With the stock market in turmoil as economic uncertainty ramps up, long-term investors have an opportunity to pick up high-quality stocks at attractive prices. While there's no telling how much further the major indices will fall, there are plenty of great stocks worth buying right now. My top five stocks include Intel(NASDAQ: INTC), AT&T(NYSE: T), International Business Machines(NYSE: IBM), Berkshire Hathaway(NYSE: BRK.B), and Paycom(NYSE: PAYC).
1. Intel
With a new outsider CEO ready to shake things up, Intel finds itself at the start of another turnaround attempt. Layoffs and other cost cutting measures are likely as semiconductor veteran Lip-Bu Tan retools the company to better compete as both a foundry and products company.
The Intel 18A process node is now ready, although ramping to volume production will take time. One of Tan's key tasks as CEO is to find more foundry customers to make the immense amount of investments Intel has plowed into its manufacturing operations over the past few years pay off. Intel 18A features a new type of transistor and backside power delivery, and it could give Intel an advantage over Taiwan Semiconductor. Intel 18A is also critical for Intel's own product roadmap as it looks to regain market share from AMD.
With Intel stock trading at historically cheap levels relative to book value, all it would take is a bit of positive news to drive the stock higher.
2. AT&T
Telecom giant AT&T has consistently expanded its wireless and fiber customer base over the past few years. While a tough economic environment could hurt demand, AT&T is betting on bundling its wireless and fiber services together to keep customers around.
About 40% of AT&T's fiber customers also have AT&T's wireless service. These customers have lower churn and higher lifetime values than customers who don't bundle. In an industry that can at times be extremely promotional, with deals on new smartphones luring customers away, the fiber-wireless bundle should insulate AT&T to a degree.
AT&T expects to generate at least $16 billion in free cash flow in 2025, excluding any payments from DirecTV. Trading at about 12 times this free cash flow outlook, AT&T stock still looks attractive despite a recent rally. A solid dividend that yields more than 4% and the planned restart of share buybacks are icing on the cake.
3. International Business Machines
It's been a long road for IBM over the past decade. Caught flat-footed by the rise of cloud computing, the company has gone through a dramatic transformation. By shedding legacy businesses and focusing on two key growth areas, hybrid cloud computing and artificial intelligence, IBM has returned to sustainable and profitable growth.
IBM expects revenue growth to accelerate to at least 5% this year as the company's bets pay off. IBM has now booked more than $5 billion worth of generative AI-related business, fueled by its vast consulting arm, and its software segment posted 11% revenue growth in the fourth quarter of 2024. Pre-tax profit margin is expected to expand this year as IBM continues to shift toward high-value software.
IBM is planning to generate $13.5 billion in free cash flow for 2025. In 2024, the company produced the highest free cash flow margin in its history. Trading for about 17 times the free cash flow outlook and likely to be somewhat insulated from economic turmoil, IBM stock looks like a great buy.
4. Berkshire Hathaway
Berkshire Hathaway has a mountain of cash at its disposal at a time when economic uncertainty is rapidly rising, and it has Warren Buffett ready to deploy that cash as opportunities arise. Berkshire ended 2024 with an incredible $334 billion in cash and short-term investments, enough to fund multiple megadeals.
While many of Berkshire's businesses would suffer during an economic downturn, the company's cash-rich balance sheet provides a powerful backstop. For a company like Berkshire, economic crises are opportunities to make the kinds of investments that no one else is willing to make. This could mean acquiring companies outright, buying up discounted stocks, or striking other types of deals that ultimately pay off for Berkshire shareholders.
If the stock market enters bear market territory, Berkshire stock will almost certainly be dragged down with most other stocks. But for long-term investors able to handle the volatility, Berkshire is uniquely positioned to benefit from economic turmoil.
5. Paycom
Paycom stock has been hit hard over the past few years as the company pushed its automated payroll software solution. While this platform reduces costs for customers and delivers exceptional returns on investments, a side effect for Paycom was a reduction in other types of revenue. Paycom's growth slowed as a result, and the market gave the stock the cold shoulder.
Paycom's results are sensitive to hiring trends and the state of the economy, so its outlook calling for just 8% revenue growth in 2025 shouldn't be a surprise. The good news is that Paycom offers a strong value proposition with its automated payroll solution. As companies scramble to cut costs amid economic uncertainty, Paycom's solution should be an attractive proposition. Once economic conditions normalize, Paycom's growth could accelerate.
Paycom stock trades for around 25 times the average analyst estimate for 2025 adjusted earnings. The stock isn't nearly as cheap as it was in mid-2024, but that's still a reasonable price to pay for such a high-quality company. While Paycom stock will likely be volatile for the time being, now's a good time for long-term investors to take a look.
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Timothy Green has positions in AT&T, Berkshire Hathaway, Intel, International Business Machines, and Paycom Software. The Motley Fool has positions in and recommends Berkshire Hathaway, Intel, International Business Machines, Paycom Software, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short May 2025 $30 calls on Intel. The Motley Fool has a disclosure policy.
