In this article, we will take a look at the 12 Best Stocks to Buy for the Long Term.
Since markets first took shape, investors have tried to boost returns and limit losses by picking the right moments to get in and out. The idea sounds simple. Buy when prices feel low and rising, and sell when they seem high and ready to fall. In practice, market timing is harder than it looks. First, when you buy, and then again when you sell. Miss either step and the outcome changes quickly.
A report from U.S. Bank notes that sharp swings in the market can shake even disciplined, long-term investors. Periods of volatility often lead people to question a buy-and-hold approach. Still, history offers some perspective. While past results never guarantee future returns, the market has consistently recovered from downturns and rewarded patience over time. Over the last 35 years, the market delivered a positive return in nearly eight out of every 10 years. Much of the market’s gains and losses also tend to happen in just a handful of days each year, making short-term timing especially difficult. Monthly patterns simply are not predictable.
The report also points to dividends as a key part of long-term investing. Dividends are easy to overlook, especially early on, when the payments feel small. Over time, though, they add up. More than 40% of total gains in the S&P 500 have come from dividends. Many investors choose to reinvest those payouts automatically, using them to buy additional shares. Those extra shares then generate dividends of their own. Over years and decades, this steady reinvestment can quietly compound returns and play a meaningful role in building long-term wealth.
Given this, we will take a look at some of the best stocks for the long-term.
Our Methodology:
For this article, we screened for companies with market caps above $2 billion. From that list, we selected industry leaders across multiple sectors to give investors a more diversified set of choices rather than concentrating risk in one area. Next, we identified strong dividend companies with healthy balance sheets, positive 5-year revenue growth, and positive 5-year returns. Finally, we picked 12 companies that were most popular among hedge funds, as per Insider Monkey’s database of Q3 2025, and ranked them accordingly.
Why are we interested in the stocks that hedge funds pile into? 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12. PepsiCo, Inc. (NASDAQ:PEP)
Number of Hedge Fund Holders: 68
5-Year Average Revenue Growth: 6.31%
5-Year Return: 12.49%
On January 16, BNP Paribas raised its rating on PepsiCo, Inc. (NASDAQ:PEP) to Outperform from Neutral. It set a $179 price target on the stock. The firm also lifted its FY27 EPS forecast by roughly 5%, arguing that recent activist involvement creates a “win-win” situation for the company, according to the analyst.
PepsiCo’s shares are down nearly 1.5% over the past 12 months, reflecting a tough operating backdrop. Demand has softened as consumers lean more toward health and wellness, while higher living costs, rising production expenses, and tariffs have added pressure. Management is guiding for low single-digit organic revenue growth in full-year 2025 and flat core EPS on a constant currency basis. While recent results have been weak, much of that disappointment already appears baked into the stock. The snack segment, in particular, has been hit as health trends intensify and the use of weight-loss drugs such as Ozempic becomes more widespread.
Because of its exposure to restaurants, PepsiCo remains tied to discretionary consumer spending. Even so, the strength of its brand portfolio has allowed the company to push through price increases during inflationary periods.
That said, tariffs and changing consumption habits have weighed on profitability. Through the first three quarters of 2025, organic revenue increased 1.5%, while core EPS declined 3.5%. The company has also leaned on acquisitions to drive growth. PepsiCo bought SodaStream in 2018, giving it a strong foothold in the at-home soda category. That was followed by the acquisition of Rockstar Energy in 2020. More recently, in early 2025, PepsiCo added Siete Foods, known for its grain-free tortillas and Mexican-American offerings, along with Poppi, a fast-growing prebiotic soda brand.
PepsiCo, Inc. (NASDAQ:PEP) is far more diversified than its flagship cola might suggest. Alongside its beverage lineup, the company owns Frito-Lay and Quaker and controls well-known drink brands such as Mountain Dew and Gatorade, giving it a broad presence across both snacks and beverages.
11. Caterpillar Inc. (NYSE:CAT)
Number of Hedge Fund Holders: 70
5-Year Average Revenue Growth: 6.49%
5-Year Return: 259.53%
On January 27, Jefferies raised its price target on Caterpillar to $750 from $700 and reiterated a Buy rating on the stock. The analyst said the setup for Q4 earnings “feels in line to potentially conservative,” pointing to steady volume trends and continued margin improvement across both business segments as support for the higher target. While Caterpillar’s power generation narrative is “now well appreciated,” Jefferies noted that faster growth in the rest of the portfolio could still lift the shares further.
Caterpillar Inc. (NYSE:CAT) is preparing to report its Q4 2025 results, and expectations are positive following a very strong prior quarter. In Q3 2025, revenue from the energy and transportation segment rose 17% year over year, helping drive total company revenue growth of 10%. CEO Joe Creed has told investors that the company’s backlog continues to grow as Caterpillar supplies critical power-generation solutions for AI data centers. The company also benefits from demand for its heavy equipment used in the construction of those facilities.
Caterpillar has been a dominant force in construction and industrial equipment for more than 100 years. While it has weathered countless boom-and-bust cycles, the current surge in AI-related demand could be the next major driver pushing the stock toward new all-time highs.
