The S&P 500 index closed 0.3% lower at 6,101.24 on Friday, January 24, reversing its course after hitting a fresh intraday record earlier in the session. The Nasdaq Composite and Dow Jones Industrial Average also slipped, with the former dropping 0.5% to 19,954.30 and the latter falling 140.82 points to 44,424.25. This marked the end of a four-day winning streak for the three major indexes. The decline was largely attributed to investors taking profits, particularly in mega-cap tech stocks. Despite this, the market remains bullish, with the S&P 500 and Nasdaq posting their second consecutive positive week, rising 1.7% and 1.7% respectively. The Dow climbed 2.2% over the same period.
In other news, President Trump made headlines on Thursday by calling for interest rates to drop immediately and asking Saudi Arabia and other OPEC nations to lower the price of oil. Market participants are closely watching the President’s statements, which have had a significant impact on the market. However, the market’s optimism is largely driven by President Donald Trump’s pro-business policies, which have boosted risk assets. Investors are also relieved that the President has only made threats on the tariff front, rather than taking formal action, during his first few days in office.
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In an interview with CNBC on January 23, Mike Bailey, Director of Research at FBB Capital Partners, discussed the current state of the market. He noted that companies have had a great quarter, which reflects the fact that the economy is doing well, people have jobs, and they’re buying things, which trickles down to the market. This, in turn, has a positive impact on the tech sector as a whole. However, Bailey advised investors to take a more nuanced approach and consider the specific fundamentals of each company.
Bailey believes that large-cap companies have the greatest opportunity to meet or exceed investor expectations for growth. He noted that while small caps are trading cheaper, they may not be the best option for long-term investments or high-conviction plays. Bailey explained that his firm’s approach is focused on identifying companies with strong earnings growth potential, and larger cap companies tend to have more resources and a stronger track record of delivering on their growth promises. However, he did acknowledge that small caps can be a good option for investors who are looking to capitalize on a short-term economic cycle or recovery.
Bailey emphasized the importance of looking beyond the top ten stocks that make up 50% of the market, which often dominate the conversation. He suggested that there are plenty of other companies that are worth considering. These companies, according to Bailey, offer a compelling combination of growth potential, valuation, and dividend yield, making them attractive options for investors looking to diversify their portfolios.
Furthermore, Bailey emphasized the importance of having a long-term perspective and not getting caught up in short-term market fluctuations. He encouraged investors to focus on the underlying fundamentals of each company and to avoid making emotional decisions based on market volatility.
Large-cap companies with stable revenue and consistent net income growth remain attractive options for investors seeking reliable returns and long-term stability. With that in context, let’s take a look at the 12 best fundamental stocks to buy now.
Source: Pixabay
Our Methodology
We used Blue Chip ETFs and financial media reports to compile a list of 25 companies with strong fundamentals. We then narrowed our choices to 12 stocks with a 10-year revenue growth rate between 8% to 20% and a 10-year net income growth rate of at least 8%, informed by reputable sources, such as SeekingAlpha. Then we used Insider Monkey’s Hedge Fund database to rank 12 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? 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).
12 Best Fundamental Stocks to Buy Now
12. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Holdings: 69
10-Year Revenue Growth Rate: 10.96%
10-Year Net Income Growth Rate: 13.91%
Chipotle Mexican Grill, Inc. (NYSE:CMG) is a fast-casual restaurant chain specializing in burritos, tacos, and other Mexican-inspired cuisine. The company has been a leader in the industry for over three decades and operates over 3,600 locations primarily in North America.
Chipotle Mexican Grill, Inc. (NYSE:CMG) is investing in new technologies and initiatives aimed at enhancing the customer experience and improving operational efficiency. One key area of focus is on throughput, or the speed at which customers can be served during peak hours. The company has set a goal of increasing the number of entrees served per 15 minutes, with a target of reaching the low 30s, up from the current mid-20s. To achieve this, Chipotle Mexican Grill, Inc. (NYSE:CMG) is implementing new equipment and processes, such as dual-sided planchas and produce slicers, to streamline food preparation and reduce labor costs. Additionally, the company is investing in digital technologies, including AI-powered marketing and loyalty programs, to drive customer engagement and retention.
Another key area of focus for Chipotle Mexican Grill, Inc. (NYSE:CMG) is international expansion. The company has recently opened its first restaurant in Dubai and is planning to accelerate growth in Canada, where it currently has almost 50 locations. In Europe, Chipotle Mexican Grill, Inc. (NYSE:CMG) is working to refine its menu and operational systems to better meet the needs of local customers, with a focus on delivering high-quality, sustainable food at a competitive price.
11. Amphenol Corporation (NYSE:APH)
Number of Hedge Fund Holdings: 69
10-Year Revenue Growth Rate: 11.03%
10-Year Net Income Growth Rate: 13.08%
Amphenol Corporation (NYSE:APH) is a global leader in manufacturing interconnect and sensor systems. The company provides solutions for a variety of industries, including automotive, aerospace, IT, and telecommunications. Amphenol Corporation’s (NYSE:APH) components are essential in high-performance applications such as data centers, electric vehicles, and industrial automation.
Amphenol Corporation (NYSE:APH) is focusing on expanding its position in next-generation technologies, particularly in the area of artificial intelligence (AI). The company is working closely with leading players in the industry to develop and supply high-speed and power interconnect products that enable the complex calculations and communications required for AI applications. Amphenol Corporation’s (NYSE:APH) products are designed to provide low latency, high-speed connectivity, and power efficiency, making them an essential component in the development of AI systems.
Amphenol Corporation (NYSE:APH) is also investing in other growth areas, such as the industrial market, where the company is seeing improving demand trends. The company is experiencing growth in areas such as medical, rail mass transit, alternative energy, and industrial instrumentation, which is driven by the increasing adoption of electronics and connectivity in these industries. Amphenol Corporation (NYSE:APH) is expanding its product offerings and capabilities in these markets, both organically and through complementary acquisitions to further enhance its position and drive growth. The company’s acquisition of the Andrew business from CommScope is expected to strengthen its position in the global communications market and add new technologies along with new team members.
10. The Charles Schwab Corporation (NYSE:SCHW)
Number of Hedge Fund Holdings: 74
10-Year Revenue Growth Rate: 12.60%
10-Year Net Income Growth Rate: 16.23%
The Charles Schwab Corporation (NYSE:SCHW) is a major financial services firm that provides investment management, brokerage, banking, and advisory services. The company’s customer base includes individual investors, financial advisors, and institutions. The Charles Schwab Corporation (NYSE:SCHW) is a pioneer in low-cost investing and is a preferred choice for cost-conscious clients.
The Charles Schwab Corporation (NYSE:SCHW) is focusing on driving growth through a combination of organic expansion, strategic investments, and technological innovation. One key area of focus is the development of new products and services that cater to the evolving needs of its clients. The company is investing heavily in its alternative investments platform, which will provide high-net-worth and ultra-high-net-worth clients with access to a range of alternative asset classes, including private equity, private credit, and hedge funds. This move is expected to help The Charles Schwab Corporation (NYSE:SCHW) deepen its relationships with its most valuable clients and attract new business from investors seeking diversified investment portfolios.
Furthermore, The Charles Schwab Corporation (NYSE:SCHW) is exploring the possibility of offering spot cryptocurrency trading in the future depending on regulations. This move would enable the company to capitalize on the growing demand for cryptocurrency investments and provide its clients with a more comprehensive range of investment options. Additionally, The Charles Schwab Corporation (NYSE:SCHW) is investing in its digital capabilities, including new mobile apps and online platforms, to make it easier for clients to manage their investments and access the company’s services.
9. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holdings: 75
10-Year Revenue Growth Rate: 8.50%
10-Year Net Income Growth Rate: 13.53%
Costco Wholesale Corporation (NASDAQ:COST) is a multinational retailer that operates a chain of membership-based warehouse clubs. The company offers a wide selection of products, including fresh produce, meats, dairy products, household essentials, electronics, and more. Costco Wholesale Corporation (NASDAQ:COST) has over 800 locations worldwide and is one of the largest retailers in the world.
Costco Wholesale Corporation (NASDAQ:COST) is investing in its online platform, improving search functionality, and making inventory available through its mobile app. Additionally, the company is leveraging its partnerships with Instacart and Uber to offer same-day delivery to its members, making it easier for them to shop online and receive their purchases quickly. By enhancing its e-commerce capabilities, Costco Wholesale Corporation (NASDAQ:COST) aims to increase its online sales and attract new members who value the convenience of shopping from home.
Costco Wholesale Corporation (NASDAQ:COST) is also expanding its product offerings and services to drive growth and attract new members. The company has introduced new categories, such as precious metals and gift cards, which have been well-received by members. Additionally, Costco Wholesale Corporation (NASDAQ:COST) is enhancing its pharmacy services by offering online prescription refill and delivery options, which is expected to drive traffic to its website and increase sales. The company is also focusing on its private label brand, Kirkland Signature.
Another key area of focus for Costco Wholesale Corporation (NASDAQ:COST) is its international expansion. The company is opening new locations in countries such as Canada, Mexico, and Asia, and is seeing strong growth in these markets. To support its international expansion, Costco Wholesale Corporation (NASDAQ:COST) is investing in its logistics and supply chain capabilities, including the development of new distribution centers and the implementation of more efficient delivery systems.
8. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Hedge Fund Holdings: 82
10-Year Revenue Growth Rate: 14.63%
10-Year Net Income Growth Rate: 18.69%
Intuitive Surgical, Inc. (NASDAQ:ISRG) is a leading medical technology company that specializes in the development and manufacturing of robotic-assisted surgical systems. The company’s flagship product, the da Vinci surgical system, has revolutionized the field of surgery by providing surgeons with enhanced visualization, precision, and control.
Intuitive Surgical, Inc. (NASDAQ:ISRG) is focused on driving growth through the expansion of its product portfolio and the increased adoption of its systems in new and existing markets. One key area of focus is the continued development and launch of new products. The company recently launched the da Vinci 5 system, which offers enhanced capabilities and features for surgeons. The company has also announced plans to expand its manufacturing capacity and invest in new facilities, which will enable it to meet the growing demand for its products and improve its operational efficiency. Additionally, Intuitive Surgical, Inc. (NASDAQ:ISRG) is prioritizing investments in research and development, with a focus on advancing the field of robotic-assisted surgery and developing new technologies that can improve patient outcomes. Intuitive Surgical, Inc. (NASDAQ:ISRG) is also focusing on increasing the adoption of its systems in certain procedures, such as general surgery and thoracic surgery, and is working to expand its presence in emerging markets, such as China and India.
Intuitive Surgical, Inc. (NASDAQ:ISRG) is expanding its global reach, the company has announced plans to establish a direct presence in certain countries, such as Italy and Spain, which will enable it to build closer relationships with customers and better understand their needs. Intuitive Surgical, Inc. (NASDAQ:ISRG) is also investing in training and education programs to support the adoption of its systems in new markets and to help surgeons develop the skills they need to use the company’s products effectively. Furthermore, the company is exploring new business models, such as leasing and financing options, to make its products more accessible to a wider range of customers.
7. Intercontinental Exchange, Inc. (NYSE:ICE)
Number of Hedge Fund Holdings: 84
10-Year Revenue Growth Rate: 12.47%
10-Year Net Income Growth Rate: 16.73%
Intercontinental Exchange, Inc. (NYSE:ICE) owns and operates the New York Stock Exchange (NYSE) and offers data services, analytics, and solutions for risk management. The company serves a diverse clientele that includes financial institutions, corporations, and government entities.
Intercontinental Exchange, Inc. (NYSE:ICE) is investing in its commodities business, which has seen significant expansion in recent years. The company’s global commodities platform provides a network of diverse, liquid, and interconnected markets, enabling customers to manage their energy price risk and capitalize on new opportunities. The company believes it is well-positioned to benefit from the growing demand for energy, particularly in non-OECD countries, where energy consumption is expected to double over the next 25 years.
In addition to its energy business, Intercontinental Exchange, Inc. (NYSE:ICE) is also investing in its mortgage technology segment, which provides a range of solutions for the U.S. mortgage industry. The company’s recent acquisition of Black Knight has enabled it to offer a comprehensive platform that spans the entire mortgage lifecycle, from origination to servicing.
Intercontinental Exchange, Inc. (NYSE:ICE) is also focused on developing new partnerships and collaborations. The company’s recent partnership with MarketAxess is expected to enhance its liquidity pool and client value proposition in the fixed-income space. Intercontinental Exchange, Inc. (NYSE:ICE) is also investing in new technologies, such as artificial intelligence and machine learning, to improve the efficiency and effectiveness of its platforms.
6. S&P Global Inc. (NYSE:SPGI)
Number of Hedge Fund Holdings: 85
10-Year Revenue Growth Rate: 10.73%
10-Year Net Income Growth Rate: 14.67%
S&P Global Inc. (NYSE:SPGI) is a leading provider of credit ratings, research, and market intelligence, with a rich history dating back to 1860. The company has evolved over the years to become a trusted source of essential intelligence for investors, corporations, and governments worldwide. S&P Global Inc. (NYSE:SPGI) has a diverse portfolio of businesses, including S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices, and S&P Global Platts.
S&P Global Inc. (NYSE:SPGI) is focused on driving growth through innovation and investment in new technologies. One key area of focus is the development of artificial intelligence (AI) and machine learning (ML) capabilities, which are being integrated into various products and services across the company’s divisions. For example, the company’s Market Intelligence division is using AI to enhance its data analytics and provide more insightful research to clients. Additionally, the company’s S&P Global Ratings division is leveraging AI to improve the accuracy and efficiency of its credit rating models. By embracing these new technologies, S&P Global Inc. (NYSE:SPGI) aims to stay ahead of the curve and provide its clients with the most advanced and effective solutions.
S&P Global Inc. (NYSE:SPGI) is also focused on enhancing its customer relationships and delivering more value to its clients. The company has recently created a new Chief Client Officer role, which will be responsible for connecting the dots across different divisions and providing a more integrated approach to sales and customer service. This move is designed to help the company better understand its client’s needs and provide more tailored solutions to meet those needs.
5. Boston Scientific Corporation (NYSE:BSX)
Number of Hedge Fund Holdings: 92
10-Year Revenue Growth Rate: 8.17%
10-Year Net Income Growth Rate: 20.06%
Boston Scientific Corporation (NYSE:BSX) is a developer, manufacturer, and marketer of medical devices that are used in a range of interventional medical specialties including cardiology, endoscopy, neurology, and urology, among other fields. The company a has diverse portfolio of products and technologies and provides it to healthcare professionals and patients worldwide.
Boston Scientific Corporation (NYSE:BSX) is investing in emerging markets and technologies, such as structural heart and electrophysiology. The company has recently launched its ACURATE Prime platform in Europe, which has shown promising results and has the potential to increase the eligible patient population by approximately 20%. Additionally, Boston Scientific Corporation (NYSE:BSX) is committed to its TAVR program in the US and is working closely with the FDA to determine the most efficient and prudent path forward. The TAVR is a procedure where a doctor replaces a damaged heart valve using a thin tube inserted through an incision in the leg, without needing major open-heart surgery. The company believes that its Prime platform, with its enhanced features and increased radial force, will play a critical role in its future success in the TAVR market.
Boston Scientific Corporation (NYSE:BSX) is also prioritizing the development of its portfolio of imaging and diagnostic technologies, including its IVUS and OCT platforms. The company’s AVVIGO+ system, which utilizes artificial intelligence to aid in the interpretation of IVUS images, has shown significant results and is expected to drive growth in the company’s imaging business. Furthermore, Boston Scientific Corporation (NYSE:BSX) is exploring opportunities to expand its offerings in the field of pulmonary embolism treatment, including its EKOS system, which has demonstrated strong clinical results. By investing in these emerging areas, the company is well-positioned to drive growth and expansion in the coming years.
4. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holdings: 95
10-Year Revenue Growth Rate: 14.35%
10-Year Net Income Growth Rate: 20.95%
The Progressive Corporation (NYSE:PGR) is one of the largest and most successful insurance companies in the United States. Founded in 1937, the company has a long history of providing innovative and competitive insurance products to its customers. The Progressive Corporation (NYSE:PGR) is renowned for its direct-to-consumer approach and innovative tools, such as usage-based insurance programs.
The Progressive Corporation (NYSE:PGR) is investing heavily in its marketing and advertising efforts. The company has seen significant returns on its media spend, with cost per sale remaining below target acquisition costs. This has allowed the company to continue to grow its customer base by using its app and the agency side. The company is also leveraging its segmentation capabilities to target high-quality customers and improve retention rates. By using data and analytics to better understand customer behavior and preferences, The Progressive Corporation (NYSE:PGR) aims to tailor its marketing efforts to specific segments and increase the effectiveness of its advertising spend.
The Progressive Corporation (NYSE:PGR) is also taking steps to expand its product offerings and increase its presence in new markets. The company has seen significant growth in its commercial lines business and is looking to build on this momentum by introducing new products and services tailored to the needs of small businesses and entrepreneurs. Additionally, The Progressive Corporation (NYSE:PGR) is investing in its technology platform, with a focus on developing new digital channels and tools that will allow customers to interact with the company more easily and conveniently.
3. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holdings: 98
10-Year Revenue Growth Rate: 10.32%
10-Year Net Income Growth Rate: 14.14%
Thermo Fisher Scientific Inc. (NYSE:TMO) is a world-leading provider of scientific instruments, reagents, and consumables to the scientific community, serving a diverse range of customers in the pharmaceutical, biotech, academic, and government sectors.
Thermo Fisher Scientific Inc. (NYSE:TMO) is focused on executing its proven growth strategy, which centers on gaining market share through innovation, expanding its commercial capabilities, and strengthening its position as a trusted partner to its customers. The company is investing heavily in research and development and has a strong pipeline of new products and technologies that are expected to drive growth in the coming years. The company’s recent launches in the areas of precision medicine and advanced materials have been met with strong adoption, and the company is seeing significant opportunities for growth in these areas. Additionally, Thermo Fisher Scientific Inc.’s (NYSE:TMO) accelerated drug development program, which aims to help pharmaceutical and biotech companies bring new medicines to market more quickly, is gaining traction and is expected to be a key driver of growth in the future.
Thermo Fisher Scientific Inc. (NYSE:TMO) is also pursuing external growth opportunities through strategic acquisitions and partnerships. The company recently acquired Olink, a leading provider of proteomics solutions. The acquisition aims to expand the company’s capabilities in the rapidly growing field of proteomics and positions the company for future growth in this area.
2. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holdings: 202
10-Year Revenue Growth Rate: 18.24%
10-Year Net Income Growth Rate: 22.06%
Alphabet Inc. (NASDAQ:GOOGL), the parent company of Google, is a global technology conglomerate encompassing a wide array of innovative businesses. The company is known for its groundbreaking work in search, advertising, cloud computing, and artificial intelligence (AI).
Alphabet Inc. (NASDAQ:GOOGL) is focusing its efforts on the development and integration of Artificial Intelligence (AI) and Machine Learning (ML) technologies. The company has been investing heavily in the development of its AI platform, Gemini, which is being used to power a range of applications and services, including search, advertising, and cloud computing. With Gemini, Alphabet Inc. (NASDAQ:GOOGL) is aiming to revolutionize the way people interact with technology and make it more intuitive and user-friendly. The company is also using AI to improve its advertising business, with the launch of new ad formats and platforms that use machine learning to better target and engage users.
In addition to its AI efforts, Alphabet Inc. (NASDAQ:GOOGL) is also focusing on expanding its cloud computing business, Google Cloud. The company has been investing in the development of new cloud-based services and platforms, including its AI-powered cloud platform, Vertex, and its data analytics platform, BigQuery.
Furthermore, Alphabet Inc. (NASDAQ:GOOGL) is also exploring new opportunities in the autonomous vehicle industry through its subsidiary, Waymo. Waymo has been making significant progress in the development of its autonomous driving technology. The company has also partnered with major automotive companies, such as Uber and Hyundai, to expand Waymo’s reach and capabilities.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holdings: 279
10-Year Revenue Growth Rate: 10.76%
10-Year Net Income Growth Rate: 15.53%
Microsoft Corporation (NASDAQ:MSFT) is a global technology leader providing software, hardware, and cloud-based solutions to individuals and businesses worldwide. The company has been transitioning from a traditional software company and has become a comprehensive technology provider driving innovation and digital transformation across multiple industries.
Microsoft Corporation (NASDAQ:MSFT) is investing heavily in its cloud computing platform, Azure. The company is seeing significant demand for its Azure services, particularly in the area of AI. Microsoft Corporation (NASDAQ:MSFT) is expanding its Azure capacity, with new data centers being built in various regions around the world, including Brazil, Italy, Mexico, and Sweden. This expansion will enable the company to better serve its customers and meet the growing demand for cloud computing services. Additionally, Microsoft Corporation (NASDAQ:MSFT) is innovating across the full stack to optimize its fleet for AI workloads by offering the broadest selection of AI accelerators, including its first-party accelerator, Maia 100, as well as the latest GPUs from AMD and NVIDIA.
Another key area of focus for Microsoft Corporation (NASDAQ:MSFT) is the development of its AI-powered products and services. The company is advancing its Productivity and Business Processes segment, which includes Office 365, LinkedIn, and Dynamics 365. Recently, Microsoft Corporation (NASDAQ:MSFT) integrated 365 Copilot, an AI-powered assistant, into productivity tools such as Word, Excel, and Outlook, which has significantly boosted user engagement and business value. Furthermore, Microsoft Corporation (NASDAQ:MSFT) is extending its presence in the enterprise market with Dynamics 365 while also introducing industry-specific AI solutions, such as DAX Copilot for healthcare. These advancements are helping Microsoft Corporation (NASDAQ:MSFT) strengthen its market position and solidify its leadership in business applications.
While we acknowledge the potential of Microsoft Corporation (NASDAQ:MSFT) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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