The world economy faces challenges that could drag on well into next year. Troubles like high inflation and a lumpy post-pandemic recovery might even last longer. So near-term profit outlooks for many FTSE 100 shares remain highly uncertain.
A lack of clarity isn’t discouraging me from buying UK shares though. This is because I invest with a view to holding stocks for a minimum of 10 years. With the right strategy, I still have a good chance of making solid returns over this sort of timeframe, even if there are some bumps in the road.
With this in mind, here are two-blue chips I’d happily buy to hold for the next decade.
BAE Systems
Global weapons spending has snapped back to record levels. And there is no end in sight to the new arms race as suspicions over Chinese and Russian foreign policy in the West grow. It’s a backdrop that could make defence business BAE Systems (LSE:BA.) a top stock to buy right now.
The company is a top-tier supplier to major spenders Britain and the US. This is thanks to the scale, expertise, and the relationships it has built over many decades. Encouragingly, it’s also winning lots of business with fast-growing emerging markets in Asia.
As expected, BAE Systems — whose order book stands at a record £66.2bn — is taking action to capitalise on growing customer demand. Last month, it agreed to buy US-based space technology expert Ball Aerospace for $5.6bn. The firm is also setting up a unit in Ukraine to provide military support, it announced this week.
Hardware failure is a constant threat at defence companies that could significantly damage future sales. But BAE Systems’ strong track record on this front helps soothe any fears I have. I think earnings here could soar as global defence budgets march ever higher.
B&M European Value Retail
Budget retailers like B&M European Value Retail (LSE:BME) are thriving at the moment. Customers are flocking through their doors as the cost-of-living crisis forces people to search for bargains. Latest financials showed revenues at B&M rose 9.2% on a like-for-like basis between April and June.
But it would be a mistake to think that sales will cool considerably when economic conditions improve. This is a retailer I’m tipping to thrive for years to come.
The truth is that value retail has been growing rapidly since the 2008 financial crisis, as the rise of grocers Aldi and Lidl perfectly illustrates. The drive for value is now embedded in the minds of modern consumers, and revenues at B&M have more than tripled in the past eight years as a result.
The firm plans to continue expanding to maximise sales expansion in this favourable climate too. It hopes to add another 250 outlets to its store estate in the coming years, taking the total to 950.
A lack of online presence could see the FTSE firm miss out on customers as e-commerce becomes ever more popular. Yet I still expect profits to rise strongly as it invests in its stores and product ranges to tempt value hunters.
