Hershey, Ulta and Equity Residential are worth a long-term investment

As the Federal Reserve (Fed) announced potential interest rate cuts for this year, a discounted expectation for March is now being pushed back to May or June, according to the FedWatch tool from the CME Group Inc. NASDAQ: ECM. A growing level of uncertainty could push stock fundamentals to become the primary concern in selecting future investments.

Names that meet this criterion of bullish and solid fundamentals, those that are likely to form a solid foundation for wealth over the next decade, include familiar names like Hershey Company NYSE:HSYother consumer discretionary favorites such as Ulta Beauty Inc. NASDAQ:ULTA and even more abstract but strong macro games Residential equity NYSE: EQR.

What to look for

First, it is a commercial moat play, aiming for “brand loyalty” and “penetration”.

Hershey’s snacks aren’t limited to the famous chocolate. You can find them in virtually every supermarket and convenience store or on the shelves of thousands of households across the United States and around the world. If you gave someone $38.8 billion in cash (Hershey’s market cap), it would be nearly impossible to replicate what this brand has done.

Likewise, beauty products will likely never fall out of favor as Ulta’s consumer base will still have to keep up with skin care regardless of whether the economy is booming or declining.

According to its annual reports, this company has achieved a 90% retention rate of its membership base.

Last but not least, as long as people need a place to live and create demand for residential properties, real estate investment trusts (REITs) like Equity Residential benefit from this basic population need.

When companies reach these levels of status and constant demand

from a loyal customer base, financial data comes into force, especially starting from gross margin rates. If Ulta and Hershey have the penetration and brand loyalty they are believed to have, that should result in some pricing power and high margins.

Let’s get down to the numbers

In terms of gross margin, Ulta generates an undisputed rate of over 40% far outpacing the rest of the industry, proving that its pricing power is more than there. Hershey’s gross margin is equally impressive at 45%; Pricing power and brand loyalty allow management to aggressively invest in further growth.

Since real estate doesn’t operate on gross margins like retail companies do, you can look at the health of their cash flow generating properties as a shareholder. Because Equity Residential can afford to pay its shareholders a 4.5% annual dividend yield, analysts feel comfortable predicting a price target of $66.01 per share, or 10.1% upside compared to today’s prices.

These securities offer you the stability found in names held by Consumer Staples Select Sector SPDR Fund NYSEARCA: XLPwhile exposing you to growth in stocks within the SPDR fund for selected consumer discretionary sectors NYSEARCA: XLY.

Every dollar invested in Ulta and Hershey is expected to grow (over the long term) by an average of more than 20%.

While less aggressive as a growth tool, Equity Residential offers a stable dividend and exposure to appreciating real estate properties, which still works whether interest rates are high or low.

Before you consider Equity Residential, you’ll want to hear this.

MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Equity Residential wasn’t on the list.

While Equity Residential currently has a “Hold” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here