In this article, we will discuss the 12 Best Quality Stocks to Invest in Now.
Tom Lee, co-founder of Fundstrat Global Advisors, believes that a significant rebound is in the offing, despite the tough start to the year. The strategist opines that there is a possibility of ~10% – 15% bounce over the coming months. In an interview with CNBC, he stated his expectations about March, April, and May witnessing the rally. Therefore, missing critical trading days can be a mistake for investors.
What Lies Ahead?
Lee believes that investors can consider buying as the markets are unsettled. In an interview with CNBC, he went on to explain that the market’s 10 best days last year resulted in the addition of up to 20 percentage points for the broader S&P 500. However, if we exclude these 10 days, the index increased by only 4%. According to him, the best days might be around the corner. If there are tensions related to the growth or related to the employment market, Trump or the US Fed can intervene to bring some stability. These are the favourable catalysts for the upcoming weeks, says Lee. Overall, he believes that a large chunk of the bad news has been priced in as markets have seen a significant decline.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Signs of Economic Strength Remain
Morningstar, while echoing the views of Adam Hetts (Janus Henderson Investors portfolio manager), mentioned that the longer-term perspective is expected to provide investors a silver lining. Hetts believes that there are bright spots in the international markets such as Europe and China, that have surpassed the performance of the US stocks since the beginning of the year. Even though the mega-cap tech stocks have been declining, they are getting cheaper as compared with the elevated valuations just a few months ago.
According to experts, there are several signs of economic strength. Gus Faucher, chief economist for PNC Financial Services Group, told Morningstar that consumers continue to spend amidst weakness in the sentiment data. Also, the labor market has been holding up. Overall, the chief economist doesn’t see any sort of fundamental weaknesses in the broader economy that can signal a problem. As per Morningstar chief US market strategist David Sekera, the investors are required to focus on the fundamentals and valuations, while maintaining a long-term view.
With this in mind, we will now have a look at the 12 Best Quality Stocks to Invest in Now.
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Our Methodology
To list the 12 Best Quality Stocks to Invest in Now, we sifted through the holdings of iShares MSCI USA Quality Factor ETF. Next, we chose the stocks that are popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiment, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12 Best Quality Stocks to Invest in Now
12. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 96
Costco Wholesale Corporation (NASDAQ:COST) is engaged in the operation of membership warehouses. Bank of America Securities analyst Robert Ohmes reiterated a “Buy” rating on the company’s stock, setting a price objective of $1,095.00. The analyst rating is backed by factors highlighting the company’s strong performance and strategic positioning. Costco Wholesale Corporation (NASDAQ:COST) reported healthy financial results for Q2 2025, with EPS exceeding expectations despite the foreign exchange challenges, says the analyst.
Costco Wholesale Corporation (NASDAQ:COST)’s e-commerce segment demonstrated strong expansion, and the company managed to improve its gross margin. In Q2 2025, the company saw e-commerce comparable sales growth of 20.9%. Its gross margin came in at 10.85%, reflecting an increase of 5 bps YoY. As per the analyst, the positive membership trends further aid the favourable outlook on the Costco Wholesale Corporation (NASDAQ:COST)’s stock. Collectively, all these factors, together with the company’s ability to attract consumers amidst the high-price environment and its strategic investments towards supply chain and wages, place it well for continued growth. The company’s investments in digital initiatives offer strong opportunities for future growth. Given its progress in enhancing the e-commerce platform, online profitability as well as expansion of digital offerings, the company remains well-placed to capture a significant share of the growing online retail market.
Madison Investments, an investment advisor, released its Q3 2024 investor letter. Here is what the fund said:
“Costco Wholesale Corporation (NASDAQ:COST) continues to demonstrate its commitment to sustainability by lowering its emissions. For example, it has converted its Kirkland Signature laundry packs from plastic tubs to a pouch. This has reduced plastic packaging by 80%. It has also moved to localize production of bulky items such as water, paper, and laundry detergents. Manufacturing these goods closer to the countries in which they are sold reduces emissions associated with shipping.”
11. Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders: 115
Eli Lilly and Company (NYSE:LLY) discovers, develops, and markets human pharmaceuticals. Morgan Stanley reaffirmed the positive stance on the company’s stock, maintaining an “Overweight” rating and a price objective of $1,146.00. The firm’s reaffirmed rating and price target demonstrate confidence in the company’s position and prospects within the industry. The company has announced its plans to strengthen its domestic medicine production throughout therapeutic areas by building 4 new pharmaceutical manufacturing sites in the US. This results in Eli Lilly and Company (NYSE:LLY)’s total US capital expansion commitments to over $50 billion since 2020.
The company’s optimism regarding the potential of its pipeline throughout therapeutic areas – cardiometabolic health, oncology, immunology and neuroscience – fuels its unprecedented commitment to the domestic manufacturing build-out. Notably, Bernstein analysts reaffirmed an “Outperform” rating on Eli Lilly and Company (NYSE:LLY)’s stock with the price objective of $1,100, highlighting its strategic orientation and robust pipeline. Eli Lilly and Company (NYSE:LLY)’s focus on expanding the manufacturing footprint and advancing development pipeline cements its focus on growth and innovation.
RiverPark Advisors, an investment advisory firm and sponsor of the RiverPark family of mutual funds, released its “RiverPark Large Growth Fund” Q4 2024 investor letter. Here is what the fund said:
“Eli Lilly and Company (NYSE:LLY): LLY was a top detractor in the fourth quarter following a rare revenue miss in the company’s 3Q update. The greater than $1 billion miss in the tirzepatide complex (Mounjaro/Zepbound) was caused by a combination of factors, including wholesaler stocking patterns (2Q inventory build, 3Q sell through), refrigerated supply chain constraints, timing of the company’s direct-to-consumer efforts, and the pace of international market launches. We believe the diabetes/obesity/weight-loss market is enormous and that current GLP-1 drugs, though no longer supply constrained, are greatly in demand. We are confident that LLY’s recent sales shortfall was supply chain-related and that the company’s tirzepatide franchise growth will soon reaccelerate.
LLY discovers, develops, manufactures, and markets pharmaceutical products. The company manufactures and distributes products through facilities in the United States and seven other countries and sells into 110 countries. The company has a broad and deep portfolio of products including a focus on diabetes, oncology, immunology and neuroscience. More recently, LLY’s GLP-1 diabetes drug Mounjaro and obesity drug Zepbound, have delivered strong revenue growth, and investors are optimistic that the company’s recently approved Alzheimer drug, Kisunla, will add to that growth.
LLY has a stable portfolio of franchise products, which enables it to invest heavily in its product pipeline. We believe that this combination of franchise and growth products will drive high teens revenue growth and a four-fold increase in free cash flow in the next five years.”
10. Adobe Inc. (NASDAQ:ADBE)
Number of Hedge Fund Holders: 117
Adobe Inc. (NASDAQ:ADBE) carries out its operations as a technology company. Analyst Keith Weiss from Morgan Stanley maintained a “Buy” rating on the company’s stock, maintaining the price objective of $660.00. The analyst’s rating is backed by factors highlighting the company’s current market position and future growth potential. The analyst sees a favourable risk/reward scenario because of Adobe Inc. (NASDAQ:ADBE)’s strategic initiatives. The company’s plans to roll out new subscription tiers and add-ons, like a higher-priced Firefly offering, can enhance monetization efforts.
These initiatives, together with the potential for a back-end-loaded year, demonstrate that Adobe Inc. (NASDAQ:ADBE) remains well-placed to capitalize on its strengths and address market challenges. Elsewhere, Stifel analysts reiterated a “Buy” rating with the price objective of $600.00. As per the analysis conducted by the firm, even though competitive text-to-media GenAl models are abundant, Adobe Inc. (NASDAQ:ADBE)’s Firefly provides strong value propositions. The company’s GenAl capabilities offer an opportunity to further monetize the GenAl offerings. Overall, the firm’s analysis highlights the importance of the integrations and new features in sustaining Adobe Inc. (NASDAQ:ADBE)’s competitive edge in the broader market.
RiverPark Advisors, an investment advisory firm and sponsor of the RiverPark family of mutual funds, released its Q4 2024 investor letter. Here is what the fund said:
“Adobe Inc. (NASDAQ:ADBE): ADBE was a top detractor in the quarter after giving disappointing FY2025 guidance despite reporting strong FY4Q24 earnings. Better revenue growth (+11% versus expectations of +10%), operating margins (47% versus expectations of 46%), and Digital Media Net New Annual Recurring Revenue (“DM NNARR,” a key metric,$578 million versus expectations of $555 million) were driven by both new customers and expansion of existing relationships. Despite these strong numbers, the company guided the current year DM NNARR to $1.9 billion, below expectations of $2.0 billion, leading some investors to speculate on the maturity of Adobe’s business and its competitiveness against emerging AI solutions.
Some investors believe that AI, and Open AI’s Sora product specifically, pose an existential threat to Adobe’s Creative Cloud Suite. We do not share these concerns and believe that AI is a tremendous growth opportunity for Adobe, a view shared by ADBE management. ADBE is the leading software and solutions provider in the content creation and content management space. The company offers a line of products and services used by creative professionals, communicators, businesses of all sizes, and consumers for creating, managing, delivering, measuring and optimizing content and experiences across personal computers, smartphones, other electronic devices and digital media formats. The company has grown revenues in the double-digit percent range for the last decade, and as it enters its 43rd year since its founding, we expect ADBE to continue to grow revenue greater than 10% per year through 2028. The company generates 41% EBITDA margins, which we think can expand to nearly 50%, and we believe the company will more than double last year’s roughly $7.9 billion of free cash flow over the next five years.”