In this article, we will discuss the 12 Best Long-term Stocks to Invest in for High Returns.
The global economy seems to be at a point where fiscal ambition intersects with market skepticism, says Oakglen Wealth. Donald Trump’s presidential election and the Republican takeover of the US Senate and retention of the House of Representatives resulted in a complicated mix of policy goals. Notably, the broader market’s initial reaction hints at positivity given Trump’s plans for growth, hinting at the continued outperformance of US assets in the year ahead.
Sectors To Focus on in 2025
Fidelity has an optimistic view of the financial sector, primarily because of steady economic growth for the broader US economy. Since the financial sector is cyclical, the sector’s performance is mainly a function of the strength of the broader economy. The US economy has been showing momentum and a path towards the desired “soft landing,” says Fidelity. Therefore, worries about a mild recession (which could have impacted the financial stocks) are alleviated. One significant difference in market dynamics entering 2025, in comparison to recent years, is the outlook on interest rates.
The H2 2024 began a new rate cycle, with the US Fed cutting rates for the first time since the initial days of the pandemic. Banks might benefit from higher interest rates due to higher NIMs. On the other hand, lower rates can help boost confidence and decrease the pressure on economic growth, which is expected to be beneficial for virtually all industries in this sector, opines Fidelity. Within equities, Franklin Templeton has an optimistic outlook on IT, health care, energy, consumer staples, and industrial sectors.
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Growth Drivers Amidst Policy Shifts
As per Russell Investments, the US economy is resilient as it enters 2025, but the road ahead is expected to be affected by shifting policy dynamics. On the positive side, tax cuts and deregulation can offer a meaningful growth boost, mainly to domestic and cyclical sectors. The investment firm believes that companies leveraging AI technologies to enhance productivity—mainly in industrials and healthcare— are expected to see material improvements to operating fundamentals.
Even though the mega-cap AI stocks have fueled the market returns over recent years, leadership has been shifting to companies leveraging AI to develop real-world efficiencies. Russell Investments believes that the Trump administration’s policies offer a delicate balancing act. It assumes that the new administration will not aggressively pursue policies that can create inflation risk.
With this in mind, let us now have a look at the 12 Best Long-term Stocks to Invest in for High Returns.
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Our Methodology
To list the 12 Best Long-term Stocks to Invest in for High Returns, we sifted through several financial media reports related to the best long-term stocks to buy. After getting an initial list of 20 stocks, we chose the ones which analysts saw the most upside to. Finally, the stocks were ranked in ascending order of their average upside potential, as of February 6. We also mentioned the hedge fund sentiments around each stock, as of Q3 2024.
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12 Best Long-term Stocks to Invest in for High Returns
12) UnitedHealth Group Incorporated (NYSE:UNH)
Average Upside Potential: 20.8%
Number of Hedge Fund Holders: 112
UnitedHealth Group Incorporated (NYSE:UNH) operates as a diversified healthcare company. TD Cowen analyst Ryan Langston maintained a “Buy” rating on the company’s shares, setting a price target of $609.00. The rating was backed by a combination of factors, including UnitedHealth Group Incorporated (NYSE:UNH)’s ability to surpass market expectations and confidence demonstrated by management in the financial outlook. Notably, the company has affirmed the 2025 performance outlook established in December 2024, including revenues of $450 billion – $455 billion, net earnings of $28.15 – $28.65 per share, and adjusted net earnings of $29.50 – $30.00 per share.
As per the analyst, even though a slightly challenging operating environment is expected for next year, UnitedHealth Group Incorporated (NYSE:UNH)’s strategic initiatives and pricing strategies can fuel growth. Furthermore, the company successfully improved its operating cost ratio, mainly because of strategic portfolio initiatives, which remains a positive indicator for future profitability. The company’s diversified portfolio provides a base for competitive advantage.
UnitedHealth Group Incorporated (NYSE:UNH)’s scale and analytics capabilities can act as key drivers for potential market share gains, primarily in government insurance markets. Aristotle Atlantic Partners, LLC, an investment advisor, released its Q4 2024 investor letter. Here is what the fund said:
“UnitedHealth Group Incorporated (NYSE:UNH) detracted from performance in the fourth quarter following the tragic shooting of its insurance division CEO and increased focus on health insurance industry practices. A bipartisan bill was introduced that could force companies that own pharmacy benefit managers to divest their pharmacy operations, which would impact United’s Optum unit.”
11) Shell plc (NYSE:SHEL)
Average Upside Potential: 21.4%
Number of Hedge Fund Holders: 48
Shell plc (NYSE:SHEL) operates as an energy and petrochemical company. Analyst Roger Read from Wells Fargo maintained a “Buy” rating on the company’s shares, which stemmed from the company’s promising financial outlook and strategic initiatives. Shell plc (NYSE:SHEL) demonstrated robust operational execution, which, together with cost-cutting measures, improved its cash flow and FCF, aiding a positive financial performance. In Q4 2024, despite the lower earnings, the company’s cash delivery remained solid and it generated FCF of $40 billion across the year, higher than 2023, in a lower price environment.
As per the analyst, Shell plc (NYSE:SHEL)’s emphasis on refining its portfolio via divestments and prioritizing value over volume continues to strengthen its position. It remains well-positioned to benefit from the anticipated growth in the global LNG market. Furthermore, Shell plc (NYSE:SHEL)’s commitment to shareholder returns is evident via dividend increases and a share buyback program, aided by robust cash flow forecasts and a reduction in net debt. To provide a brief overview, the company announced a 4% increase in its dividends and another $3.5 billion buyback program on January 30. This marks the 13th consecutive quarter of at least $3 billion of buybacks.
Elsewhere, DBS analyst Suvro Sarkar has maintained a bullish stance on the company’s stock, giving a “Buy” rating on January 31. The rating was backed by factors including Shell plc (NYSE:SHEL)’s strategic focus on enhancing shareholder returns and maintaining strong cash flows. Also, the analyst believes that the company’s strong earnings potential is fueled by its integrated gas and upstream oil segments, which can benefit from global supply constraints and geopolitical tensions.
10) Microsoft Corporation (NASDAQ:MSFT)
Average Upside Potential: 21.7%
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) develops and supports software, services, devices and solutions. Analyst Bradley Sills from Bank of America Securities reiterated a “Buy” rating on the shares of the company, keeping the price objective at $510.00. The analyst’s rating stems from a combination of factors, highlighting Microsoft Corporation (NASDAQ:MSFT)’s robust performance and potential for future growth. Even though there have been some execution challenges in the Azure segment, its core growth drivers remain strong, with Office products demonstrating significant strength.
The expected growth in Azure, fueled by AI workloads and large cloud deals, demonstrates a positive outlook for the upcoming quarters. Microsoft Corporation (NASDAQ:MSFT)’s strategic focus on AI, mainly through M365 Copilot, can fuel considerable revenue growth, reinforcing its position as a leader in applications and infrastructure. The rating and price target are backed by Microsoft Corporation (NASDAQ:MSFT)’s ability to capitalize on the expanding AI market.
Fred Alger Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office365, 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, Microsoft delivered better-than-expected fiscal first-quarter revenues, beating analyst estimates across all three segments. In the Intelligent Cloud business, Azure revenue grew 34% year[1]over-year, slightly above consensus, with AI Services contributing 12% to Azure’s growth, up from 11% in the previous quarter, as demand for AI continues to outpace capacity. However, shares declined after management signaled a potential deceleration in Azure growth for the next quarter and highlighted a negative earnings impact from OpenAI-related losses. Additionally, concerns over significantly increased AI-related capital expenditures (CapEx) raised questions about short-term profitability despite the long-term growth potential. While these near-term challenges led to shares detracting from performance for the quarter, we remain confident in Microsoft’s ability to maintain its leadership in AI.”