In this article, we discuss the 12 best stocks to buy for an 18 year old. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Stocks to Buy for an 18 Year Old.
It is an exciting time to be involved in trading stocks. The Federal Reserve in the United States has signaled that it will start cutting interest rates in 2024 as inflation cools. This means that borrowing costs will decrease. This, in turn, will drive investments in growth stocks with explosive potential as investors start taking risks after nearly two years of practicing caution because of recession fears. The NASDAQ Composite, one of the benchmark growth indexes at the market, is already up more than 45% so far this year.
For those just getting started at the stock market, like 18 year olds with an eye for trading, it is important not just to identify good growth stocks but also potential opportunities in the value sector that balance the portfolio against risk. One of the easiest ways of doing this is to measure the moat of a publicly-traded firm. The wider the moat, the better financial standing of the firm. Moat is generally defined as a sustainable competitive advantage of a company that makes it hard for rivals to compete against it.
Some of the companies with the widest moat include Alphabet Inc. (NASDAQ:GOOGL), The Walt Disney Company (NYSE:DIS), and The Charles Schwab Corporation (NYSE:SCHW), and they are the best stocks to buy for an 18 year old, providing a solid base from which to work towards making a lot of money. The competitive advantages gained by these firms also allow them to work towards growth and expansion unlike other firms, as illustrated by the recent initiatives taken by Alphabet Inc. (NASDAQ:GOOGL).
During the third quarter earnings call in late October, Sundar Pichai, the CEO of Alphabet Inc. (NASDAQ:GOOGL), highlighted how the competitive advantages of the firm in Search, YouTube, and Cloud were helping it invest money in growth sectors like artificial intelligence. In addition, the company was in the process of rolling out new AI services in big markets like Japan and India after receiving a lot of approval for them in North America. The company has also been integrating AI with advertisements.
“Today, more than 60% of the world’s thousand-largest companies are Google Cloud customers. At Cloud Next, we showcased amazing innovations across our entire portfolio of Infrastructure, Data and AI, Workspace Collaboration, and Cybersecurity solutions. We offer advanced AI-optimized infrastructure to train and serve models at scale, and today, more than half of all funded generative AI startups are Google Cloud customers. This includes AI21 Labs, Contextual, Elemental Cognition, Writer, and more.
We continue to provide the widest choice of accelerator options. Our A3 VMs powered by NVIDIA’s H100 GPU are generally available, and we are winning customers with Cloud TPU v5e, our most cost-efficient and versatile accelerator to date. On top of our infrastructure, our Vertex AI platform helps customers build, deploy and scale AI-powered applications. We offer more than 100 models — including popular third-party and open-source models, as well as tools to quickly build Search and Conversation use cases. From Q2 to Q3, the number of active generative AI projects on Vertex AI grew by 7X, including Highmark Health, which is creating more personalized member materials.”
Our Methodology
In order to compile the list of 12 best stocks to buy for an 18 year old, the thirty top companies in the VanEck Morningstar Wide Moat ETF were shortlisted and the top twelve of these ranked according to hedge fund sentiment. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2023 was used to identify the number of hedge funds that hold stakes in each firm. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
A close-up of a security analyst using a calculator, reviewing stocks.
Best Stocks to Buy for an 18 Year Old
12. Zimmer Biomet Holdings, Inc. (NYSE:ZBH)
Number of Hedge Fund Holders: 55
Zimmer Biomet Holdings, Inc. (NYSE:ZBH) operates as a medical technology company. On November 13, investment advisory JPM Securities maintained an Outperform rating on Zimmer Biomet Holdings, Inc. (NYSE:ZBH) stock and lowered the price target to $140 from $160.
At the end of the third quarter of 2023, 55 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Zimmer Biomet Holdings, Inc. (NYSE:ZBH), compared to 46 the preceding quarter worth $1.2 billion.
Just like Alphabet Inc. (NASDAQ:GOOGL), The Walt Disney Company (NYSE:DIS), and The Charles Schwab Corporation (NYSE:SCHW), Zimmer Biomet Holdings, Inc. (NYSE:ZBH) is one of the best stocks to buy for an 18 year old.
11. Gilead Sciences, Inc. (NASDAQ:GILD)
Number of Hedge Fund Holders: 55
Gilead Sciences, Inc. (NASDAQ:GILD) is a biopharmaceutical company that discovers, develops, and commercializes medicines. On December 12, investment advisory Morgan Stanley maintained an Equal Weight rating on Gilead Sciences, Inc. (NASDAQ:GILD) stock and lowered the price target to $84 from $88.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Gilead Sciences, Inc. (NASDAQ:GILD) with 4.7 million shares worth more than $357 million.
In its Q3 2023 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Gilead Sciences, Inc. (NASDAQ:GILD) was one of them. Here is what the fund said:
“During the quarter we initiated positions in two new names: T-Mobile and Gilead Sciences, Inc. (NASDAQ:GILD). Gilead Sciences is a large biopharmaceutical company we have long followed given its dominant position in HIV treatment and strong intellectual property position. With pandemic-induced distortions on quarterly financials largely in the rearview mirror (Veklury — aka Remdesivir — was an overnight success as an antiviral treatment of COVID), we believe Gilead’s organic revenue growth potential over the next many years is in the mid-single digits. Gilead’s growth should be stable, as the company has no major patent expirations until the early 2030s.
While less growthy than some high-flying drug classes (e.g., diabetes/obesity), Gilead’s current valuation is undemanding, with a P/E barely in the double digits. We tend to shy away from health care investments whose valuation is dependent on pipeline drugs transforming into a large commercial opportunity, given the uncertain nature of drug discovery and the binary characteristic of the stock reactions. In Gilead’s case, we believe the market is ascribing virtually no value to its existing pipeline, in effect providing us with a “free” call option. Lastly, Gilead’s 4% (and growing) coupon should offer considerable downside support amid a more challenging market backdrop.”
10. Biogen Inc. (NASDAQ:BIIB)
Number of Hedge Fund Holders: 57
Biogen Inc. (NASDAQ:BIIB) discovers, develops, manufactures, and delivers therapies for treating neurological and neurodegenerative diseases. On December 20, investment advisory Cantor Fitzgerald initiated coverage of Biogen Inc. (NASDAQ:BIIB) stock with an Overweight rating and a price target of $311.
Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Sarissa Capital Management is a leading shareholder in Biogen Inc. (NASDAQ:BIIB) with 643,000 shares worth more than $165 million.
9. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 59
Medtronic plc (NYSE:MDT) makes and sells device-based medical therapies. On December 7, investment advisory CL King maintained a Buy rating on Medtronic plc (NYSE:MDT) stock with a price target of $102.
At the end of the third quarter of 2023, 59 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Medtronic plc (NYSE:MDT), compared to 63 in the previous quarter worth $1.8 billion.
8. RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 63
RTX Corporation (NYSE:RTX) is a Massachusetts-based defense manufacturer. On December 19, investment advisory TD Cowen maintained an Outperform rating on RTX Corporation (NYSE:RTX) stock and raised the price target to $106 from $99.
At the end of the third quarter of 2023, 63 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in RTX Corporation (NYSE:RTX), up from 56 in the preceding quarter worth $1.3 billion.
In its Q3 2023 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and RTX Corporation (NYSE:RTX) was one of them. Here is what the fund said:
“RTX Corporation (NYSE:RTX) lowered its free cash flow guidance for the year due to a new issue in its jet engine business. Although the company’s management has a solution, the total implementation cost remains unknown, which caused the stock to react negatively.”
7. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders: 68
Comcast Corporation (NASDAQ:CMCSA) operates as a media and technology company worldwide. On December 15, investment advisory Loop Capital maintained a Buy rating on Comcast Corporation (NASDAQ:CMCSA) stock and raised the price target to $55 from $53.
Among the hedge funds being tracked by Insider Monkey, New York-based firm First Eagle Investment Management is a leading shareholder in Comcast Corporation (NASDAQ:CMCSA) with 31 million shares worth more than $1.4 billion.
6. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 69
NIKE, Inc. (NYSE:NKE) markets athletic footwear and apparel. On November 16, Truist analyst Joseph Civello initiated coverage of NIKE, Inc. (NYSE:NKE) stock with a Hold rating and a price target of $108.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in NIKE, Inc. (NYSE:NKE) with 6.7 million shares worth more than $640 million.
Alongside Alphabet Inc. (NASDAQ:GOOGL), The Walt Disney Company (NYSE:DIS), and The Charles Schwab Corporation (NYSE:SCHW), NIKE, Inc. (NYSE:NKE) is one of the best stocks to buy for an 18 year old.
In its Q2 2023 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NIKE, Inc. (NYSE:NKE) was one of them. Here is what the fund said:
“Athletic footwear and apparel company NIKE, Inc. (NYSE:NKE), also a beneficiary of pandemic pull-forward demand, lagged primarily around fears about consumer resilience and potential pressure on Nike’s business in a macroeconomic slowdown.”
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Disclose. None. 12 Best Stocks to Buy for an 18 Year Old is originally published on Insider Monkey.