[Editor’s note: “9 Stocks That Every 20-Year-Old Should Buy” was previously published in October 2019. It has since been updated to include the most relevant information available.]
The market’s catastrophic crash this week has many biting their nails wondering whether we’re finally seeing the end of the decade-long bull market. Seeing the Dow Jones Industrial Average and the S&P 500 tailspin is unsettling. But if you’re in your twenties you should be applauding a market correction.
With 30 years of growth in front of them, 20-somethings can ride out turbulence that many others can’t afford to. But that doesn’t mean you should be cavalier about which stocks to buy.
A balanced portfolio is the key to long-term investing. While it pays to take a risk here and there, the building blocks of a strong retirement portfolio are tried-and-true companies whose businesses are solid enough to weather any storm. The best stocks to buy and hold for the long run are those with low debt, a wide moat and healthy cash flow.
While 20-somethings shouldn’t be intensely focused on income stocks, seeking out juicy dividends is a good way to ride out choppy waters.
Here’s a look at 10 stocks 20-somethings should be considering in today’s market.
Stocks to Buy: Walmart (WMT)
If you grew up in the age of Amazon (NASDAQ:AMZN) it might seem counterintuitive to buy Walmart (NYSE:WMT). But Walmart’s ability to survive the retail apocalypse and thrive in its aftermath should give you confidence in its future.
The discount superstore is about to merge two of the most successful strategies to become a powerful, and dangerous, hybrid retailer. People love the convenience of shopping with Amazon — fast and free shipping, streaming perks, free returns. Walmart has got a lot of those perks covered now that the firm has built out its e-commerce presence.
Now Walmart is taking a page out of Costco’s (NASDAQ:COST) book with a new round of perks that will keep customers shopping at its physical stores as well. Walmart is reportedly preparing to roll out Walmart+, a membership that could include everything from discounted prescriptions to low-priced fuel at Walmart gas stations.
The bottom line is that Walmart’s ability to evolve and leverage its size makes it a stock worth holding onto for the long haul.
CVS Health (CVS)
Another stock that’s worth getting your hands on early is CVS Health (NYSE:CVS). The firm has been under a dark cloud even before the market started tumbling because of the upcoming presidential elections.
Not only could CVS actually benefit from worries about the coronavirus from China as more and more people rush in to pick up medical supplies, but the firm looks poised for impressive growth in the years ahead.
Now that its Aetna acquisition is complete, CVS is a one-stop shop for all things healthcare. It’s a retail pharmacy, a walk-in health clinic, a pharmacy benefits manager and a healthcare insurer. CVS is no doubt going to capitalize on the fact that it can serve its customers at every point in their healthcare experience.
Not only that, but CVS is in a unique position to survive even if a progressive candidate takes office. There has been a lot of focus on lowering healthcare costs this election cycle, and CVS is in a great position to do just that. Its control over so many levers within the healthcare system means CVS’ setup will allow the firm to work with lawmakers instead of against them.
Waste Management (WM)
When it comes to investing, boring is often best and that’s the case with Waste Management (NYSE:WM). The company owns and operates landfills and waste collection vehicles which it uses to carry out contracts with local governments. As the firm owns the landfills around the country, there’s not a ton of customer turnover which results in a fairly predictable revenue stream.
Plus, although there has been a shift toward reducing the amount of waste the public produces, garbage isn’t going away anytime soon. People will be in need of waste collection for the foreseeable future and Waste Management will be there to deal with it. That’s what makes Waste Management a great building block for a long-term portfolio.
Wells Fargo (WFC)
The best part of being a 20-something is the vast expanse of time in front of you. That’s true from an investment standpoint, which is why I think Wells Fargo (NYSE:WFC) is the perfect pick for a long-term investment in the financial sector. Wells Fargo stock has been down in the dumps ever since the firm’s account scandal came to light back in 2013.
Last week, the bank came one step closer to putting the ordeal firmly in the rear-view mirror after agreeing to pay $3 billion in damages. On top of that the firm has replaced its CEO and several board members and completely overhauled its employee compensation structure.
As the bank emerges from this scandal, it could become a great value play. Not only that, but Wells Fargo offers a dividend yield just shy of 5%.
Another stock I believe should be in every 20-something’s portfolio is telecom giant AT&T (NYSE:T). The firm has been in the midst of a turnaround effort over the past two years and finally turned a corner during the second half of 2019. Now, as 5G becomes a reality and the streaming space matures, AT&T looks poised to be a winner.
Now that Time Warner is firmly under the AT&T umbrella, the firm is gearing up to roll out a powerful streaming service packed with an impressive portfolio of content.
AT&T’s business offers a unique position as the streaming space changes shape over the next few years. As both a media company and a telecom, AT&T will be able to offer unparalleled bundles to its customers, creating an ecosystem that’s both profitable and compelling. For now, it’s the only place you can find an internet connection, a streaming service and a data plan under the same roof.
When it comes to solid, long-term buys with low debt and healthy cash flow, Apple (NASDAQ:AAPL) is about as perfect as they come. The firm’s cash-rich position means investors can hold on to shares with confidence as the company has the financial power to get through pretty much anything. Not only that, but a strong cash position during a period of economic hardship means Apple has the potential to buy up some of its less-prepared peers.
While Apple has warned that the coronavirus will dent its results, that will be a case of short-term pain. Management confirmed that the company’s issues are supply-chain related. Demand for the firm’s devices is still strong, which means once the coronavirus has been contained and factories are up and running again, Apple can get back to business.
Apple is probably the best stock to buy and forget about because of its fiercely loyal customers and its immaculate balance sheet. For that reason, it should be one of the first places 20-somethings look when starting to build up an investment portfolio.
Another investment that’s been hammered in the wake of the coronavirus is specialty coffee chain Starbucks (NASDAQ:SBUX). Some of Starbucks’ future growth depends on China, so naturally when the nation ground to a halt on coronavirus worries, the firm struggled. CEO Kevin Johnson said as much during Starbucks’ first-quarter results.
But even without China in the picture, Starbucks looks like a good long-term bet. Starbucks’ unparalleled loyalty scheme on a successful mobile app shows management’s commitment to keeping the chain from falling out of favor among its customers. The firm navigated through the public’s shift away from fast food by beefing up its food offerings and creating customized experiences at Reserve Roastery locations. Management’s ability to pivot quickly is what makes Starbucks a good long-term pick.
Plus, the firm is relatively shareholder-friendly. Not only is Starbucks sporting a respectable 2.1% dividend yield, but management has historically rewarded shareholders with buyback programs.
Walt Disney (DIS)
Walt Disney (NYSE:DIS) is facing headwind after headwind right now as the coronavirus forces the firm to shutter some of its theme parks and CEO Bob Iger announced his decision to step down. However, none of those events impact the long-term story for Disney stock, something investors can capitalize on now that the share price has dipped below $120.
Last year the firm rolled out Disney+, a new streaming service that by all accounts was bound to take the industry by storm. At this point in the coronavirus slide, Disney has more than given up those gains, despite the streaming service being successful over the past few months.
Of course, Disney still has struggles ahead — especially if the coronavirus continues to cause disruptions among its theme parks and cruise ships. But if you’ve got a long-term timeline, this is probably the only time you’ll see blue-chip Disney stock selling this low.
Berkshire Hathaway (BRK.A, BRK.B)
Millennials have missed most of famed Warren Buffett’s successful career as an investor, but they have the benefit of seeing in a new era for his holding company, Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B). Buffett’s infamous patience and restraint have made Berkshire Hathaway one of the best blue-chip stocks to hold on to.
What’s more, Buffett was holding on to a war chest of cash in the absence of great deals on Wall Street. That $128 billion is going to go a lot further now that the market is falling. Plus, as one of Buffett’s investment strategies is to pick companies with cash-rich balance sheets, his portfolio is likely to fare better than some of his peers if we see a full-scale market meltdown in the coming months.
At 89 years old, Buffett will inevitably step down at some point over the next decade. He hasn’t named a successor just yet, but in his annual letter he confirmed that the firm is prepared for his absence. In the coming years, Buffett said he plans to make some of his top executives more visible, likely in an effort to allow the public to warm to his successor.
The building blocks of wealth are in slow, steady investments that appreciate over time. But in your 20’s there’s room for risk and that’s why millennials should consider investing in China despite the chaos the coronavirus has caused.
With that in mind, I believe choosing one of the safer Chinese companies is risk enough at this point in time, so Alibaba (NYSE:BABA) is my pick. The Chinese e-commerce giant has a lot going for itself including a top spot in China’s retail market and a growing cloud business.
Of course, the firm will likely suffer in the wake of the coronavirus, but likely less than some of its peers as e-commerce will be one of the least-impacted industries. Betting on China now is risky as its unclear exactly how long the coronavirus will hang over the nation’s economy. However, if you’ve got a long timeline, it’s worth considering.
Laura Hoy has a Finance degree from Duquesne University and has been writing about financial markets for the past 8 years. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN. As of this writing, Laura Hoy was long DIS, SBUX, AAPL, T and CVS.