While several stocks under $50 to buy exist in the equities sector, which ones are worthwhile to hold onto forever? Identifying these picks in an unenviable task. However, given the worrying backdrop of the global economy, I’m going to lean heavily on high-quality names.
But what exactly does quality stocks under $50 to buy mean? Simply, these market ideas feature strong profitability metrics. For some folks, that may be return on equity. For others, it could mean return on assets or any number of traditional bottom-line gauges. The main point is these publicly traded companies carry a track record of dependable performances.
Therefore, you’re not going to find any “out there” speculative ideas on this list of stocks under $50 to buy. For that, you can check out my piece, “7 Stocks With the Best Chance of Creating a New Wave of Millionaires by 2030.” Here, we’re dealing with businesses and hard data points that you can trust.
So, without any more delay, here are stocks under $50 to buy and hold forever.
Cisco Systems (CSCO)
About as fun as watching paint dry, Cisco Systems (NASDAQ:CSCO) is not going to win any awards for the most titillating market idea in your portfolio. However, with so much excitement in the background – whether that be geopolitical flashpoints or crushing central bank policies – a little boredom brings positivity to the mix. Technology conglomerate Cisco delivers boredom in droves, and I mean this with great respect.
According to Gurufocus, CSCO stock represents a “modestly undervalued” investment. Currently, the company features a forward price-to-earnings (P/E) ratio of 11.2 times. In contrast, the hardware industry features a forward P/E of 13 times but that’s not the highlight for Cisco.
Rather, CSCO represents one of the stocks under $50 to buy and hold forever because of its tremendous quality. Gurufocus rates Cisco’s profitability as a 10 out of 10, and for good reason. First, its return on equity stands at 29%, ranking better than over 94% of its peers. Second, its net margin is 22.9%, superior to almost 95% of the competition.
Call it boring or pedestrian or whatever pejorative you want to use. It’s dependable, and that’s why it’s on this list of stocks under $50 to buy and hold forever.
United Microelectronics (UMC)
Founded as Taiwan’s first semiconductor firm, United Microelectronics (NYSE:UMC) features a rich heritage. At the same time, this heritage admittedly puts United Microelectronics in the geopolitical crosshairs. Since the coronavirus pandemic, global views about China went decisively negative and pretty much stayed there. High-profile visits to Taiwan did not help cool matters.
It’s having an impact on market sentiment as well. On a year-to-date basis, UMC hemorrhaged nearly 54% of market value. Further, fresh U.S. tech export restrictions to China cloud the broader narrative for semiconductors. However, if you can overlook these fundamental challenges, UMC offers a compelling idea among stocks under $50 to buy.
Per Gurufocus, UMC rates as “significantly undervalued.” Currently, the company features a forward P/E of 7 times. That would be ridiculous were it not for the geopolitical rumblings. But even with the saber rattling, it’s difficult to ignore United’s incredible quality.
Astute investors will appreciate the company’s return on equity of 26%, rated higher than nearly 84% of semiconductor peers. In addition, United carries a net margin of 28%, better than 90% of its peers.
Trex Company (TREX)
I’m not going to lie. I had never heard of Trex Company (NYSE:TREX) before starting my research on stocks under $50 to buy and hold forever. But I’m glad I came across the firm, which specializes in the manufacturing of wood-alternative composite decking, railing and other outdoor items made from recycled materials. The company should rate highly based on the responsible and sustainable governance investing ideology.
To be fair, TREX presents a speculative case for stocks under $50 to buy. Since the start of this year, the security plummeted 62%. Almost certainly, some of the red ink originated from the slowdown in the housing sector. Already, many regions are experiencing conspicuous price declines, implying a deflationary environment.
According to Gurufocus’s proprietary calculations, Trex Company rates as “significantly undervalued.” However, the reason for inclusion on this list of stocks under $50 to buy is high quality. The company’s return on equity stands at 37.5%, beating out over 97% of its peers.
If that wasn’t enough to trust Trex, look at its balance sheet. With a subterranean debt-to-equity ratio of 0.06 – the industry median is 0.46 – you can hold onto TREX for the long haul.
Simulations Plus (SLP)
Tied to the broader healthcare industry, Simulations Plus (NASDAQ:SLP) develops absorption, distribution, metabolism, excretion and toxicity modeling and simulation software for the pharmaceutical and biotechnology industries. In addition, it serves the industrial chemicals, cosmetics, food ingredients and herbicide sectors.
Because of its wide-ranging relevance, SLP performs very well among the stocks under $50 to buy on this list. While shares are technically down for the year, they’re only in the negative by less than 4%. In comparison, the benchmark S&P 500 index fell 25% during the same period.
According to Gurufocus, Simulations Plus features a “modestly undervalued” business based on its proprietary metrics. Of course, the main takeaway for SLP stock centers on its high quality. For instance, its return on assets ratio stands at 6.5%, ranking better than nearly 75% of the competition. In addition, the company enjoys a net margin of 22.7%, better than over 92% of its peers.
LeMaitre Vascular (LMAT)
An American medical device company, LeMaitre Vascular (NASDAQ:LMAT) provides devices, implants and human tissue cryopreservation services. LeMaitre Vascular targets surgeons, who leverage said devices and services to treat vascular conditions.
Similar to Simulations Plus above, LMAT also finds itself below parity for the year. However, it’s only in red ink to the tune of 7%. Given the broader circumstances, that’s a win in most people’s books.
According to Gurufocus, LeMaitre Vascular features a “fairly valued” business. Therefore, speculators might not get the boost inherent in other discounted stocks under $50 to buy. That said, LeMaitre enjoys a high-quality income statement as it pertains to the bottom line. For instance, the company’s return on equity pings at 9.2%, ranking better than nearly 67% of the competition.
What’s more, LMAT enjoys strong revenue trajectories as well. Take a look at its three-year book growth rate of 20.4%, ranking higher than over 67% of its peers. Finally, LeMaitre enjoys significant strengths in the balance sheet, making it one of the stocks under $50 to buy.
Fastenal (FAST)
Based in Winona, Minnesota, Fastenal (NASDAQ:FAST) represents the largest fastener distributor in North America. By fasteners, we’re talking about mundane parts like nuts and bolts, all the way up to anchors and automotive components.
Despite its utilitarian profile, Fastenal hasn’t enjoyed much success in the open market this year. Since the January opener, FAST stock slipped 25%. That’s almost identical to the loss of the major equities index. However, it’s also an opportunity for contrarian investors for stocks under $50 to buy.
I say that because of its excellent profitability profile. Fastenal carries a return on equity of nearly 34%, ranked better than 91% of the competition. Also, its return on assets is almost 24%, outpacing 96% of its peers.
In addition, Fastenal features solid growth, particularly its 9.5% three-year book growth rate. In comparison, the industry median metric is 5.45%. Finally, the company enjoys a robust balance sheet, featuring an equity-to-asset ratio of 0.69 times. In comparison, the industrial distribution industry carries a median stat of 0.48 times.
Pfizer (PFE)
A world-famous pharmaceutical firm, Pfizer (NYSE:PFE) added to its reputation by helping forward a Covid-19 vaccine. Not only that, the company utilized a messenger-RNA-based approach, reflecting a groundbreaking innovation in medical science. Moving forward, Pfizer should be able to leverage this acumen into even more significant vaccines and therapeutics.
Unfortunately, Wall Street doesn’t see it that way. Since the start of the year, PFE has fallen a staggering 25%. Nevertheless, contrarians should consider PFE one of the best stocks under $50 to buy. Fundamentally, the science is significant. Financially, prospective investors will receive a solid deal.
According to Gurufocus, Pfizer rates as “significantly undervalued.” However, the spotlight centers on the bottom line. Primarily, the pharma carries a return on equity of over 37%. This ranks better than nearly 97% of its peers. As well, the company has a net margin of 29%, better than 94% of the competition.
If that wasn’t enough, on the top line, Pfizer enjoys a three-year revenue growth rate of 27.8%. In comparison, the industry median metric is only 5.5%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.