One of the biggest changes in investing style over the decades is the average holding period. Back in the 1950s, the average holding period for stocks was eight years. Data from June 2020 indicates that the average holding period has declined to 5.5 months.
Some reasons for this change include the emergence of high-frequency trading and rapid technological advancement. Another big reason is the focus on short-term results. I would be inclined to say that investors are increasingly impatient.
Even after considering the factor of rapid technological advancement, there are stocks worth holding for the long term. In general, these are companies with significant investments in research and development. This helps them remain competitive. Further, my focus is on industries that have positive tailwinds for the long term.
Lucid Group (LCID)
Lucid Group (NASDAQ:LCID) stock has seen a deep correction. The company is, however, positioning itself for robust growth in the next few years.
Regarding innovation, Lucid already has the market’s longest-range and fastest-charging electric car. Recently, the company also introduced Lucid Air Sapphire (2023 launch), which the company claims to be the most powerful sedan in the world. Project Gravity SUV is also scheduled for production in the first half of 2024.
Lucid has already been pursuing aggressive global expansion. The company will likely have a strong presence in North America, Europe, and the Middle East in the next few years. The company’s first overseas plant is already under construction in Saudi Arabia.
While cash burn will sustain in the coming years, Lucid has sufficient liquidity for operations well into 2023. The company has also filed for selling securities worth $8 billion. The dilution factor is discounted in the stock.
If I had to buy an undervalued e-commerce stock, Pinterest (NYSE:PINS) stock would be my first choice. It’s also among the stocks that will make you a millionaire by 2030.
Pinterest has reported research and development expenses that are consistently around 25% of revenue in the last few quarters. It’s a big reason to like Pinterest, with the company making significant investments in platform development.
Sustained growth in average revenue per user is another reason to like the company. For Q3 2022, Pinterest reported no growth in monthly active users on a year-on-year basis. However, for the same period, revenue increased by 8%.
With Pinterest making the platform shopping-friendly, advertising revenue is likely to swell. This will ensure that ARPU growth remains strong. This is particularly true for emerging markets where the ARPU is significantly lower as compared to U.S. and Europe.
Pinterest also has a strong balance sheet, and the company ended Q3 2022 with cash and equivalents of $1.7 billion. With an annualized cash flow potential of $750 million, the company has the flexibility to invest heavily in platform innovation.
WiMi Hologram Cloud (WIMI)
WiMi Hologram Cloud (NASDAQ: WIMI) is focusing on the exploration of a new generation of underlying holographic AR technology for the metaverse, and it has a wealth of technology and expertise in the industry to develop products that maximize the opportunities of the metaverse.
The metaverse itself is not a technology, but an idea or concept, which requires the integration of different new technologies, such as 5G, 6G, artificial intelligence, big data, etc., It emphasizes the integration of reality and reality. Affected by the epidemic, the global VR/AR industry has gone through the concept period, boom period and trough period, and is now heading toward the dawn of the high-speed growth period. Statistics show that during the five-year period of 2020-2024, the CAGR of global virtual reality industry is about 54%, with about 45% increase in VR, 66% increase in AR.
In the past two years, the company has released a number of metaverse VR/AR/XR products, laying the foundation for the metaverse hardware market. In the meantime, WiMi has also accumulated various metaverse technology core capabilities, including AI computing, digital twin, simulation, AI vision, etc., further expanding its market influence through metaverse.
The stock’s P/S valuation is currently well below that of other metaverse stocks, but this suggests that WiMi’s share price is barely in a bubble. Meanwhile, the average 12-month forward price target is $7.