Predicting the performance of a company in the coming year will be very difficult. Finding companies that can thrive in 50 years is a completely different level of challenge, but the scale of these returns is actually beneficial to long-term investors. Success in this area usually involves identifying companies with unique competitive advantages, which will enable them to adapt to trends and seize new opportunities emerging along the way.
With our focus on ultra-long-term investments, we asked three Motley Fool investors to identify a company that can pave the way for sustained growth and steady returns. This is why they think of Cirrus Logic (NASDAQ: CRUS), UBS (NYSE: UBS), NVIDIA (Nasdaq: NVDA)
Top 3 Stocks To Invest In Right Now: Cirrus Logic (Nasdaq: CRUS)
The high-quality audio processor maker won the Apple (NASDAQ:AAPL) business several years ago. So far, Apple devices from the iPod and iPhone to high-end Macbooks have built-in Cirrus Logic audio chips. In recent years, this relationship has included Cirrus’ wireless audio controller in both the device and EarPods.
We just say that Apple’s order is very good for Cirrus Logic’s income statement. Cupertino accounted for 79% of Cirrus Logic’s top line sales in fiscal 2017, and this ratio has been on an upward trend for many years. Samsung, the second revenue contributor, accounted for 15% of Cirrus’s sales in the past three years.
So Cirrus Logic can mark up when Apple is soaring, but it will also be affected when this huge customer faces headwinds. This is the current situation, as Cupertino barely cut Wall Street’s first-quarter target and provided timid guidelines for the second quarter. On the second day, the circulation of Apple’s shares decreased by 4%, but Cirrus investors plunged 8%. Today, Apple’s stock has risen 4% so far, while Cirrus shares fell 24% in 2018.
In fact, Cirrus’s business has a lot to do with Apple’s business, so the ups and downs of Cupertino are more acute at Cirrus’ headquarters in Austin, Texas. However, the temporary lack of rapid growth will not bring immediate fortunes to audio chip suppliers, because it can be canceled on the order of apples in the past.
The company can look back at $1.6 billion in revenue sources and generate $ 188 million in free cash flow. This is a healthy business with no long-term debt and nearly $230 million in cash reserves. However, the trading price of Cirrus stock is only 11 times earnings or 8 times free cash flow – both are far lower than Apple itself, there are many other valuation indicators.
Cirrus Logic’s stock is not so cheap. Help you a favor and see if you can buy a few stocks at these low prices.
Top 3 Stocks To Invest In Right Now: UBS (NYSE: UBS)
How high is the “high yield”? The average dividend payout of the S&P 500 is almost twice that? Because if so, UBS AG may be the stock you are looking for.
UBS paid a dividend rate of 3.9%, which seems quite high to me because S&P’s average stock only pays 2%. It is undeniable that UBS now does not seem to have to pay so much in the dividend check because “3.9%” is 122% more than UBS actually earned last year. But that is the case – that’s why I think UBS stocks may be worth a look, despite their high payout ratios and similar P/E ratios (currently 61 times earnings).
Last year, UBS’s profits were hit by one-half of the $1.2 billion restructuring fee and the $4.2 billion income tax bill. However, this tax is much more than any payment made by UBS over the past five years. In fact, UBS’s total income over the past five years has exceeded this figure. Therefore, last year’s taxation may seem to be a one-time event, mainly related to the impact of the US tax reform, and is unlikely to repeat itself in the coming years. Looking ahead, I think we are likely to see UBS’s annual profits approaching its US$3.2 billion in 2016, or even US$6.2 billion in 2015, instead of US$1.1 billion last year.
With more than 150 years of history, UBS is a time-tested bank stock and continues to pay you dividends.
Top 3 Stocks To Invest In Right Now: NVIDIA (NASDAQ:NVDA)
Imagine your daughter or son 20 years later chatting with you in the beach house, overlooking the gorgeous white sand beaches with your children – your grandchildren – splashing in the crystal clear waters. Your adult child tells you how much your children like their new pediatrician. Here is the kicker: You are not in the beach house, but in the virtual reality world, and your fully self-driving car lets you visit your child. The pediatrician is a robot.
Too far-fetched? Maybe, but maybe not. If so, then if you buy NVIDIA stock, your adult offspring may boast about you. The company is in a technology center that will make the future possible.
NVIDIA’s graphics processing unit (GPU) supports the world’s most popular video game applications, making it the perfect choice for virtual reality. The company’s GPU is also well suited for artificial intelligence (AI) applications. NVIDIA is a key leader and innovator in auto-driving automotive technology.
Leading the way in several extremely important technology trends, NVIDIA’s stock has soared nearly 900% over the past three years. I expect NVIDIA will remain an important player in these areas for a long time to come. In the long run, stocks should have a lot of room to rise – even if the future does not become fully realized as I think.