As volatility looks to persist into the year’s end, I think it’s a wise move to consider checking out some of the (soon-to-be) marked-down merchandise for names worth holding for the next couple of decades. Undoubtedly, volatility doesn’t have to be a foe of the investor, provided one can see through the near-term noise to the long-term fundamentals.
Of course, you’re going to need the proper investment horizon (at least five years, but longer is better). If your investment horizon is measured in decades instead of months, I believe that volatility and the odd market correction are more of a friend to investors than anything else, even for those who have to deal with losses. At the end of the day, if you’ve got dry powder or a steady paycheque coming in, you should hope for the market deals to be more abundant than rare.
Through most of the year, I’m sure you’ve heard how expensive the market (most notably the S&P 500) has become and how painful the next downturn could be as a result. Add the AI bubble chatter into the equation, and it has become a bit tougher to be an investor with anything less than a three-year horizon.
If you’ve got a 20-plus investment horizon, though, the latest jitters shouldn’t just faze you; they should excite you at the possibility of bargains that could come if a tech-driven downturn were to drag down much of the markets. In this piece, we’ll look at three names worth buying and holding for the extremely long term.
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CP Rail
CP Rail (TSX: CP) recently broke out to hit a new all-time high, thanks to a broader recovery across the rails. The $117 billion transport juggernaut has been more of a freight train that cannot be stopped since October.
Now up more than 11% in a month, questions linger as to whether CP Rail’s comeback moment could have legs to take it higher. The latest quarterly earnings were seriously impressive, with robust growth and surging carloads.
With potential to pad margins further as fuel prices hopefully look to move lower while the firm continues to make the most of its Kansas City Southern assets (think nearshoring tailwinds), I don’t find the somewhat frothy 31.1 times trailing price-to-earnings (P/E) multiple to be all that off-putting, given its recent momentum and, perhaps more importantly, its rock-solid moat that’s likely to last for the next two decades and beyond.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) shares are up a modest 9% so far this year, but with shares fresh off a correction (still down 12%), investors might wish to reconsider the name as the firm looks to start wheeling and dealing again.
With the Zabka Group and Cumberland Farms acquisitions in play, I do think that investors might be underestimating the synergies to be had if all goes right with the proposed deals. Not to mention how the moves stand to further solidify the firm’s international portfolio. In my view, such mid-sized deals could be an even better way to power earnings than one juggernaut deal.
Sure, 7-Eleven might be off the table for now, but I think there are less-risky opportunities rich with synergies that Couche-Tard could unlock over the medium term. With one of the smartest, risk-averse M&A strategies in retail, I’d continue to stick by the name as the growth-by-acquisition story looks to pay bigger dividends under the reign of its outstanding CEO, Alex Miller, a man who’s perfect to take Couche-Tard to new heights.
In terms of predictable value, Couche-Tard stock is hard to beat, at least in my view.
