On September 12, Friday, the Nasdaq Composite ended the week on a high note, marking a week of closing record highs. Investors took indications of weakening jobs and controlled inflation to mean that the Federal Reserve will cut interest rates next week.
The tech-heavy Nasdaq went up by 0.44% on Friday. The broad market S&P 500 dropped just 0.05%. The blue-chip Dow Jones Industrial Average fell by 0.59%.
Looking at the full week, the three major averages showed gains. The S&P 500, which rose 1.6%, saw its best weekly performance since early August and its fifth positive week out of the last six. The Nasdaq secured its second winning week in a row as it advanced 2%. The Dow posted its first positive week in the last three after seeing a week-to-date climb of 1%.
Investors are now waiting for the Federal Reserve’s decision on September 17. Futures markets expect the Fed to cut interest rates by a quarter percentage point, according to the CME FedWatch tool.
With this background in mind, let’s take a look at the 10 unrivaled stocks of the next 3 years.
Our Methodology
To compile our list of the 10 unrivaled stocks of the next 3 years, we sifted through our own rankings, financial media reports, and various online resources. We used search phrases like “unrivaled stocks” and “wide moat stocks” to compile a list of more than 25 unrivaled stocks. Next, we focused on the top 10 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q2 2025 database of 983 elite hedge funds. Finally, the 10 unrivaled stocks of the next 3 years were ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2025.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Unrivaled Stocks of the Next 3 Years
10. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 91
Costco Wholesale Corporation (NASDAQ:COST) is one of the best unrivaled stocks of the next 3 years. On September 5, Truist Securities reaffirmed its Hold rating on Costco Wholesale Corporation (NASDAQ:COST) with a price target of $1,042. This decision came after the company reported strong sales in August.
In the US, Costco Wholesale Corporation (NASDAQ:COST) saw comparable sales rise by 6.7% in August, excluding the impacts from changes in gasoline prices and foreign exchange. This performance was a small improvement of 20 basis points compared to July. For the fourth fiscal quarter, US comparable sales increased by 6%.
Costco Wholesale Corporation (NASDAQ:COST) saw total sales rise by 6.9% in August, excluding fuel and foreign exchange effects. Net sales for the quarter reached $84.4 billion, up 8% year-over-year and in line with Truist’s estimates.
Truist Securities acknowledged Costco Wholesale Corporation’s (NASDAQ:COST) ability to attract value-conscious customers with competitive offerings. However, the firm remains on the sidelines because of valuation concerns as the stock trades at about 50 times the estimated earnings per share for calendar year 2025.
Costco Wholesale Corporation (NASDAQ:COST) is a global retailer that operates an international chain of membership warehouses, offering well-known brand products at prices much lower than regular wholesale or retail stores.
9. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 95
Johnson & Johnson (NYSE:JNJ) is one of the best unrivaled stocks of the next 3 years. On September 3, Wolfe Research increased the price target for Johnson & Johnson (NYSE:JNJ) from $175 to $195 and kept an Outperform rating.
Wolfe Research cited growing confidence in Johnson & Johnson’s (NYSE:JNJ) upcoming talc litigation outcome. This confidence led the firm to use lower weighted average cost of capital (WACC) assumptions in its discounted cash flow analysis.
The research firm pointed out some challenges for the pharmaceutical industry in 2025. These include sector-specific tariffs and Most-Favored-Nation prescription drug pricing, which aims to reduce prescription drug prices for Americans.
Despite these challenges, Wolfe Research has a positive outlook on Johnson & Johnson’s (NYSE:JNJ) growth prospects, especially from its Innovative Medicine division.
Johnson & Johnson (NYSE:JNJ) is an American multinational healthcare company that specializes in pharmaceuticals and medical technologies.
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