In this article we will take a look at the 10 best young stocks to buy and hold for 20 years. You can skip our detailed analysis of the major growth catalysts for young stocks and go directly to the 5 Best Young Stocks To Buy and Hold For 20 Years.
To clear any confusion right off the bat, by “young stocks” we mean stocks that are working on new technologies. These are mostly growth-oriented companies that hire young tech talent to work on new tech services and apps that are changing the lives of billions around the globe.
The COVID-19 pandemic transformed the way we view the tech industry today. As the world transitioned to digitization, smart innovations and new technologies displayed a strong role in fighting against the COVID-19 pandemic. According to an article published by consulting firm Mckinsey, digital technology can improve healthcare while lowering costs where the firm predicts that the expenses saved may be anywhere between $1.5 trillion and $3 trillion per year by 2030.
Teladoc Health, Inc. (NYSE:TDOC) is one example of young stocks that are gaining investors’ attention. During the imposed lockdowns, telemedicine and virtual healthcare platform Teladoc Health, Inc. (NYSE:TDOC) reported a 50% increase in service. Shares of Teladoc Health, Inc. (NYSE:TDOC) rose 11% over the past month. In a separate article published by CB Insights’ Industry Analyst Consensus, telehealth technology is estimated to be a $57 billion market.
Stocks to Buy and Hold in the Tech Industry
The tech industry continuously proves its significance given its roles in the growing economy. Several tech giants have established histories in the industry such as Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOG), have high-growth potential.
Tech heavy giant Microsoft Corporation (NASDAQ:MSFT) is a young stock to buy and hold. In the first quarter of 2021, the company’s revenue came in at $41.7 billion, up 19% year-over-year. With ongoing acquisitions of over 225 companies and stakes in over 64 companies, the firm continues to prosper in the industry. Earlier this year, the company gained US antitrust approval for a $19.7 billion purchase of American multinational AI company Nuance Communications, Inc. (NASDAQ:NUAN). The purchase will allow Microsoft Corporation (NASDAQ:MSFT) to extend its healthcare services with Nuance Communications, Inc.’s (NASDAQ:NUAN) platform. Currently, 77% of hospitals in the United States apply the Nuance Communications, Inc. (NASDAQ:NUAN) platform. Microsoft Corporation (NASDAQ:MSFT) currently trades for $259.43 and have a PE ratio of 35.35. The 52-week price range of Microsoft Corporation (NASDAQ:MSFT) is $193.55-263.19. Shares of MSFT jumped 32% over the last twelve months. On June 2, analysts in KGI Securities initiated coverage on Microsoft Corporation (NASDAQ:MSFT) with an Outperform rating and announced a price target of $300.
Another notable stock to buy and hold for 20 years in the tech industry is California-based multinational technology company Apple Inc. (NASDAQ:AAPL). In the first quarter of 2021, the company’s revenue came in at $89.6 billion, up 54% year-over-year. The company has acquired over 71 US companies. One recent purchase of Apple Inc. (NASDAQ:AAPL) is podcast start-up Scout FM. Scout FM allows its users to stream podcast stations on a variety of subjects. Apple Inc. (NASDAQ:AAPL) currently trades for $130.46 and have a PE ratio of 29.32. The 52-week price range of Apple Inc. (NASDAQ:AAPL) is $87.79-145.09. Shares of AAPL jumped 49% over the last twelve months.
Multinational conglomerate Alphabet Inc. (NASDAQ:GOOG) is another stock to buy and hold for 20 years. The company continues to expand its operations with over 200 acquired companies. Recently, the company strengthened its video-sharing platform YouTube with Product Feeds. After releasing the Product Feeds platform which allows users to connect items to an existing YouTube video, 70% of users have purchased a brand, and advertisers saw a 60% increase in conversions. Alphabet Inc.’s (NASDAQ:GOOG) revenue in the first quarter of 2021 came in at $41.2 billion, up 34% from the same period of 2020. Alphabet Inc.’s (NASDAQ:GOOG) has a PE ratio of 33.47. The 52-week price range of Alphabet Inc.’s (NASDAQ:GOOG) is $1,347.01-2,543.93. Shares of GOOG jumped 75% over the last twelve months. On April 28, analysts from Piper Sandler maintained an Overweight rating on Alphabet Inc.’s (NASDAQ:GOOG) and raised the price target to $2635.
Stocks to Buy and Hold in the Healthcare Sector
The COVID-19 pandemic has strengthened the demand for the healthcare industry with vaccine producers Pfizer Inc. (NYSE: PFE), Moderna Inc. (NASDAQ: MRNA), and Johnson & Johnson (NYSE: JNJ) experiencing the impacts of the pandemic. According to an article published by investment bank and financial services company Morgan Stanley, it is expected that acceleration for both medical components and drug active pharmaceutical ingredients (API) will continue in the post-COVID-19 environment.
One of the leading COVID-19 vaccine developers Pfizer Inc. (NYSE: PFE) manufactured over 200 million doses in over 165 countries. The company’s revenue in the first quarter of 2021 came in at $14.6 billion a 45% increase from the same period of 2020 driven by additional selling days in the United States and international markets. Earlier this year, the company purchased pharmaceutical company Amplyx Pharmaceuticals, Inc. The pharmaceutical behemoth aims to expand its antifungal product range with the acquisition. Pfizer Inc. (NYSE: PFE) has a PE ratio of 19.66. The 52-week price range of Pfizer Inc. (NYSE: PFE) is $29.99-43.08. Shares of PFE jumped 22% over the last twelve months. On June 17, analysts from RBC Capital maintained a Sector Perform rating on Pfizer Inc. (NYSE: PFE) and raised the price target to $44.
Another notable stock in the healthcare sector to buy and hold for 20 years is Moderna Inc. (NASDAQ: MRNA). Moderna Inc. (NASDAQ: MRNA) targets to raise its capacity to produce COVID-19 vaccines by 3 billion in 2022 with its commitment to expand supply at its production sites. Moderna Inc.’s (NASDAQ: MRNA) revenue in the first quarter of 2021 came in at $1.9 billion, a significant increase from $8 million during the same period in 2020. Moderna Inc.’s (NASDAQ: MRNA) has a PE ratio of 133.51. The 52-week price range of Moderna Inc.’s (NASDAQ: MRNA) is $54.21-227.71. Shares of MRNA jumped 200% over the last twelve months. On May 7, Chardan Capital maintained a Buy rating on Moderna Inc. and raised the price target to $188.
Our Methodology
In this article we focused on high-growth tech and healthcare stocks that are working on new technologies. We took into account hedge fund sentiment, analysts’ ratings, fundamentals and future growth potential while selecting these stocks.
Photo by Jason Briscoe on Unsplash
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With this context in mind, let us now take a look at the 10 best young stocks to buy and hold for 20 years.
Best Young Stocks To Buy and Hold For 20 Years
10. DXC Technology Company (NYSE:DXC)
Number of Hedge Fund Holders: 28
Total Value of Hedge Fund Holdings: $1.05 Billion
Virginia-based technology services company DXC Technology Company (NYSE:DXC) ranks 10th on the 10 best young stocks to buy and hold for 20 years. The tech company offers various software platforms from CRM software, project management software, and marketing automation software to over 6,000 customers. In 2020, the company sold its DXC’s healthcare software to Dedalus Group for $525 million. The purchase enabled the firm to build a stronger global force in the clinical IT field. Meanwhile, global information firm Atos was rumored to be buying DXC Technology Company (NYSE:DXC) for $10 billion earlier this year. However, the firm declared in February 2021 that the deal will not push through.
DXC Technology Company (NYSE:DXC) posted its revenue of $4.38 billion in the first quarter of 2021, down 8.9% from the same period of 2020. However, the company’s long-term goals include a $1.5 billion free cash flow and an adjusted EBIT margin of 11% in 2024. The 52-week price range of DXC Technology Company (NYSE:DXC) is $14.73-41.75. Shares of DXC jumped 161% over the last twelve months. On June 2, Wells Fargo upgraded DXC Technology Company to Overweight and announced a $48 price target.
Just like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOG), DXC Technology Company (NYSE:DXC) is one of the best young stocks to buy and hold for 20 years.
There were 28 hedge funds that reported owning stakes in DXC Technology Company (NYSE:DXC) at the end of the first quarter, up from 39 hedge funds during the fourth quarter.
9. Nio Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 28
Total Value of Hedge Fund Holdings: $1.32 Billion
Ranking 9th in our list of the 10 best young stocks to buy and hold for 20 years is Nio Inc. (NYSE:NIO), a company that is headquartered in China and specializes in autonomous driving and artificial intelligence. In 2019, electric car manufacturer Tesla, Inc. (NASDAQ:TSLA) bought plant materials from Nio Inc. (NYSE:NIO), which benefitted both parties since Tesla, Inc. (NASDAQ:TSLA) was expanding its operations in China at the time of the deal, and Nio Inc. (NYSE:NIO) was gaining trust in China for electric vehicles. In 2020, the Model 3 was Tesla, Inc.’s (NASDAQ:TSLA) best-selling electric vehicle in China. While Nio Inc. (NYSE:NIO) was able to sell 43,728 automobiles, a 112.6% increase of year-over-year.
Nio Inc. (NYSE:NIO) posted its total revenue of $1.21 billion in the first quarter of 2021, up 481.8% from the first quarter of 2020. The 52-week price range of Nio Inc. (NYSE:NIO) is $6.50-66.99. Shares of NIO jumped 527% over the last twelve months. On June 8, BOCOM International initiated coverage on Nio Inc. with a Buy rating and announced a price target of $57.
There were 28 hedge funds that reported owning stakes in Nio Inc. (NYSE:NIO) at the end of the first quarter, down from 34 funds a quarter earlier. The total value of these stakes at the end of Q1 is $1.32 billion.
McLain Capital mentioned Nio Inc. (NYSE:NIO) in its Q2 2020 investor letter:
“Nio, Inc. (NIO): It’s stock up 360% since the beginning of June on no news, and one of our more troublesome short positions, the Chinese electric vehicle manufacturer is valued at a whopping $17bln on trailing revenue of only $1.1bln. In 2019, the business ran a -17% gross margin, a -140% EBITDA margin & burned ~$1.5bln in cash in 2019. The stock has become one of the most popular stocks among retail traders with approximately 250,000 accounts holding the name just on the popular Robinhood trading platform.”
8. Chewy, Inc. (NYSE:CHWY)
Number of Hedge Fund Holders: 32
Total Value of Hedge Fund Holdings: $433 Million
Ranking 8th in the 10 best young stocks to buy and hold for 20 years is e-commerce pet commodities company Chewy, Inc. (NYSE:CHWY). Chewy, Inc. functions as an online retailer for pet products to over 19 million active customers. Chewy, Inc. was initially acquired by PetSmart in a $3.35 billion deal that closed in 2017. However, in 2020, the companies announced that they have ended their partnership in a $6 billion recap deal. In 2021, Chewy, Inc. launched its newest platform “Connect with a Vet” to customers in 47 states. The platform was rated 10/10 during the launch by 80% of its users.
Chewy, Inc. (NYSE:CHWY) posted its net sales of $2.14 billion in the first quarter of 2021, up f31.7% year-over-year. The 52-week price range of Chewy, Inc. (NYSE:CHWY) is $44.31-120.00. Shares of CHWY jumped 60% over the last twelve months. On May 3, Guggenheim initiated coverage On Chewy with a Buy rating and announces a price target of $95.
Just like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOG), Chewy, Inc. (NYSE:CHWY) is one of the best young stocks to buy and hold for 20 years.
There were 32 hedge funds that reported owning stakes in Chewy, Inc. (NYSE:CHWY) at the end of the first quarter, down from 37 funds a quarter earlier. The total value of these stakes at the end of Q1 is $433 million.
Nelson Capital Management mentioned Chewy, Inc. (NYSE:CHWY) in its 4Q 2020 investor letter:
“One of our investment themes over the last several years has been the “humanization of pets,” which refers to the increasing amount of time and money that people are devoting to their animals. This theme has become even more evident during the pandemic, as many families and individuals have adopted pets while spending more time at home. Today, more than 85 million US households have pets. In 2015, roughly 7% of pet products in the U.S. were bought online. By 2019, that number had increased to 22%. Moreover, the pandemic has caused pet parents, new and experienced alike, to sign up for delivery of pet supplies in order to avoid trips to physical stores. 72% of pet owners made at least one online purchase for their pets in the past 12 months and 39% of those were subscription-based purchases.
Chewy (tkr: CHWY) is the largest pure-play pet “e-tailer” in the world, offering “the personalized service of a neighborhood pet store combined with the convenience and speed of e-commerce.” The company was founded in 2011 and was bought by PetSmart in 2017, for $3 billion. In June, 2019, Chewy went public. All of its sales are currently U.S.-based. The company has co-headquarters with one facility in Dania Beach, Florida and one in Boston, Massachusetts, and employs about 12,000 people. Chewy offers a selection of high-quality pet food, treats, supplies, and pet healthcare products.
In addition to one-time sales, Chewy is creating a recurring revenue model through its “autoship” program. This is essentially a subscription service for products that are sent at intervals specified by customers and includes such items as food and medicine. Customers are more profitable the longer they stay with the company, as their “lifetime value” grows. The company is organized around providing an exceptional customer experience. Chewy has 10 fulfillment centers scattered across the US, which enable cost-efficient overnight shipments to about 80% of the U.S. population and cost-efficient two-day shipments to nearly 100%. This allows Chewy to provide excellent service to the company’s more than 12.7 million active users.
Chewy’s ability operate profitably in the future hinges on two key variables: growing its customer base and more efficiently managing its fulfillment costs through automation of its fulfillment centers, thereby decreasing labor costs. Chewy has a smart, experienced management team and the company is expected to become profitable at the end of this fiscal year.”
7. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 32
Total Value of Hedge Fund Holdings: $1.14 Billion
Palantir Technologies Inc. (NYSE:PLTR) ranks 7th in our list of 10 best young stocks to buy and hold for 20 years. Palantir Technologies Inc. was founded in 2003 and went public in 2020. The company operates as an American software company that offers solutions to supply chain, health and life sciences, and auto racing. Earlier this year, the company entered a partnership with biotechnology company Celularity. The partnership allowed Celularity to use PLTR’s platform to get deeper insights into data collected from research and development, production.
Palantir Technologies Inc. (NYSE:PLTR) posted its revenue of $341 million in the first quarter of 2021, a 49% increase year-over-year. The 52-week price range of Palantir Technologies Inc. (NYSE:PLTR) is $8.90-45.00. Shares of PLTR jumped 5% over the last twelve months. On April 23, Wolfe Research initiated coverage on Palantir Technologies Inc. with a Peer Perform rating and announced a price target of $23.
There were 32 hedge funds that reported owning stakes in Palantir Technologies Inc. (NYSE:PLTR) at the end of the first quarter. The total value of these stakes at the end of Q1 is $1.14 billion
Guardian Fund mentioned Palantir Technologies Inc. (NYSE:PLTR) in its Q4 2020 investor letter:
“In October, we bought a stake in Palantir. Earlier, in June, our concentrated Tech Fund, which has a mandate to also buy shares in the secondary market, bought shares of Palantir from insiders, before the direct listing. At the price we bought, the equity had much more upside than downside. Palantir is operating a software platform that functions as the digital infrastructure for data-driven operations and decision making. The software helps to structure and capture context in data of large corporations. Governments are increasingly realizing that they have to deal with serious data challenges and cyber risk. As most governments cannot attract the most talented software engineers, they need private enterprises such as Palantir to help them build solid infrastructure. Foundry, Palantir’s software for enterprises, is used by companiesto make safer cars and airplanes or to accelerate cancer research. The speed to bring new clients on board is improving and revenues will grow faster than expenses. Palantir has a long runway of growth ahead.”
6. Splunk Inc. (NASDAQ:SPLK)
Number of Hedge Fund Holders: 41
Total Value of Hedge Fund Holdings: $934 Million
California-based Splunk Inc. (NASDAQ:SPLK) ranks 6th in our list of the 10 best young stocks to buy and hold for 20 years. Splunk Inc. operates as a technology company that develops software specializing in gathering and analyzing machine data from different devices. Splunk Inc. (NASDAQ:SPLK) continues to expand its services to meet the growing demand of the market. In 2020, the company acquired startup software product company Plumbr and startup digital experience monitoring platform Rigor to build one of its newest platforms Observability Suite. Observability Suite is an online platform that was designed to assist clients in gaining an overall picture of their data at an enterprise scale.
Splunk Inc. (NASDAQ:SPLK) posted its total revenue of $434 million in the first quarter of 2021, up 2% year-over-year. The 52-week price range of Splunk Inc. (NASDAQ:SPLK) is $110.28-225.89. Shares of SPLK jumped 6% over the last month. On June 7, Summit Insights Group upgraded Splunk Inc. to a Buy rating and announced a $160 price target.
Just like Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL), and Alphabet Inc. (NASDAQ:GOOG), Splunk Inc. (NASDAQ:SPLK) is one of the best young stocks to buy and hold for 20 years.
There were 41 hedge funds that reported owning stakes in Splunk Inc. (NASDAQ:SPLK) at the end of the first quarter. The total value of these stakes at the end of Q1 is $934 million.
ClearBridge Investments mentioned Splunk Inc. (NASDAQ:SPLK) in its Q1 2021 investor letter:
“In addition to the new issue market, we have been tactically adding growth exposure. To make room for these new names with more attractive outlooks related to the reopening, we sold out of companies where the thesis is not playing out at the pace we expected including Splunk.”
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Disclose. None. 10 Best Young Stocks to Buy and Hold for 20 Years is originally published on Insider Monkey.
