In this article, we will take a look at the 13 Most Promising Long-Term Stocks to Buy According to Hedge Funds.
A report by BNY Wealth noted that volatility has always been part of the stock market. Since 1946, the S&P 500 has experienced an average pullback of more than 13% within a single year. These declines can feel unsettling when they happen. Yet over time, the market has shown a clear pattern of recovery.
Despite these drops, the stock market has delivered positive annual returns about 70% of the time since 1946. The report also found that periods of higher uncertainty around fiscal and monetary policy have often been followed by stronger returns. On average, when policy uncertainty is elevated, the S&P 500 has returned more than 20% over the next year. That is more than double the return seen after periods of lower uncertainty.
A recent report by JPMorgan focused on another key point. Many investors move to cash during uncertain periods, thinking it offers protection. While cash avoids short-term market swings, it loses value slowly due to inflation. If money remains uninvested, its purchasing power declines over time. With inflation at 2% per year, cash can lose more than half its real value over 40 years. At 3% inflation, the loss becomes even greater. The money may look the same on paper, but it buys far less.
The report also explained the power of compounding. Compounding allows investments to grow not only from the original amount but also from the returns earned over time. This effect becomes more noticeable over longer periods. Starting early makes a meaningful difference. For example, saving £5,000 per year beginning at age 25 and earning a 5% annual return would result in nearly £300,000 more by age 65 compared with starting at age 35. This happens even though the total additional amount invested would only be £50,000.
Given this, we will take a look at some of the best long-term stocks to invest in.
Photo by Scott Graham on Unsplash
Our Methodology:
We used screeners to identify stocks with an average upside potential of at least 30%, and limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
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).
13. Alight, Inc. (NYSE:ALIT)
On February 23, BofA lowered its price recommendation on Alight, Inc. (NYSE:ALIT) to 50c from $1.40. The firm reiterated an Underperform rating on the shares. In a post-earnings note, the analyst said the “biggest surprise and negative takeaway” was the company’s weak Q1 revenue guidance. This metric pointed to a meaningful decline in net revenue retention. The firm updated its model to reflect what it described as “missteps on renewals.” It also cited slower project activity and near-term margin pressure tied to ongoing growth investments. These factors weighed on the firm’s outlook for the company.
During Alight’s Q4 2025 earnings call, CEO Rohit Verma spoke about the company’s strengths. He pointed to its scale, long-standing client relationships, and industry expertise. He also highlighted its global presence, which allows Alight to support clients across multiple regions. Verma said these advantages have helped the company build a leadership position in its market.
He noted that Alight serves a wide range of employers, including many Fortune 100 companies. Its platform is designed to support different client needs, especially in managing employee benefits. At the same time, Verma acknowledged that the company did not meet its internal expectations in 2025. Financial targets were missed, and both new business wins and contract renewals came in below what the company had planned. This shortfall led to results that fell short of earlier forecasts.
Looking ahead, Verma outlined several priorities. The company plans to improve service quality and operational performance. It also intends to advance product innovation, using AI to create a more modern and efficient user experience. Strengthening client relationships remains another key focus, with the goal of building long-term partnerships.
Alight, Inc. (NYSE:ALIT) operates as a cloud-based human capital technology and services provider. The company delivers human capital management solutions, including the implementation and administration of employee benefits such as health, wealth, and leave programs.
12. SunCoke Energy, Inc. (NYSE:SXC)
On February 18, B. Riley lowered its price recommendation on SunCoke Energy, Inc. (NYSE:SXC) to $9 from $10. The firm maintained a Neutral rating on the shares. In a research note, the analyst said SunCoke reported Q4 adjusted EBITDA of $56.7M, which came in below expectations. Industrial Services contributed $22.7M and helped offset weaker results in other areas. Logistics and Domestic Coke volumes were softer during the quarter, which weighed on overall performance.
During the company’s Q4 2025 earnings call, CEO Katherine Gates announced a leadership transition. CFO Mark Marinko is retiring, and Shantanu Agrawal will step into the role. Gates said the change is intended to preserve continuity in financial discipline and operational priorities. She also highlighted the company’s safety performance. SunCoke, excluding Phoenix, ended 2025 with a total recordable incident rate of 0.55. Gates described this as a notable achievement and pointed to it as a reflection of the company’s focus on safety across its operations.
For the full year, consolidated adjusted EBITDA reached $219.2 million. Gates said the results were influenced in part by the addition of Phoenix Global, which contributed for part of the year. At the same time, volumes in the terminals segment were weaker.
The Domestic Coke segment also faced several challenges. Gates said performance was affected by changes in the mix between contract and spot coke sales. Profitability was also impacted by the Granite City contract extension and a contract breach by Algoma.
SunCoke Energy, Inc. (NYSE:SXC) supplies coke to customers in domestic and international markets. The company operates through three main segments: Domestic Coke, Brazil Coke, and Logistics.
11. Cogent Communications Holdings, Inc. (NASDAQ:CCOI)
On February 23, KeyBanc analyst Brandon Nispel lowered the price recommendation on Cogent Communications Holdings, Inc. (NASDAQ:CCOI) to $25 from $30. He reiterated an Overweight rating on the shares. The analyst said the change reflects lower estimates following weaker-than-expected Q4 results. He also noted that a previously announced letter of intent to sell data center assets did not lead to a completed transaction. This development contributed to the stock’s negative reaction.
During the company’s Q4 2025 earnings call, CEO David Schaeffer spoke about progress on margins. He said margin expansion came from cost-cutting efforts and a greater focus on higher-margin on-net products. These services now make up a larger share of the company’s business. On-net revenue increased to 61% of total revenue in the latest quarter, up from 47% in the third quarter of 2023. At the same time, off-net revenue declined to 39%. Noncore revenue dropped to less than 1% of total revenue. Schaeffer said this reflects the company’s intentional shift toward more profitable services.
He also highlighted strong growth in the wavelength business. The network expanded to 1,096 locations. Quarterly wavelength revenue reached $12.1 million, up 74% from the prior year. For the full year, wavelength revenue rose to $38.5 million, which he said had doubled compared with 2024. Schaeffer also discussed efforts to strengthen the balance sheet. He said the company improved its leverage profile and plans to refinance $750 million in unsecured notes with secured debt after the make-whole period ends in June 2026.
He added that Cogent continues to pursue the sale of 24 surplus data centers as part of its asset optimization plan. Discussions with potential buyers are ongoing after an earlier letter of intent fell through due to financing conditions.
Cogent Communications Holdings, Inc. (NASDAQ:CCOI) operates as a biotechnology company focused on developing precision therapies for genetically defined diseases.
10. Papa John’s International, Inc. (NASDAQ:PZZA)
On February 20, Mizuho analyst Nick Setyan lowered the price recommendation on Papa John’s International, Inc. (NASDAQ:PZZA) to $34 from $40. He reiterated a Neutral rating on the shares. The update came as part of a broader earnings preview for companies in the restaurant sector.
Earlier in January, Papa John’s announced a major overhaul of its digital ordering system. The goal is to improve speed, accuracy, and personalization for its more than 150 million customers worldwide. The company partnered with Google Cloud to introduce new AI-driven ordering capabilities.
Papa John’s became the first partner to use Google Cloud’s expanded AI solution, called Food Ordering agent. This system allows the company to offer a unified voice and text ordering experience. It is designed to reduce friction and create a smoother process for customers across different ordering channels. The Food Ordering agent is part of Gemini Enterprise for Customer Experience. This platform connects commerce and customer service through an AI-driven system. It allows customers to interact with the brand more efficiently, whether they place orders online, through mobile apps, or over the phone.
The platform also supports voice AI agents across multiple channels, including websites, kiosks, and in-car systems. By adopting this technology early, Papa John’s is positioning itself at the forefront of AI-driven customer experience in the restaurant industry.
Papa John’s International, Inc. (NASDAQ:PZZA) operates and franchises pizza delivery and carryout restaurants. In some international markets, it also runs dine-in and delivery locations under the Papa John’s brand.
9. Stepan Company (NYSE:SCL)
On February 23, Stepan Company (NYSE:SCL) announced Project Catalyst, which is a restructuring and efficiency initiative aimed at generating about $100 million in pre-tax savings over the next two years. The plan focuses on simplifying operations, reducing costs, and improving returns for shareholders. Management said the effort is also meant to position the company for more stable long-term growth.
As part of the plan, Stepan will consolidate production into more efficient facilities. The company also intends to improve its manufacturing and procurement processes. Leadership is restructuring parts of the organization to better align resources with growth opportunities.
Stepan will close its Fieldsboro, New Jersey, plant due to weak demand for certain surfactant products. It also plans to shut down selected assets in Illinois and the U.K. These steps are expected to be completed by mid-2026. Production will shift to other facilities to ensure customers continue to receive supplies without disruption. The company expects to record restructuring charges between $70 million and $80 million, with most of the costs expected in 2026. These charges relate mainly to asset write-downs and plant closure expenses.
CEO Luis Rojo said the initiative is intended to make Stepan more efficient and resilient. He noted that it will help the company manage inflation and other cost pressures, while freeing up resources to invest in future growth and strengthen its competitive position.
Stepan Company (NYSE:SCL) manufactures specialty and intermediate chemicals used across a range of industries. Its business operates through three main segments: Surfactants, Polymers, and Specialty Products.
8. Robert Half Inc. (NYSE:RHI)
On February 17, BMO Capital lowered its price recommendation on Robert Half Inc. (NYSE:RHI) to $32 from $35. The firm reiterated a Market Perform rating on the shares following the company’s 10K disclosures. In a research note, the analyst said a $17 million cost-action charge is expected to slow the pace of profitability improvement into Q2 2026. This development made the firm’s earlier forecast look “overly aggressive.”
During the company’s Q4 2025 earnings call, CEO M. Waddell said global enterprise revenue totaled $1.302 billion. This represented a 6% decline from the same period last year on a reported basis and a 7% decrease on an adjusted basis. Even with the year-over-year drop, Waddell pointed to signs of stabilization. The company delivered positive sequential revenue growth on a same-day constant currency basis. He noted this was the first time that had happened in more than three years. He also said both revenue and earnings came in above the midpoint of the company’s prior guidance.
Waddell said the company remains well-positioned to capture new opportunities. He highlighted the strength of Robert Half’s brand, workforce, technology, and business model. These factors continue to support clients as they navigate hiring and consulting needs. The company also generated strong cash flow during the quarter. Operating cash flow reached $183 million, up 18% compared with Q4 2024. Robert Half returned capital to shareholders by paying a dividend of $0.59 per share.
Robert Half Inc. (NYSE:RHI) provides talent solutions and business consulting services through its Robert Half and Protiviti brands. Its operations are organized into three segments: contract talent solutions, permanent placement talent solutions, and Protiviti.
7. FactSet Research Systems Inc. (NYSE:FDS)
On February 23, Barclays lowered its price recommendation on FactSet Research Systems Inc. (NYSE:FDS) to $210 from $300. The firm maintained an Underweight rating on the shares. In its research note, Barclays said AI has “exacerbated investor concerns around what was already an intensely competitive market data vendor industry.” The firm pointed to growing competition and changing technology dynamics as key factors shaping the outlook.
Earlier, on February 10, FactSet announced a partnership with Kepler Cheuvreux. The agreement will bring Kepler Cheuvreux’s Aftermarket Research directly into the FactSet platform. FactSet will also apply its own AI tools to enhance the research, making it more accessible and useful for clients across the EMEA region.
Kepler Cheuvreux covers more than 1,000 European stocks across 34 sectors. Its research team includes over 110 equity analysts working from 12 offices in major financial centers across Europe and Dubai. The firm has built one of the largest research networks in the region, which adds meaningful depth to FactSet’s offering. This partnership expands FactSet’s existing Aftermarket Research platform. The service already includes research from more than 1,800 brokers worldwide. These contributors include major firms such as J.P. Morgan, Barclays, UBS, Macquarie, RBC, Deutsche Bank, and HSBC.
FactSet Research Systems Inc. (NYSE:FDS) operates as a global provider of financial data and analytics. Its platform delivers integrated data, analytics, and technology tools that help investors and financial professionals analyze markets and make informed decisions.
6. Unum Group (NYSE:UNM)
On February 20, UBS lowered its price recommendation on Unum Group (NYSE:UNM) to $81 from $85. The firm reiterated a Neutral rating on the shares. The adjustment reflected a more cautious outlook following recent performance and updated expectations.
Earlier, on February 6, Evercore ISI also reduced its price goal on Unum, lowering it to $103 from $105. The firm kept an Outperform rating. The analyst described the recent period as a “rough disability quarter” and said that, on an “apples to apples” basis, the company’s 2026 guidance came in about 1% to 2% lower than expected.
During the company’s Q4 2025 earnings call, CEO Richard McKenney said Unum delivered disciplined execution across its core businesses. He also highlighted continued investment in digital capabilities, which he said helps set the company apart in the market. McKenney noted progress in the Closed Block segment, saying these improvements strengthened the company’s overall risk profile.
For the full year, adjusted EPS came in at $8.13. This result declined from the prior year and fell short of expectations. McKenney said higher-than-expected benefit costs were the main reason for the shortfall. Even so, premium growth in core operations remained steady. Total premium growth reached about 4.5%. Colonial Life posted 3.1% growth, while international operations delivered stronger growth of 10%.
Looking ahead, McKenney said he remains confident in Unum’s position. He pointed to the company’s financial strength and $2.3 billion in cash at the holding company level. He also noted that Unum returned significant capital to shareholders, including a 10% increase in its dividend and $1 billion in share repurchases.
Unum Group (NYSE:UNM) operates as an international provider of workplace benefits and services. Through its Unum and Colonial Life brands, the company offers disability, life, accident, critical illness, dental, and vision insurance. It also provides leave management and behavioral health services.
5. Expedia Group, Inc. (NASDAQ:EXPE)
On February 23, Citigroup lowered its price recommendation on Expedia Group, Inc. (NASDAQ:EXPE) to $225 from $281. It reiterated a Neutral rating on the shares. The revision reflected a more measured outlook following the company’s latest results and guidance.
On February 12, Expedia said it expects a higher adjusted core profit margin in the first quarter. This improvement will be supported by one-time gains and continued demand from business customers. At the same time, management expressed caution about the rest of the year. The company said it remains “appropriately cautious due to ongoing macro uncertainty.” Consumer spending has been uneven, as higher prices and changes in U.S. trade policy continue to influence travel demand. Expedia’s finance chief, Scott Schenkel, said margin expansion in the first quarter will benefit from lower headcount, reduced marketing expenses, and lower cloud costs. He added that margin improvement may be more limited for the remainder of the year.
Expedia expects adjusted core profit margin to increase by 3 to 4 percentage points in the first quarter of 2026. This compares with a 1.05 percentage point increase in 2025. For the full year, the company expects margin growth of 1 to 1.25 percentage points, below the 2.4 percentage point increase recorded in 2025.
Despite the softer margin outlook, Expedia provided strong booking and revenue projections. The company expects full-year gross bookings between $127 billion and $129 billion. This is above analysts’ average estimate of $125.95 billion, based on LSEG data. Total revenue increased 11.4% to $3.54 billion, also exceeding estimates of $3.42 billion.
Expedia Group, Inc. (NASDAQ:EXPE) operates as an online travel company. Its business includes B2C, B2B, and trivago segments. The B2C segment offers travel and advertising services through several consumer-facing brands.
4. Arthur J. Gallagher & Co. (NYSE:AJG)
On February 23, Piper Sandler lowered its price recommendation on Arthur J. Gallagher & Co. (NYSE:AJG) to $226 from $249. The firm maintained a Neutral rating on the shares. The analyst said the update reflects a broader revision in price targets across insurance brokers, following the recent market selloff. The firm noted it remains relatively cautious on the sector in the near term.
Earlier, on February 17, Gallagher announced it had acquired B&W Insurance Agency, Inc., based in Washington, Pennsylvania. The companies did not disclose the financial terms of the deal. B&W Insurance Agency provides personal and commercial insurance brokerage services to clients in southwest Pennsylvania. Paul Barzd III, Jim Cote, and their team will continue working from their current office. They will operate under the leadership of Jen Tadin, who oversees Gallagher Select, the company’s U.S. property and casualty business focused on small businesses and personal insurance.
Chairman and CEO J. Patrick Gallagher, Jr. commented on the acquisition. He said, “B&W Insurance Agency has a strong local reputation and deepens our brokerage capabilities for small businesses.” He added, “I am very pleased to welcome Paul, Jim and their associates to Gallagher.”
Arthur J. Gallagher & Co. (NYSE:AJG) operates as a global insurance brokerage, risk management, and consulting firm. The company is headquartered in Rolling Meadows, Illinois. It serves clients in about 130 countries through its owned operations and a global network of brokers and consultants.
3. Vistra Corp. (NYSE:VST)
On February 20, Morgan Stanley analyst David Arcaro lowered the price recommendation on Vistra Corp. (NYSE:VST) to $215 from $227. He maintained an Overweight rating on the shares. The analyst said the firm is updating its price targets across regulated and diversified utilities and independent power producers in North America. Morgan Stanley noted that utilities underperformed the S&P 500 this month. Looking ahead to Q4 earnings, the firm expects a more balanced discussion around data center demand. Arcaro said affordability concerns and political factors have started to influence how investors view data center pipeline growth.
A February 10 CNBC report highlighted a more positive view from Jefferies. The firm upgraded Vistra to a Buy rating, saying the current share price does not fully reflect its potential to secure future data center power supply agreements. Jefferies also raised its 12-month price target to $203 from $191, implying about 30% upside at the time. Following the upgrade, Vistra shares rose as much as 5.5% in early trading the next day.
The stock has faced pressure in recent months. Shares are down about 25% since Vistra announced last September that it would supply 1,200 megawatts of power from its Comanche Peak nuclear plant to an unnamed customer. Even with that decline, Jefferies believes the pullback has created a more attractive entry point, especially as demand for reliable nuclear power grows alongside data center expansion.
Analyst Julien Dumoulin-Smith said it is difficult to call the exact bottom. Still, he believes the stock has room to surprise on the upside. He noted that current valuations do not fully reflect the potential benefit from future data center contracts.
Vistra Corp. (NYSE:VST) is a Texas-based integrated retail electricity and power generation company. Founded in 1882, the company offers electricity and natural gas solutions to a range of customers, including residential, commercial, and industrial customers.
2. Booking Holdings Inc. (NASDAQ:BKNG)
On February 24, Morgan Stanley analyst Brian Nowak upgraded Booking Holdings Inc. (NASDAQ:BKNG) to Overweight from Equal Weight. He set a price target of $5,500, down from $6,150. In his research note, Nowak said that even as agentic tools evolve, Booking is likely to remain “a key driver of travel.” He added that the company is well-positioned to “own the customer,” gather “robust” traveler data, and use that information to support high-margin direct bookings. The firm noted that early agentic travel products are developing differently than expected. Even so, Morgan Stanley believes Booking and other online travel agencies will remain central to the travel ecosystem. The analyst said these platforms are likely to be “just as important in the agentic world as they have been in the past two decades.”
During the company’s Q4 2025 earnings call, President and CEO Glenn Fogel said Booking delivered another year of strong operational performance. He acknowledged volatility in global markets but said the company’s core fundamentals remained solid. Travel demand stayed resilient, supported by the scale and reach of its global platform. Fogel also highlighted progress in expanding AI-driven capabilities. He said the company continues to execute on its Connected Trip strategy, while maintaining focus on growth in key regions such as Asia and the U.S.
In the fourth quarter, room nights reached 285 million. This marked a 9% increase compared with the prior year and came in above the company’s expectations. Strong demand across major regions helped drive gross bookings and revenue up 16%. Adjusted EBITDA increased 19% to $2.2 billion, while adjusted earnings per share rose 17%.
Fogel also discussed the company’s Transformation Program, which began in November 2024. He said the initiative has already delivered about $550 million in annual cost savings. This result reached the high end of the company’s earlier targets.
Booking Holdings Inc. (NASDAQ:BKNG) provides online travel and restaurant reservation services. The company operates through five major brands: Booking.com, Priceline, Agoda, KAYAK, and OpenTable.
1. International Business Machines Corporation (NYSE:IBM)
On February 24, UBS upgraded International Business Machines Corporation (NYSE:IBM) to Neutral from Sell and set a price target of $236. The upgrade reflects a more balanced view of the stock following recent volatility and changing expectations.
A CNBC report published on February 23 said IBM shares came under significant pressure that day. The stock fell about 13.2% to close at $223.35. The decline followed an announcement from Anthropic about its Claude Code AI tool, which can help modernize older systems built using COBOL. This development raised concerns among investors, as COBOL has long been closely associated with IBM’s mainframe business.
IBM has played a central role in supporting COBOL-based systems for decades. These systems continue to run critical operations, including banking transactions, payment processing, and retail infrastructure. Maintaining and modernizing these systems has traditionally required significant time and specialized expertise. Anthropic said its AI tool can automate much of the work involved in analyzing and updating COBOL code. This process has historically been complex and costly. COBOL, first introduced in the late 1950s, still supports essential infrastructure such as ATM networks, airline systems, and government operations.
The company noted that the number of programmers skilled in COBOL has declined over time. AI tools can now analyze large codebases more quickly, identify dependencies, document workflows, and highlight risks. Tasks that once took months can now be completed much faster. Anthropic also said modernization efforts were often delayed because updating legacy code was expensive and difficult. With AI simplifying that process, companies may have more flexibility in modernizing their systems. This could reduce reliance on traditional service providers over time.
These developments have added to broader investor concerns about AI’s potential impact on established technology companies. IBM is among the firms facing questions about how AI could reshape legacy software and IT services.
International Business Machines Corporation (NYSE:IBM) provides hybrid cloud, artificial intelligence, and consulting services. Its business operates through four main segments: Software, Consulting, Infrastructure, and Financing.
While we acknowledge the potential of IBM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than IBM and that has 100x upside potential, check out our report about this cheapest AI stock.
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