With volatility on the horizon, investors can discover the best undervalued long-term stocks to buy. These companies are often considered ‘boring’ and possess strong industry fundamentals.
Identifying these stocks requires looking beyond the hype and euphoria and focusing on companies with good financial health, competitive advantages and industry tailwinds. The risk to reward for these companies is generally much greater and can be a safer alternative to tech stocks. While there is no guaranteed formula for success, research and patience can help build a resilient portfolio for the long term.
Now, let’s uncover the three best undervalued long-term stocks to buy in March.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) stands in the top spot for the best undervalued long-term stocks to buy. Since the company’s founding in 1925, Caterpillar has grown into the largest construction equipment manufacturer in the world.
Its iconic bright yellow branded machines are common on nearly any large-scale construction project. This can be from building towering skyscrapers, condominiums or paving out highways. Beyond their signature construction equipment, Caterpillar sells diesel-electric locomotives and diesel and natural gas engines. They’re well-positioned to benefit from the boost in infrastructure investment.
The 2023 fiscal year was remarkable, as the company grew across nearly every metric. Revenue increased 13% YOY to $67.1 billion, and EPS swelled 59% YOY to $20.12 per share. Furthermore, the company saw record FCF of $10.57 billion. Its products and durability make it a staple in the industry, with growth set to accelerate over the next decade.
Canadian National Railway (CNI)
Canadian National Railway (NYSE:CNI) is a titan in the transportation industry and one of the world’s largest railway companies. With over 20,000 miles of track covering three coasts, CN transports more than $250 billion annually.
CN roots trace back to the early 20th century when the Canadian government consolidated several struggling railways. This strategic move unified an efficient transportation network across the country. The company later grew through acquisitions and now has a major presence in the United States. Investors can have peace of mind with the company’s low volatility and healthy profit margins.
In FY23, revenue decreased 2% YOY to $16.8 billion. Although top-line growth slowed in the year, EPS increased 15% YOY to $8.53 per share. The macroeconomic environment created several challenges for the railroad industry in 2023. However, CN remained resilient, and management has guided 10-15% EPS growth over the 2024-2026 period.
Waste Management (WM)
Waste Management (NYSE:WM) stock is getting increased investor attention, and the future looks bright. Although the company saw modest growth in 2023, CEO James Fish is laying the groundwork to increase operating leverage.
Waste Management has been on a tear in the last year, and institutional investors are taking a closer look. Senior management has been working hard to cut costs and make strategic investments for their growing RNG portfolio. The company plans to invest $1.21 billion by 2026 for 20 new RNG facilities. This might just be the greatest catalyst in the last decade for the company to grow its top-line revenue.
Furthermore, income-oriented investors will find Waste Management’s dividend growth particularly appealing. They have grown their dividend for 21 consecutive years, and consistent dividend payouts are another added benefit. The company is forecasting annual FCF to be more than $400 million by 2027. With a focus on dividend and EPS growth, WM stock is one of the most compelling undervalued long-term stocks for investors seeking a well-rounded addition to their portfolio.
On the date of publication, Terel Miles 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.
