3 Quality Blue Chips To Buy And Hold Forever: HSBC Holdings plc, BAE Systems plc & British American Tobacco plc

HSBC Holdings plc (LON: HSBA), BAE Systems plc (LON: BA) and British American Tobacco plc (LON: BATS): 3 stocks with strong long-term prospects

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

bluechips

Most investors look to buy low and sell high. However, a few (Warren Buffett included) look to buy low and then hold for a very long time. In fact, Buffett rarely sells an investment unless there is a potential problem on the horizon – even if he’s in a considerable profit. With this in mind, here are three top-quality blue chips that could have very strong long-term futures. As such, they may be worth buying now and holding forever.

HSBC

With the banking sector going through a challenging period and sentiment remaining weak, now seems to be an opportune moment to buy shares in HSBC (LSE: HSBA) (NYSE: HSBC.US). That’s because the bank currently trades on a relatively attractive price to earnings (P/E) ratio of 12.1, which is well below the FTSE 100’s P/E of 13.8.

However, despite its low valuation, HSBC has huge potential. That’s because it is well placed to benefit from the switch from a capital expenditure-led economy to a consumer-led economy in China, with demand for new loans and credit set to be buoyant over the long term. Furthermore, HSBC rode out the credit crunch better than most banks and so, looking ahead, could prove to have a relatively strong and reliable earnings profile moving forward.

BAE Systems

With savage defence cuts taking place across the developed world, it’s little wonder that BAE Systems’ (LSE: BA) (NASDAQOTH: BAESY.US) earnings are due to fall by 11% this year. Indeed, the effects of US sequestration are having a negative impact on the entire defence sector.

However, this means that right now could prove to be a great time to buy shares in BAE. That’s because it currently trades on a P/E of just 12 and yields a very impressive 4.6%. Furthermore, defence remains a key industry and spending item for all developed nations. While the current austerity measures in many developed countries are hurting the bottom lines of defence stocks such as BAE, in the long run demand for their products is likely to remain high. This means that, while the short term may prove to be a disappointment, BAE could turn out to be a highly profitable investment in the long run.

British American Tobacco

Although the popularity of smoking seems to be in terminal decline, e-cigarettes could prove to be a high-growth area for tobacco stocks such as British American Tobacco (LSE: BATS). Indeed, the industry is estimated to be worth well over $1 billion and have the potential to grow at a rapid rate in future years.

As an early entrant to the market, British American Tobacco looks set to benefit from the popularity of e-cigarettes. Its product, Vype, has been on the market for over a year and is already building customer loyalty and positioning itself as a major brand within the industry. With shares offering a yield of 4.1% and vast long term potential via e-cigarettes, British American Tobacco could prove to be a stunning long term play.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of BAE Systems, British American Tobacco and HSBC Holdings. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Here’s how a Stocks and Shares ISA and Lifetime ISA could supercharge my wealth!

Individual Savings Accounts (ISAs) can help UK share investors take their earnings to the next level. And their importance is…

Read more »

A person holding onto a fan of twenty pound notes
Investing Articles

A high-yield dividend ETF and an investment trust to consider this November!

Investors wanting to boost their passive income could benefit from investigating these high-yield funds and trusts, says Royston Wild.

Read more »

Investing Articles

2 of my favourite, cheap FTSE 100 growth shares this November!

These FTSE 100 growth shares could be great long-term picks to consider, reckons Royston Wild. At current prices he thinks…

Read more »

Investing Articles

Up 26%, can the BT share price really push higher still?

The BT share price has surged on several catalysts in 2024, but there’s evidence to suggest that the stock could…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

What are the best dividend shares to buy right now?

As shares in B&M European Value Retail have fallen, the dividend yield has reached a 10-year high. Should investors be…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

My favourite FTSE 100 passive income stock that keeps the Christmas coffers full

The holiday season is expensive and can leave many consumers struggling to make ends meet. Here’s how I use a…

Read more »

Investing Articles

The latest growth forecasts suggest the Glencore share price will hit 555p!

Harvey Jones has been disappointed by the performance of the Glencore share price since he bought the commodity stock last…

Read more »

Dividend Shares

A closer look at the 11% dividend yield forecast for Phoenix Group shares

Phoenix Group shares have one of the highest dividend yields in the FTSE 100 index today. Could this be a…

Read more »