In this article, we discuss 5 best stocks to buy for investment. If you want to see more best stocks to buy for investment, the risk/reward, and methodology of this list, go directly to 10 Best Stocks to Buy for Investment.
5. McDonald’s Corporation (NYSE:MCD)
Market Capitalization as of 2/15: $195.23 billion
EPS Growth Forecast Next 5 Years: 7.3%
McDonald’s Corporation (NYSE:MCD) is a leading fast food restaurant chain whose stock has rallied 5.2% in the last year and 1.15% year to date. In 2022, the company’s global comparable sales rose 10.9% year over year, with U.S. comparable sales rising 5.9% year over year and the company’s international operated markets segment comparable sales rising 13.3% year over year. McDonald’s Corporation (NYSE:MCD)’s systemwide sales rose 5% year over year. McDonald’s Corporation (NYSE:MCD) free cash flow was $5.488 billion for 2022, down from $7.102 billion in 2021.
4. PepsiCo, Inc. (NASDAQ:PEP)
Market Capitalization as of 2/15: $242.41 billion
EPS Growth Forecast Next 5 Years: 7.55%
PepsiCo, Inc. (NASDAQ:PEP) is a beverage and snack giant whose shares have more than doubled from early 2013 thanks to the company’s strong brands and decent organic growth. In the last year, PepsiCo, Inc. (NASDAQ:PEP) stock has risen 5.58% despite inflation headwinds as the market anticipates EPS growth in the future.
Lindsell Train commented on PepsiCo, Inc. (NASDAQ:PEP) in a Q3 2022 investor letter,
At this point, it may help to give a further example of these self-reinforcing moats to illustrate the idea, drawing from the consumer franchises side of our portfolio. In our view, strong consumer brands can similarly exhibit Lindycompatible anti-ageing properties. Consider, that the longer a company invests in its brands through advertising and R&D, the stronger and more resonant they may get. When successful, a self-sustaining feedback loop is established, whereby it becomes ever harder to recreate a heritage-rich brand from scratch, raising barriers to entry, and proportionately increasing its likely lifespan. There are plenty of long-lived portfolio franchises I could reference here, but I’ve gone with PepsiCo (NYSE:PEP); partly because we have good time-series stats on it (beware data bias!) but also, as I hope will become evident, because Pepsi over its 129 years has succeeded in creating some wonderfully deep moats.
With Pepsi Cola you get the flagship soft drinks brand, which is both global and generational, but you also get the Frito-Lay salty snacks portfolio assembled alongside it, claiming nearly 40% of the global market. That’s ten-times greater than the nearest competitor and likely higher than the next 65 competitors combined. These are exceptionally strong global bands with market shares to match; the long-term empirical result being Pepsi’s dividend record which over the past 66 years (as far back as we’ve been able to go) has compounded at an annualised rate of 10%. Pepsi is no ‘in at the ground floor’ start-up today, but it wasn’t six decades ago either. Early growth investor Philip Fisher put it well when in 1958 (two years into Pepsi’s current winning streak) he wrote of “companies which in spite of outstanding prospects of major further growth are so financially strong, with roots going so deep into the economic soil, that they qualify under the general classification of ‘institutional stocks’”. PepsiCo fits this description well…
3. The Procter & Gamble Company (NYSE:PG)
Market Capitalization as of 2/15: $327.83 billion
EPS Growth Forecast Next 5 Years: 5.07%
The Procter & Gamble Company (NYSE:PG) is a consumer staple conglomerate whose stock has declined 8.31% year to date given various headwinds. For the second quarter of its fiscal year, The Procter & Gamble Company (NYSE:PG) had core EPS of $1.59 per share on sales of $20.8 billion, versus the consensus of $1.59 per share on revenue of $20.73 billion. Q2 gross margin declined 160 basis points versus one year ago.
The Procter & Gamble Company (NYSE:PG) CEO Jon Moeller said, “We delivered solid results in the second quarter of fiscal year 2023 in what continues to be a very difficult cost and operating environment. Progress against our plan fiscal year to date enables us to raise our sales growth outlook for fiscal 2023 and maintain our guidance range for EPS growth despite significant headwinds. We remain committed to our integrated strategies of a focused product portfolio, superiority, productivity, constructive disruption and an agile and accountable organization structure. These strategies have enabled us to build and sustain strong momentum. They remain the right strategies to navigate through the near-term challenges we’re facing and continue to deliver balanced growth and value creation.”
With a market capitalization of $327.83 billion, The Procter & Gamble Company (NYSE:PG) ranks #3 on our list of 10 Best Stocks to Buy for Investment.
2. Walmart Inc. (NYSE:WMT)
Market Capitalization as of 2/15: $395.27 billion
EPS Growth Forecast Next 5 Years: 4.34%
Walmart Inc. (NYSE:WMT) is a retail giant that analysts expect will increase its EPS by an average of 4.34% annually over the next 5 years. One potential reason for the expected EPS growth is that the company’s board announced a new up to $20 billion share buyback authorization in November 2022. In recent quarters, Walmart Inc. (NYSE:WMT) has also benefited from more consumers shopping at its stores given the higher inflation. As of February 15, Walmart Inc. (NYSE:WMT) has a forward P/E ratio of 22.55 and a dividend yield of 1.53%.
1. Johnson & Johnson (NYSE:JNJ)
Market Capitalization as of 2/15: $416.67 billion
EPS Growth Forecast Next 5 Years: 3.89%
Healthcare giant Johnson & Johnson (NYSE:JNJ) ranks #1 on our list of 10 Best Stocks to Buy for Investment given its market capitalization of $416.67 billion as of 2/15. Analysts expect Johnson & Johnson (NYSE:JNJ) to grow its EPS by an average of 3.89% a year in the next 5 years with consensus estimates of $10.51 per share in 2023, $10.89 per share in 2024, and $11.28 per share in 2025. As of 2/15, Johnson & Johnson (NYSE:JNJ) has a forward P/E of 14.59 and a dividend yield of 2.84%.
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