be quality long-term stocks.

With that information, here are three long-term stocks that could offer safe havens for conservative investors no matter what happens in 2022. They are high-quality names that boast leading market share, a reliable record of attractive returns, and a solid reputation with consumers and shareholders alike.

Safe Long-Term Stocks: Coca-Cola (KO)

coca-cola (KO) bottles and cans. coke is a blue-chip stocks

Source: Fotazdymak / Shutterstock.com

Our first stock, Coca-Cola (NYSE:KO) is one of the most prominent beverage companies worldwide. The company has a portfolio of roughly non-alcoholic 200 brands worldwide. Management also highlights it has a 14% market share in developed countries and a 6% share in developing countries.

Furthermore, the beverage maker announced its fourth quarter of fiscal year 2021 results on Feb. 10. Revenue grew 10% year-over-year (YOY) to $9.5 billion, while net income came in at $2.45 billion, or diluted earnings per share (EPS) of 56 cents. This is up 66% from $1.46 billion in the prior-year quarter. Meanwhile, cash and equivalents ended the year at $9.7 billion.

Due to closures at leisure facilities, Covid-19 meant disruption to the business. Yet, the company emerged from the pandemic as a leaner company. Its free cash flow increased 30% YOY to $11.3 billion. And for FY2022, the company is guiding for organic revenue growth between 7% and 8%.

Overall, KO stock is up almost 20% over the past year. It is also Dividend King stock that generates a 2.8% dividend yield. Also, shares are trading at 25.2 times forward earnings and 7 times trailing sales. And at present, the 12-month median price forecast for Coca-Cola stock stands at $68 per share. Thus, this is one of the top long-term stocks for investors to watch.

Intuitive Surgical (ISRG)

A sign with the Intuitive Surgical logo standing outside of a company office

Source: Sundry Photography / Shutterstock.com

The second long-term stock on our list is Intuitive Surgical (NASDAQ:ISRG). Most InvestorPlace.com readers would know that the firm dominates the robotic surgery market with its well-known “da Vinci Surgical System.”

This technology is vital because it helps surgeons perform minimally invasive surgeries with significant health and cost advantages over traditional open surgeries. In turn, the company boasts almost 80% market share in the robotic surgery market.

Intuitive announced Q4 2021 results on Jan. 20. During the period, revenue jumped 17% YOY to $1.55 billion. Also, non-GAAP net income came in at $477 million, or $1.30 per diluted share. This is an improvement from $434 million in the prior-year quarter. Lastly, the company ended the year with $8.6 billion in cash, equivalents, and investments.

Over the past two years, the pandemic has had a negative impact on the number of elective surgeries completed. And in recent months, we have seen a resurgence of Covid-19 numbers that have impacted procedures once again. However, the installed base of da Vinci systems grew 12% YOY to 6,730. And worldwide, da Vinci procedures increased around 19% YOY during the period.

Overall, the robotic surgery market enjoys low penetration worldwide despite its benefits. And Wall Street expects growth in overseas markets to increase in future years.

Looking back, ISRG stock is up 20% over the past year. However, it has declined almost 17% year-to-date (YTD). That said, shares command a premium at 60 times forward earnings and 19.4 times trailing sales. Meanwhile, the 12-month median price forecast for Intuitive stock stands at $340 per share.

Safe Long-Term Stocks: Mastercard (MA)

A close-up shot of Mastercard (MA) credit or debit cards.

Source: Alexander Yakimov / Shutterstock.com

The final long-term stock to own is Mastercard (NYSE:MA), or the second-largest payments processing company worldwide. Via its well-known credit card brands –MasterCard, Maestro and Cirrus — it facilitates transactions for consumers and institutions.

Mastercard released Q4 2021 results on Jan. 27. The firm said its revenue increased 27% YOY to $5.22 billion. Meanwhile, adjusted net income came in at $2.3 billion, or $2.35 per diluted share, up 41% from $1.6 billion in the prior-year quarter. Additionally, cash and equivalents ended the quarter at $7.4 billion.

Analysts point out that Mastercard could be a resilient stock in recessions, as it doesn’t extend credit directly to customers. Instead, the company generates revenue primarily from swipe fees from merchants and users.

For example, the total number of transactions Mastercard’s networks processed in the fourth quarter increased by 27% YOY. Meanwhile, the profit margin remained high at 46% due to Mastercard’s enormous scale and little overhead cost. Moreover, the company boasts a breathtaking 124% return on equity.

Collectively, MA stock is up about 1.8% so far in 2022 but returned 10.6% over the past month. Shares trade at 35 times forward earnings and 19.1 times trailing sales. Finally, the 12-month median price forecast for Mastercard stock stands at $433 per share.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

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