In this article, we discuss the 11 best long-term stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Long-Term Stocks To Buy Now.
Soaring valuations and the influx of retail investors has altered overall market dynamics in favor of growth stocks in recent years. With value investing pushed to the periphery, volatility has increased. According to Rich Repetto, a stock trading volume expert at Piper Sandler, trading values are registering a consistent, unprecedented increase. An analysis by Repetto reveals that at the beginning of this year, trading volumes stood at around 14.7 billion, up sharply from 10.9 billion in 2020 and 7 billion in 2019.
With the United States economy slowing down after a record 6.7% annualized GDP growth rate in the second quarter and rising fears of inflation due to sustained supply chain issues, investors should prepare their portfolios for the months ahead by focusing on stable investments that can provide them with handsome returns in the long run. Some of the best long-term stocks to buy now include Visa Inc. (NYSE:V), Salesforce.com, Inc. (NYSE:CRM), and Sea Limited (NYSE:SE), among others discussed in detail below.
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Our Methodology
Here is our list of the 11 best long-term stocks to buy now. These were picked based on their pricing power, basic business fundamentals, and overall strength of the business in a fluctuating market.
The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Best Long-Term Stocks To Buy Now
11. Verastem, Inc. (NASDAQ:VSTM)
Number of Hedge Fund Holders: 21
Verastem, Inc. (NASDAQ:VSTM) is a biotech stock that has recently received positive coverage from analysts. In May, BTIG analyst Robert Hazlett upgraded the stock to Buy from Neutral with a price target of $8. In July, Alliance Global Partners initiated coverage of the stock with a Buy rating and a price target of $6. Analysts at both these investment advisories touted the positive data from the drug pipeline of the firm as the prime reason behind the bullish outlook.
Verastem, Inc. (NASDAQ:VSTM) develops and markets medicines to enhance the life of cancer patients. It has received Breakthrough Therapy designation for one product from regulatory bodies in the US and posted positive topline results from another recently.
At the end of the second quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $241 million in Verastem, Inc. (NASDAQ:VSTM), up from 12 in the preceding quarter worth $129 million.
Just like Visa Inc. (NYSE:V), Salesforce.com, Inc. (NYSE:CRM), and Sea Limited (NYSE:SE), Verastem, Inc. (NASDAQ:VSTM) is one of the stocks that elite investors are buying.
10. Teladoc Health, Inc. (NYSE:TDOC)
Number of Hedge Fund Holders: 43
Teladoc Health, Inc. (NYSE:TDOC) provides virtual healthcare services. The company was one of the big winners during the pandemic as strict social distancing measures increased interest around the business model of the company. However, the performance of the stock in the post-pandemic economy has surprised analysts. The company recently posted earnings for the third quarter, beating estimates on earnings per share by $0.13 and on revenue by $4.8 million.
Virtual health services have increased in importance with the spread of high-speed internet and the ease of use for both patients and doctors. Teladoc Health, Inc. (NYSE:TDOC), one of the leading brands in this market segment, will benefit from this emerging trend in the long term.
At the end of the second quarter of 2021, 43 hedge funds in the database of Insider Monkey held stakes worth $3.5 billion in Teladoc Health, Inc. (NYSE:TDOC), up from 42 in the previous quarter worth $3.3 billion.
In its Q4 2020 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Teladoc Health, Inc. (NYSE:TDOC) was one of them. Here is what the fund said:
“Teladoc Health offers remote physician access to patients at home. After experiencing incredible levels of growth throughout the early stages of the pandemic as its unique value proposition rose to the forefront of the healthcare industry, the firm’s shares cooled off a bit as optimistic vaccine data slightly curtailed investor expectations for the firm’s future growth potential. We sold the stock.”
9. Etsy, Inc. (NASDAQ:ETSY)
Number of Hedge Fund Holders: 47
BTIG, Loop Capital, and Wedbush have all raised their price targets on Etsy, Inc. (NASDAQ:ETSY) stock recently. Analysts cite attractive valuation and revenue growth estimates as some of the reasons behind the positive coverage of the stock. Internet retailers like Etsy have also been backed to benefit from supply chain issues as the prices of products rise and holiday season approaches.
Despite tough competition from the likes of Amazon and Walmart, Etsy, Inc. (NASDAQ:ETSY) has managed to carve a name for itself in the ecommerce market while maintaining margins. As valuation concerns hit other internet firms, the stock looks more attractive for the long term.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Etsy, Inc. (NASDAQ:ETSY) with 1.7 million shares worth more than $362 million.
In its Q1 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Etsy, Inc. (NASDAQ:ETSY) was one of them. Here is what the fund said:
“Etsy continued to be a top contributor in the Portfolio during the first quarter. Etsy experienced record levels of demand in 2020. Throughout the beginning of this year, the business has continued to see accelerated growth trends. The company’s recently announced fourth quarter results provided numerous data points that highlight Etsy’s success in both broadening and deepening the relationship it has with buyers and sellers on its platform. In fact, Etsy now stands as the fourth largest e commerce site in the U.S. Repeat buyers have grown nearly 100% year-over-year, despite mask sales, which grew rapidly at the onset of the pandemic, shrinking to less than 5% of sales. We continue to believe Etsy remains in the early stages of growing out its platform. We remain confident in its ability to compound its value for shareholders at an attractive rate going forward.”
8. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 54
Costco Wholesale Corporation (NASDAQ:COST) is one of the most established businesses in the United States with an impressive dividend history and solid fundamentals. Despite competition from internet retailers, the level of trust that the company has developed with customers is hard to erode. Indeed, Charlie Munger, an elite investor who works closely with Warren Buffett, has said that he prefers Costco stock over Amazon in the long term. The company has also stepped up investments in online retail, hoping to catch competitors like Walmart and Amazon. In June, ecommerce comparable sales of the firm jumped 20%, continuing an impressive streak of internet sales increases of 57%, 20%, and 12% in the preceding three months.
Costco Wholesale Corporation (NASDAQ:COST) recently beat market expectations on earnings per share and revenue by $0.36 and $1.2 billion, respectively. It also declared a quarterly dividend of $0.79 per share in August, in line with previous. The forward yield was 0.71%.
At the end of the second quarter of 2021, 54 hedge funds in the database of Insider Monkey held stakes worth $4.3 billion in Costco Wholesale Corporation (NASDAQ:COST), down from 56 in the preceding quarter worth $4 billion.
In its Q1 2021 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and Costco Wholesale Corporation (NASDAQ:COST) was one of them. Here is what the fund said:
“We saw these dynamics at play in the Fund. Some of the worst-performing stocks this quarter were among our best performers in Q1 2020. Another example was the market’s reaction to Costco Wholesale (1.5% weight in the Fund) during the quarter. From December 31, 2020 to March 8th, Costco shares declined 17% and dropped below their pre-pandemic high. The common rationale offered by sell-side analysts was that Costco would face difficult one-year “comps” (i.e. same-store sales, which compare sales from stores open for at least a year). Because so many consumers rushed to Costco ahead of shelter-in-place and subsequent quarantines, it will be harder for Costco to meaningfully beat those results when compared year-over-year. That may indeed be true, but we struggle to understand how Costco could be “less valuable” than it was a year earlier when it concurrently increased its membership base by over 7%, or 3.9 million members. With membership renewal rates around 90%, the vast majority of the new customers Costco brought in last year will be around for years to come.
Analysts also complained about Costco raising its already industry-leading minimum wage to $16/hour, with an average “effective” pay of $23-$24/hour when you include overtime and bonuses. Costco paying its employees “too much” has been a common gripe of Wall Street analysts for at least two decades. While the extra pay does indeed impact short-term profit margins, it also serves to make Costco more durable, as its flywheel (i.e. a virtuous value cycle) starts with happy employees. A 20-year chart of Costco stock price is evidence that this strategy works and we’re confident that it will continue to work.”
7. NextEra Energy, Inc. (NYSE:NEE)
Number of Hedge Fund Holders: 59
NextEra Energy, Inc. (NYSE:NEE) features on our list of long-term stocks because the company operates in the electrical utility business, an important market segment for the future. However, the firm is different from other utility providers since it generates a significant amount of electricity through wind, solar, and other forms of renewable energy. It has also invested in nuclear energy for power generation.
NextEra Energy, Inc. (NYSE:NEE) was recently awarded the Wolf Creek-Blackberry transmission line project by the Southwest Power Pool, an electric power manager in central US. The company will build a new transmission line from Kansas to Missouri almost 94 miles in length as part of the agreement by January 2025.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in NextEra Energy, Inc. (NYSE:NEE) with 14 million shares worth more than $1 billion.
6. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 67
Pfizer Inc. (NYSE:PFE) is one of the premier biopharma stocks in the United States. It has a diverse range of products that lead the market in several areas. The drug pipeline of the company is also impressive, as recent reports of the development of a COVID-19 pill demonstrate. Regulatory bodies in the US recently authorized the use of the COVID-19 vaccine of the firm for children aged 5-11 years-old.
In earnings results for the third quarter, posted on November 1, Pfizer Inc. (NYSE:PFE) reported earnings per share of $1.34, beating market estimates by $0.25. The revenue over the period was $24 billion, up 134% year-on-year.
At the end of the second quarter of 2021, 67 hedge funds in the database of Insider Monkey held stakes worth $2.3 billion in Pfizer Inc. (NYSE:PFE), up from 65 in the preceding quarter worth $2 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Pfizer Inc. (NYSE:PFE) was one of them. Here is what the fund said:
“Our underweights in health care and staples contributed to relative performance during the period. As we continue to focus the portfolio on high-conviction ideas, we sold Pfizer in late 2020, in the health care sector.”
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Disclosure. None. 11 Best Long-Term Stocks To Buy Now is originally published on Insider Monkey.
