When I’m searching for FTSE 100 stocks to buy — or indeed any UK share for that matter — I always search for companies I’d be comfortable to hold for a long time. This usually means I look for stocks to own for a minimum of 10 years.
Of course things don’t always go to plan. I don’t have a crystal ball and unexpected company-specific or industry problems can come out of the blue. However, by taking a long-term view, I aim to succeed by buying undervalued companies that could soar in value in the following years.
Could these FTSE 100 stocks help me make a pile of cash if I own them to 2032?
Tesco
As a possible investor, I think Tesco (LSE: TSCO) has a lot going for it. By some distance it sits atop the throne as the UK’s biggest food retailer. This is, of course, a highly-defensive industry — we need to eat whatever social, economic or political crisis comes along — which can therefore provide excellent earnings visibility. Finally, I believe Tesco has the best online operation of all the country’s major supermarkets, putting it in prime position to exploit the e-commerce boom.
Having said that, Tesco also faces some substantial risks to long-term profits. It faces a colossal battle to stop its customer base eroding as Aldi and Lidl rapidly expand and Amazon boosts its online grocery operation. Tesco already operates with wafer-thin margins and it only has limited scope to cut prices to see off the competition. It is also experiencing significant cost pressures that are affecting its ability to stock its shelves that could last for some time (it recently stopped selling Colgate products due to a rumoured pricing dispute). So I’m happy to pass on the supermarket giant right now.
Fresnillo
Fresnillo (LSE: FRE), on the other hand, is a FTSE 100 stock I’d buy to hold for the next decade. In fact I might consider buying the Mexican silver and gold miner to own indefinitely. As we saw in 2020 when Covid-19 exploded, economic crises can occur at the drop of a hat. Having exposure to safe-haven shares — for example those that produce precious metals — is a good way to protect oneself as broader financial markets sink. You may recall that Fresnillo’s share price soared in summer 2020 when gold values hit their record highs above $2,070 per ounce.
Fresnillo’s share price has sunk in recent weeks. In late January it advised that pandemic-related disruption and changes to labour laws would see the business miss its production targets in 2022. The possibility of further share-price-damaging output revisions are something that investors need to be prepared for.
Still, as someone who looks to the long term, I’m still thinking of buying Fresnillo shares. The business is the world’s biggest silver miner and operates some truly world-class assets. It is also investing heavily in exploration to find the next generation of money-spinning mines. Furthermore, I think the long-term price outlook for silver is strong as solar panel manufacturing takes off and its use in jewellery grows.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon, Fresnillo, and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This post was originally published on Motley Fool
