In this article, we will take a look at the 10 safe stocks to invest in for the long term in 2024.
The Sectors with Promising Growth
The recent market action can be attributed to the Fed’s decision. To discuss the future of the equity market, Drew Pettit, Citi US equity strategist, appeared in an interview on Yahoo Finance on September 26, 2024.
According to Pettit, the market is yet to hit an all-time high if you look beneath the surface. He suggests that the Fed’s decision and if the potential softness in the labor data comes through, investors may regain confidence positioning the market for recovery. He adds that in the past quarter, cyclical and secular stocks have been performing well, but are yet to hit the market peak.
Speaking of growth sectors, some sectors have outperformed others, growing exponentially. Pettit adds that stocks with mature business models have yielded greater returns from minuscule upsides in sales. As for the tech sector, he believes that stocks will remain resilient and will be able to handle some deceleration. He advises investors to remain cautious of tech stocks moving forward and focus on overlooked areas of the market such as consumer goods, financials, and cyclicals.
Investors Must Focus More on Fundamentals
The market saw a great run-up after the easing cycle. However, the question of a soft landing still stands. On September 30, Liz Young Thomas, SoFi head of investment strategy, appeared in an interview on CNBC to discuss the latest market trends and opportunities for investors.
Thomas believes that the maximum gains have already been achieved up until the easing cycle, however, growth may continue till the end of 2024. She stresses that the next 30 to 60 days are extremely crucial for the market and will help investors understand the motive behind the rate cuts, and whether the cuts were needed in the first place.
While growth in the tech sector has been slowing down, other sectors have reportedly grown and more than 80% of the S&P 500 has been trading above the 200-day moving average. She adds that the tech sector has started to strengthen and the optimism surrounding the Chinese economy may combine to yield positive results for the market.
Thomas reiterates that while multiples are rich, to ensure a soft landing, the market must move to trade based on fundamentals rather than on multiples. She explains that this simply means that multiples are unlikely to expand from here, but earnings may get more steady. Sectors such as industrials have been growing and expanding while financials have been slower. Thomas advises investors to focus on stocks that have strong fundamentals and steady earnings growth.
Now that we have glanced at the market outlook following the easing cycle, let’s take a look at the 10 safe stocks to invest in for the long term in 2024.
A financial analyst looking at a monitor displaying the stocks of the public company.
Our Methodology
To come up with the safest stocks to invest in for the long term in 2024 we consulted multiple reports and also screened for reliable growers using the Finviz stock screener. We compiled an initial list of 30 stocks. We then referred to the 10% year revenue growth rate for each of the stocks along with their history of dividend payouts. Companies with the highest growth rates and a history of dividend growth were included in the list. The 10 safe stocks to invest in for the long term in 2024 are in ascending order of their 10-year revenue growth rate.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Safe Stocks To Invest In For The Long Term in 2024
10. Colgate-Palmolive Company (NYSE:CL)
10 Year Revenue Growth: 1.38%
Number of Hedge Fund Holders: 52
Colgate-Palmolive Company (NYSE:CL) is one of the safest stocks to invest in for the long term. The manufacturing company is based in New York, United States, and owns some of the most popular fast-moving consumer goods brands in the world. These include Protex, Speed Stick, PCA Skin, and Sanex.
In the second quarter of 2024, the company logged $5.06 billion in net sales, up by 4.9% year-over-year. For the past four quarters, Colgate-Palmolive Company (NYSE:CL) has been delivering double-digit growth rates in operating profits, net income, and earnings per share. For the complete fiscal year 2024, the company expects net sales to grow from somewhere between 2% and 5%.
Colgate-Palmolive Company (NYSE:CL) has a strong international presence, accounting for 70% of its revenue. The company believes making reinvestments into the business is one of the most important aspects of a solid entity. In its Q2 2024 earnings release, the company highlighted that its growing sales coupled with an increase in advertising by 18% secures the long-term expansion goals of the business.
Latin America is a major market for the company, accounting for 25% of the company’s sales. Sales from Latin America grew by 7.6% year-over-year, while organic sales expanded by 18.8%. The region also logged $417 million in operating profits, the highest among all divisions in terms of dollar value. The company’s position in this segment and global market share of 41.5% in toothpaste across 200 countries is proof of its dominant position in the industry.
At the end of Q2 2024, 52 hedge funds owned stakes in Colgate-Palmolive Company (NYSE:CL), with total stakes amounting to $2.73 billion. Of this, First Eagle Investment Management was the largest shareholder with a position worth $875.86 million, as of June 30.
ClearBridge Investments’ ClearBridge Sustainability Leaders Strategy stated the following regarding Colgate-Palmolive Company (NYSE:CL) in its Q2 2024 investor letter:
“Colgate-Palmolive Company (NYSE:CL), added to the portfolio in 2023, started outperforming materially toward the tail end of last year as growth, margin and market share momentum began to turn favorably, and that momentum has continued year to date as the stock has nicely outperformed the large cap staples group. The fundamental upside has been driven by a combination of healthy organic growth (with positive volumes), good gross margin progression, and strong re-investment spending supporting market share gains and future growth.”
9. Walmart Inc. (NYSE:WMT)
10 Year Revenue Growth: 3.30%
Number of Hedge Fund Holders: 95
Walmart Inc. (NYSE:WMT) is one of the biggest retail companies in the world and one of the safest stocks to invest in for the long term. It operates retail outlets, wholesale units, and e-commerce sites in more than 20 countries that serve more than 240 million customers every week.
The company has remarkably high speeds of delivery due to its massive network. It currently operates 210 distribution centers and has a private fleet of 9,000 tractors, 80,000 trailers, and 11,000 drivers, all of which enabled the company to deliver 30% of orders within 3 hours over the past 12 months in the United States.
Walmart Inc. (NYSE:WMT) is consistently improving, and we say that because of its investments in technology and expansion. In FQ1 2025, the company launched an AI-backed platform allowing customers to receive product recommendations based on their likes and dislikes. As for its brick-and-mortar stores, by the end of FY 2026, the company expects more than half of its stores and fulfillment centers to be automated.
Walmart is also a favorite among sellers, as evidenced by a 36% growth in sellers on its marketplace in the fiscal first quarter of 2025. In addition to that, the company is on track to add a staggering $130 billion in sales if it achieves its 4% sales growth target over the next five years. Such can be attributed to the company’s initiatives for sellers on the Walmart Marketplace. At the end of August, Walmart Inc. (NYSE:WMT) announced new categories, established personalized omnichannel experiences, and advanced its digital and fulfillment capabilities, improving the overall seller experience.
Coming to the internal use of technology, the company is leveraging data to better understand and increase its customer base. To make better use of data, the company launched its insights and analytics platform, Walmart Data Ventures, in 2021. This year, the client base of Walmart Data Ventures increased by 173%, and the presence of small to medium enterprises shot up by 100% year-to-date.
Over the past four quarters, the Walmart Marketplace has achieved over 30% sales growth, contributing to its ranking on our list. As the demand for online retail grows, so will Walmart’s position in the market.
8. PepsiCo, Inc. (NASDAQ:PEP)
10 Year Revenue Growth: 3.30%
Number of Hedge Fund Holders: 65
PepsiCo, Inc. (NASDAQ:PEP) is one of the largest food companies in the world. The company is home to some of the most consumed products in the world including Lays, Doritos, Cheetos, Gatorade, Pepsi-Cola, and Mountain Dew.
During the year, the company went through major partnerships and acquisitions in the food industry and improved its stance on technology. Last week, PepsiCo announced the acquisition of Siete Foods for $1.2 billion, complementing the company’s multicultural portfolio with authentic Mexican-American food options. In addition to that, PepsiCo, Inc. (NASDAQ:PEP) partnered with Intuitive AI to launch Oscar Sort AI, a recycling and sortation system that will be deployed at several locations in the United States.
The company has more than 500 brands at its disposal making it one of the safest stocks to invest in for the long term in 2024. It has grown its revenue by 30% between 2020 and 2023. While declining prices across the globe may be a cause of concern, the company’s diversified business and solid growth trajectory minimize the risk attached to macroeconomic changes.
PepsiCo, Inc. (NASDAQ:PEP) plans to advance its productivity initiatives and commercial investments to manage growth. By the fiscal year ending 2024, the company expects to increase organic revenue by 4%, return $8.2 billion to shareholders, and log an 8% increase in earnings per share.
Analysts are bullish on PEP and their 12-month median price target of $185 points to a 10% upside from current levels. By the end of Q1 2024, 62 hedge funds included PepsiCo, Inc. (NASDAQ:PEP) in their portfolios with total stakes amounting to $4.35 billion. Fisher Asset Management emerged as the largest stakeholder, with a position worth $1.21 billion.
Artisan Partners mentioned PepsiCo, Inc. (NASDAQ:PEP) in its Q1 2024 investor letter. Here is what the firm said:
“In the demographics/consumer trends theme, slowing sales volumes led us to focus more on services versus goods. As an example, we sold our position in food and beverage leader PepsiCo given slowing growth in its underperforming core beverage business, one which generates about 60% of revenues. Adding to the uncertainty of growth prospects beverages, PepsiCo was forced by local lawmakers and industry wholesalers to shift to a new distribution model during the rollout of Hard Mtn Dew, a new line of drinks that combines Mountain Dew with malt liquor.”
7. NextEra Energy, Inc. (NYSE:NEE)
10 Year Revenue Growth: 5.09%
Number of Hedge Fund Holders: 73
NextEra Energy, Inc. (NYSE:NEE) is a prominent renewable energy company that provides energy to more than 3 million customers in the United States. The company generates, transmits, distributes, and sells electric power, generated through wind, solar, nuclear, and natural gas, across North America.
NextEra Energy, Inc. (NYSE:NEE) provides its services across two major segments including Florida Power & Light (FPL), an electric utility business, and NextEra Energy Resources (NEER), a clean energy producer. FPL accounts for the majority of its revenue.
Since 2001, NextEra Energy’s (NYSE:NEE) innovations have helped customers save over $16 billion in fuel costs. During the second quarter of 2024, the company added more than 3,000 megawatts of new renewables and storage. In June, the company announced an agreement with Entergy to develop close to 4.5 gigawatts of new solar and energy storage projects. These projects will provide cheaper renewable energy to customers across the United States, especially in Arkansas, Louisiana, Mississippi, and Texas.
To capitalize on its strategic investments, NextEra Energy (NYSE:NEE) plans to invest somewhere between $8 billion and $8.8 billion in capital expenditures for the fiscal full year 2024. At the end of Q2 2024, 73 hedge funds were bullish on the stock with total stakes amounting to $2.1 billion.
ClearBridge Investments’ ClearBridge Large Cap Growth Strategy stated the following regarding NextEra Energy, Inc. (NYSE:NEE) in its Q2 2024 investor letter:
“AI-related momentum was a key driver of performance in the second quarter, lifting the enablers in technology as well as holdings like renewable power producer NextEra Energy, Inc. (NYSE:NEE) that supply the increasing energy needs of data centers. Parts of the market lacking an AI connection, like our medical device holdings, underperformed despite no change to fundamentals. We have managed through several similar momentum periods over our tenure and have delivered long-term results for shareholders by staying true to an approach that emphasizes diversification across three buckets of growth companies (select, stable and cyclical) and seeks to take advantage of attractive entry points into quality growth businesses.”
6. The Home Depot, Inc. (NYSE:HD)
10 Year Revenue Growth: 6.55%
Number of Hedge Fund Holders: 86
The Home Depot, Inc. (NYSE:HD) is a home improvement retailer based in the United States. The company sells tools, construction products, and appliances. The company was founded in 1979 and now owns over 2,300 stores across North America.
The company vowed to expand the day it was brought to life. Its initial stores were sized at an average of 60,000 square feet and today, its stores are 105,000 square feet on average. Additionally, customers can choose from over 35,000 products in stores and 1 million products online at Home Depot, Inc. (NYSE:HD). To strengthen its position in the industry, the company locked in several product launches and acquisitions throughout the year, In June Home Depot completed the acquisition of SRS Distribution, a residential specialty trade distribution company. Last week, Home Depot’s retail media division, Orange Apron Media, launched a new self-service ad platform allowing advertisers to plan, activate, optimize, and report their media campaigns.
The company has over 475,000 associates who enable the smooth running of the company. To keep up with the industry requirements, Home Depot, Inc. (NYSE:HD) improved the tools its associates use for selling. The advancements allow associates to view customers’ activity and experience at Home Depot. Home Depot, Inc. (NYSE:HD) also launched another platform allowing associates and store leaders to have a quick digital view of a customer’s journey. As a result, associates can understand customer behavior and their likes, dislikes, and buying patterns.
In the second quarter of 2024, Home Depot, Inc. (NYSE:HD) logged $43.2 billion in sales, up by 0.6% year-over-year. 86 hedge funds held the stock at the end of Q2 2024, of which, Fisher Asset Management was the largest shareholder, as of June 30. Analysts are bullish on the stock, and that may be because of the stock’s consistent financial performance and strategic expansion outlook.
5. Costco Wholesale Corporation (NASDAQ:COST)
10 Year Revenue Growth: 8.49%
Number of Hedge Fund Holders: 71
Costco Wholesale Corporation (NASDAQ:COST) ranks fifth on our list of the safest stocks to invest in for the long term. The company is a wholesale corporation with over 891 warehouses across the globe, of which 614 are based in the United States of America.
Historically, the company has always been the epitome of solid growth. Costco Wholesale Corporation (NASDAQ:COST) is one of the few companies that managed to reach $3 billion in sales within the first six years of operation. By 1993, the company was generating $16 billion in annual sales. In 2023, Costco Wholesale Corporation (NASDAQ:COST) ended the year with a revenue of over $242 billion.
Costco Wholesale Corporation (NASDAQ:COST) reported $78.2 billion in sales, an increase of 1% year-over-year, during the fiscal fourth quarter of 2024. For the full fiscal year 2024, the company logged $249.6 billion in sales, up by 5% year-over-year.
The company’s reliable growth trajectory is what investors like about the stock. Before the end of 2024, the company plans to open another 12 locations, bringing the total to 30 for this year alone. The company spent over $1.06 billion on capital expenditures during the fiscal third quarter of 2024, bringing the full-year total to $4.3 billion.
Analysts are bullish on COST and their 12-month median price target of $950 points to an 8% upside from current levels. By the end of the second quarter, 71 hedge funds held shares in Costco Wholesale Corporation (NASDAQ:COST) with total stakes amounting to $5.96 billion. The largest shareholder was Fisher Asset Management with a position worth $2.51 billion, as of June 30.
ClearBridge Investments’ ClearBridge Sustainability Leaders Strategy stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its Q2 2024 investor letter:
“Consumer staples holdings were also standouts in the quarter, such as Costco Wholesale Corporation (NASDAQ:COST), which continues to execute well and delivered better than expected earnings, helped by strong traffic driving better expense leverage. Customers also looked to be shifting toward more discretionary purchases.”
4. Visa Inc. (NYSE:V)
10 Year Revenue Growth: 10.87%
Number of Hedge Fund Holders: 163
Visa Inc. (NYSE:V) is a multinational payment card service provider based in the United States that facilitates electronic fund transfers across the globe. The company also provides commercial patent solutions, sells cards, has virtual cards, and offers B2B payment options.
In the past quarter, Visa Inc. (NYSE:V) leveraged its proprietary services to expand its presence globally. Yape, a super app in Peru with more than 15 million users has now integrated Visa’s services to facilitate money transfers directly through mobile devices. Moreover, prominent digital wallets in Vietnam have enabled Visa cards for over 50 million users.
In the fiscal third quarter of 2024, the company logged $8.9 billion in revenue, up by 10% year-over-year. The company also grew its global payments volume by 7% and 5% in the US. Visa Inc. (NYSE:V) is a legendary company that knows the art of expansion. Only last week, the company acquired Featurespace, an AI payments protection technology developer. The acquisition will help Visa expand in the fraud detection and risk scoring segments. In addition to that, Visa Inc. (NYSE:V) launched a pilot project, Visa Commercial Solutions Hub, to bring its commercial payments network under the same roof, in an attempt to disrupt a $145 trillion market. Financial institutions and businesses alike will now be able to access a multitude of payment options on a single platform.
Analysts are bullish on the stock, and why should they not be? The company currently has more than 4.5 billion cards in circulation in over 200 countries. In addition to that, In the past 12 months, Visa has facilitated 296.8 billion transactions with a total volume of $15.5 trillion.
Overall, 163 hedge funds held stakes in Visa (NYSE:V) in the second quarter, with positions worth $24.9 billion. According to the Insider Monkey database, TCI Fund Management is the largest shareholder of the company, as of June 30.
Aoris International Fund stated the following regarding Visa Inc. (NYSE:V) in its Q2 2024 investor letter:
“Visa Inc. (NYSE:V) operates the world’s largest payments network, which facilitates the movement of money between merchants, financial institutions, consumers, businesses, and governments.
The company is best known for enabling consumers to make debit and credit card payments. In the year to September 2023, 4.3 billion Visa cardholders made 213 billion transactions on its network, to a total value of US$12.1 trillion.
Compared to cash and cheques, which are still widely used around the world, Visa’s network is a more convenient, secure, and ubiquitous way for consumers to pay. Visa has invested to reduce friction and fraud in the payments experience, to the benefit of both merchants and consumers…” (Click here to read the full text)
3. Microsoft Corporation (NASDAQ:MSFT)
10 Year Revenue Growth: 10.94%
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is one of the biggest technology companies in the world that develops productivity and business suite applications, cloud products, and personal computing products.
Microsoft Corporation (NASDAQ:MSFT) reported revenue worth $64.7 billion in FQ4 2024, up by 15% year-over-year. During the same quarter, Microsoft Cloud had $36.8 billion in quarterly revenue, up by 21%. Its productivity/business processes and intelligent cloud segment, on the other hand, logged revenue worth $20.3 billion and $28.5 billion respectively.
The company is a leading investor in artificial intelligence technology. In July, Microsoft and Lumen Technologies partnered to enhance and modernize Lumen’s workloads to Microsoft Azure. Earlier in August, Microsoft Corporation (NASDAQ:MSFT) partnered with Palantir Technologies, a data software company, to deploy its suite of products in Microsoft Azure. Only last week, the company partnered with Rezolve AI to change the online retail landscape with AI-backed solutions.
The company’s partnerships do not end here. BlackRock, Global Infrastructure Partners, Microsoft, and MGX recently made a $100 billion deal to enhance the functioning of data centers and AI. The company is also expanding its footprint by establishing engineering development centers in Abu Dhabi, UAE. In addition to that, Microsoft invested a staggering EUR 4.3 billion to boost AI infrastructure and cloud usage in Italy.
Overall, Microsoft Corporation’s (NASDAQ:MSFT) financial strength coupled with its strategic partnerships in various industries make it one of the safest stocks to invest in for the long term. In the second quarter, 279 hedge funds held positions in Microsoft (NASDAQ:MSFT) and their stakes amounted to $89.07 billion. As of June 30, the Bill & Melinda Gates Foundation Trust is the most dominant shareholder in the company and has a position worth $15.6 billion, according to the Insider Monkey database.
Fred Alger Management’s Alger Spectra Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2024 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the quarter, shares contributed to performance after the company reported strong fiscal third quarter results, underscoring its leadership position in the cloud and highlighted its role as a primary facilitator and beneficiary of AI adoption. Company revenue growth, operating margin, and earnings growth surpassed consensus expectations. The utility scale Azure cloud business grew 31% in constant currency of which 7% was AI related versus 3% two quarters ago. Further, management noted most of the AI revenue continues to stem from inference rather than training indicating high quality AI applications by Microsoft’s clients. Management also indicated that the significant cost-cutting programs in corporate America are done, suggesting that the cost optimization headwinds previously impacting Azure’s growth are over. Separately, management provided color on their new AI-productivity tool, Copilot, noting that approximately 60% of Fortune 500 companies are already using Copilot, and that the quarter witnessed a 50% increase in Copilot assistance integration within Teams. We continue to believe that Microsoft has the potential to hold a leading position in AI, given its innovative approach and demonstrated high unit volume growth opportunity.”
2. UnitedHealth Group Incorporated (NYSE:UNH)
10 Year Revenue Growth: 11.83%
Number of Hedge Fund Holders: 114
UnitedHealth Group Incorporated (NYSE:UNH) ranks second on our list of safe stocks to invest in for the long term in 2024. It is a multinational health insurance and services company based in the United States. UnitedHealth Group Incorporated (NYSE:UNH) operates several subsidiaries including UnitedHealthcare Servic LLC, Optum, Change Healthcare, and United Health Foundation.
UnitedHealth Group’s (NYSE:UNH) primary goal is giving back to the community. In the past year, UnitedHealth’s professionals made over 2 million home visits to identify health emergencies in patients that would have gone unrecognized otherwise.
On the financial front, UnitedHealth Group Incorporated (NYSE:UNH) logged $98.9 billion in revenue, up by nearly $6 billion. The company is notorious for expansion. In the past 30 days, the company announced plans worth thousands surrounding the provision of integrated healthcare services and healthcare workforce expansion in Idaho and Mexico, to name a few. In addition to that, the company announced its 2025 medicare advantage plan last week. According to the plan, the company will be striving to reduce the cost of healthcare for patients with chronic diseases.
In less than a decade, UnitedHealth Group Incorporated (NYSE:UNH) has grown its revenue from $101 billion in 2011 to $372 billion in 2023. The company currently provides health coverage to over 50 million people in the United States, a testament to its position in the industry and the value it provides to the world.
Analysts are bullish on UNH and their 12-month median price target of $620 points to a 5% upside from current levels. Overall, 114 investors were bullish on the stock at the end of Q2 2024, with total stakes amounting to $12.5 billion. As of June 30, Fisher Asset Management was the largest shareholder with a position worth $1.57 billion.
Invesco Distributors, Inc. stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its Q2 2024 investor letter:
“UnitedHealth Group Incorporated (NYSE:UNH): Like many managed care providers, United Health has come under pressure from rising medical costs and higher-than-expected utilization. The stock is currently undervalued based on our analysis. We view the company as a high-quality compounder with secular growth opportunities in the managed care segment. The US Presidential election may cause additional near-term uncertainty, but we believe United Health will be able to rebound once pricing and utilization issues normalize.”
1. Broadcom Inc. (NASDAQ:AVGO)
10 Year Revenue Growth: 29.92%
Number of Hedge Fund Holders: 130
Broadcom Inc. (NASDAQ:AVGO) is a semiconductor manufacturing company that designs, develops, and supplies semiconductor and software infrastructure products. Some of its products include cable modems, networking processors, and storage adapters.
Broadcom Inc. (NASDAQ:AVGO) is one of the most prominent future stocks and we say that because in 2024, the company extended its AI workload to deliver the industry’s first switch platform for scalable AI systems. The company also launched a new technology, Retimers, that helps computers process huge amounts of data for AI tasks. Both these innovations are breakthroughs for AI infrastructure.
The company’s futuristic approach is not recent. Previously, in 2023, Broadcom Inc. (NASDAQ:AVGO) launched the industry’s first highest-performance fabric for AI networks and the industry’s first switch with an on-chip neural network. In addition to that, the company recently partnered with Comcast, and Charter Communications to make chipsets capable of 25Gbps speed. Previously in August, the company launched Rally Anywhere, an on-premise version of Rally, its leading enterprise agility platform. The on-premise version will allow businesses to plan, prioritize, manage, and track activities at every level in the organization.
In the fiscal third quarter of 2024, the company’s revenue was $13.1 billion, up by 47% year-over-year, driven by the growing demand for AI and its cloud platform, VMware. In the fourth quarter of 2024, Broadcom expects revenue from AI to grow by 10% sequentially reaching $3.5 billion, bringing the full-year total to $12 billion. Overall, VMware, its proprietary cloud platform logged $3.8 billion in revenue during FQ3 2024.
Overall, Broadcom Inc. (NASDAQ:AVGO) has an upward growth trajectory for the foreseeable future. Such can be attributed to the expanding demand for artificial intelligence and data and storage capabilities.
Aristotle Atlantic Partners mentioned Broadcom Inc. (NASDAQ:AVGO) in its Q2 2024 investor letter. Here is what the firm said:
“Broadcom is a global technology leader that designs, develops and supplies a broad range of semiconductor and infrastructure software solutions. The company strategically focuses its research and development resources to address niche opportunities in target markets and leverage its extensive portfolio of U.S. and other patents and other intellectual property to integrate multiple technologies and create system-on-chip component and software solutions that target growth opportunities. Broadcom designs products and software that deliver high performance and provide mission-critical functionality. The company has a history of innovation in the semiconductor industry and offers thousands of products that are used in end products such as enterprise and data center networking, home connectivity, “set-top boxes broadband access”, telecommunication equipment, smartphones and base stations, data center servers and storage systems, factory automation, power generation and alternative energy systems, and electronic displays. Broadcom differentiates itself through its high-performance design and integration capabilities and focuses on developing products for target markets where it believes it can earn attractive margins.
We view Broadcom’s semiconductor business as being very well positioned to benefit from secular growth in data center networking, which is being driven by AI and cloud computing. The company continues to invest in research and development, and we see this as a competitive advantage for the company. Broadcom’s infrastructure software business is a recurring revenue business model that provides mission-critical mainframe support software to its customer base. The recent VMware acquisition will enhance this business strategy and accelerate the growth rate of this business unit, as VMware’s product suite includes key tools for AI server upgrades. Our long-term investment thesis is supported by Broadcom’s success in its strategy of maintaining technology and market share leadership in mission-critical markets with high switching costs and deep profit pools.”
Overall, AVGO ranks first among the 10 best safe stocks to invest in for the long term. While we acknowledge the potential of semiconductor companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVGO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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