In this article, we discuss the 13 best stocks that will always grow. To skip the detailed analysis of the current economic landscape, go directly to the 5 Best Stocks That Will Always Grow.
At the Federal Reserve’s May 1 meeting, Chairman Jerome Powell focused on the Fed’s dual mandate of promoting maximum employment and stable prices. The Fed maintained the federal funds rate at 5.25% to 5.5% and said that while the economic activity has been solid, with robust consumer spending and job gains, inflation remains a concern. The unemployment rate remains low at 3.8%, but the GDP growth moderated from 3.4% in the fourth quarter of 2023 to 1.6% in the first quarter of 2024. The market remained strong after the Fed meeting as the S&P 500 was 2.21% higher between May 1 and May 3 market close.
Navigating the Economic Landscape
Billionaire Leon Cooperman of Omega Advisors believes that the current US debt levels could be too high to manage. He expressed concern about the growing debt crisis in the United States in a CNBC interview on April 23, adding that leadership has failed to address it effectively. Cooperman referenced past endorsements of the Simpson-Bowles report by political figures like Mitt Romney and Senator Joe Manchin, emphasizing that the problem has only worsened since then. He believes that deficits do matter and warns that the country is heading towards a financial crisis due to the lack of action on this issue.
The Simpson-Bowles report refers to the recommendations put forward by the National Commission on Fiscal Responsibility and Reform in 2010 to address the United States’ fiscal challenges. The growing debt problem was one of the main concerns of the commission, and their report proposed a comprehensive set of measures to reduce the deficit through a combination of spending cuts, tax reforms, and changes to entitlement programs.
Companies That Excel Against the Odds
If we take Leon Cooperman’s warnings into consideration, investors are more likely to favor defensive sectors like consumer defensive, health care, and utilities. Major companies from these sectors thrived during the financial crisis of 2007-2009. During that crisis, the S&P 500 lost over 56% of its value. On the other hand, between the start of 2007 and the end of 2009, Walmart Inc. (NYSE:WMT) share price gained nearly 13%. Moreover, the healthcare company, Abbott Laboratories (NYSE:ABT) was nearly 14.7% higher during the same period.
Walmart Inc. (NYSE:WMT) is a low-risk stock that holds one of the most dominant positions among the hypermarkets and discount department stores sectors. Despite the volatile economic landscape over the last 5 years, the company’s revenue has grown at a compound annual growth rate (CAGR) of over 4.7%. Furthermore, the company has been increasing its dividends for 52 years and has a dividend yield of 1.39%, as of May 3. At its latest earnings call, Walmart Inc.’s (NYSE:WMT) CEO, Doug McMillon made the following comments:
“We were strong in the U.S., Mexico, Canada, and India, where we had the best Big Billion Days ever, and we continued the strong performance in China with the start of Chinese New Year. Typically, we see some of our customer experience scores dip during the high-volume hours and days we experience during the holidays. But during Q4, the Walmart U.S. team delivered three-year high customer scores in our stores for pickup and delivery from stores and for those orders that flow directly from our e-commerce fulfillment centers.
I’m excited about the omnichannel net promoter score trends the team is driving. Across countries, we continue to see a customer that’s resilient but looking for value. As always, we’re working hard to deliver that for them, including through our rollbacks on food pricing in Walmart U.S. Those were up significantly in Q4 versus last year, following a big increase in Q3.”
While Abbott Laboratories’ (NYSE:ABT) revenue declined in 2023, it still grew at a CAGR of 5.6% over the last 5 years. Additionally, the company’s stock price resilience isn’t the only thing that makes it a good buy during a financial crisis, it is also a magnificent dividend growth stock. Similar to Walmart Inc. (NYSE:WMT), the company has raised its dividend for the 52nd consecutive year. As of May 3, the company has a dividend yield of 2.08%. Polen Capital also sees accelerating earnings growth for Abbott Laboratories (NYSE:ABT) as it said in its first quarter 2024 investor letter:
“We increased our positions in ThermoFisher Scientific, Visa, Zoetis, Nike, and Abbott Laboratories (NYSE:ABT). Each of these companies is durable and available at attractive valuations, in our view, for the growth we see ahead. In fact, in the case of ThermoFisher, Nike, and Abbott Labs, we expect accelerating earnings growth in the back half of 2024 after more difficult earnings growth periods pass for each of these companies. ThermoFisher and Abbott will finally wind down most of their COVID-19 testing and vaccine-related efforts due to a lack of demand, so these should no longer be revenue growth headwinds.”
While analysts keep mixed views on the economy, investors can look toward the companies with consistent top-line growth regardless of the economic conditions. Some of the companies that will always grow include UnitedHealth Group Incorporated (NYSE:UNH), Eli Lilly and Company (NYSE:LLY), and Intuitive Surgical, Inc. (NASDAQ:ISRG).
Our Methodology
For this article, we used the Yahoo Finance stocks screener to identify 40 companies from defensive sectors such as consumer defensive, healthcare, and utilities with market caps above $25 billion and past five-year revenue growth rate of over 5%. These companies have experienced consistent revenue growth over the years, hold dominant positions in their respective sectors, and control a major chunk of the market share. We narrowed down our list to 13 stocks most widely held by institutional investors and listed them in ascending order of their hedge fund sentiment.
The hedge fund data was taken from Insider Monkey’s database of 933 elite hedge funds. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
13 Best Stocks That Will Always Grow
13 Best Stocks That Will Always Grow
13. Keurig Dr Pepper Inc. (NASDAQ:KDP)
1-year Revenue Growth Rate: 5.39%
3-year Revenue Growth Rate: 8.44%
5-year Revenue Growth Rate: 14.76%
Number of Hedge Fund Holders: 37
Keurig Dr Pepper Inc. (NASDAQ:KDP) is one of the companies that control a significant share of the soft drink industry and has a market cap of $45.71 billion. At a stake value of $1.26 billion, 37 hedge funds held positions in Keurig Dr Pepper Inc. (NASDAQ:KDP). As of the fourth quarter of 2023, Holocene Advisors is the most prominent shareholder in the company and has a position worth $202.09 million.
On April 25, Keurig Dr Pepper Inc. (NASDAQ:KDP) reported Q1 earnings. The non-GAAP EPS for the quarter was $0.38, which topped the estimates by $0.03. The revenue grew by 3.6% year-over-year to $3.47 billion and was above the consensus by $60 million.
Keurig Dr Pepper Inc. (NASDAQ:KDP) joins our list of the best stocks that will always grow, along with UnitedHealth Group Incorporated (NYSE:UNH), Eli Lilly and Company (NYSE:LLY), and Intuitive Surgical, Inc. (NASDAQ:ISRG).
12. Monster Beverage Corporation (NASDAQ:MNST)
1-year Revenue Growth Rate: 13.14%
3-year Revenue Growth Rate: 15.80%
5-year Revenue Growth Rate: 13.40%
Number of Hedge Fund Holders: 42
Monster Beverage Corporation (NASDAQ:MNST) is among the companies that dominate the energy drink industry. In the fourth quarter of 2023, 42 hedge funds held positions in Monster Beverage Corporation (NASDAQ:MNST) worth $1.48 billion. As of Q4 of 2023, Broadwood Capital is the most dominant shareholder in the company and has a position worth $488.994 million.
18 Wall Street analysts have covered Monster Beverage Corporation (NASDAQ:MNST), and 13 keep a Buy-equivalent rating on the stock. As of May 3, the average price target of $64.81 has an upside of 17.84% from current levels. In the last 5 years, Monster Beverage Corporation’s (NASDAQ:MNST) revenue increased by 13.40%, and it ranks on our list of the best stocks that will always grow.
11. The Hershey Company (NYSE:HSY)
1-year Revenue Growth Rate: 7.16%
3-year Revenue Growth Rate: 11.06%
5-year Revenue Growth Rate: 7.46%
Number of Hedge Fund Holders: 46
The Hershey Company (NYSE:HSY) operates as a key player in the confectioners’ industry and its revenue grew by 7.46% over the past 5 years.
The Hershey Company (NYSE:HSY) was part of 46 hedge funds’ portfolios in Q4 of 2023 and the positions were worth $1.25 billion. Two Sigma Advisors has increased its stake in the company by 115% to 1.21 million shares worth $226.077 million and is the most significant shareholder, as of December 31, 2023.
Heartland Advisors stated the following regarding The Hershey Company (NYSE:HSY) in its first quarter 2024 investor letter:
“Consumer Staples. Another new position is The Hershey Company (NYSE:HSY), the leading chocolate confectionary company in North America with a growing presence in salty snacks and non-chocolate confections.
The maker of such popular brands as Hershey’s, Reese’s, Cadbury, and Jolly Rancher has historically traded at a premium to its consumer staples peers. But in an environment where consumer finances are stressed and input costs are climbing, that premium has disappeared. The stock is down 35% from its 2023 peak due to volume headwinds and margin pressures brought about by rising prices.
We believe Hershey simply needs to demonstrate to investors that these headwinds are cyclical and temporary in nature, while once again showcasing its ability to balance superior profitability with modest growth and stable market share. Cocoa prices, a key input for HSY, have seen a nearly unprecedented price spike on supply disruptions in West Africa (where the majority of global supply originates). While we cannot predict when cocoa prices deflate, we are confident HSY and its largest competitors will be slow to reverse price increases required to recoup the input cost squeeze. Encouragingly, after being hampered by supply chain constraints in the post-COVID-19 environment, HSY has a greater innovation slate and more capacity in place to grow in the coming years. The stock, meanwhile, now trades near historic lows relative to other blue chip consumer staples, the consumer staples sector as a whole, and the broad market.”
10. Mondelez International, Inc. (NASDAQ:MDLZ)
1-year Revenue Growth Rate: 14.35%
3-year Revenue Growth Rate: 10.66%
5-year Revenue Growth Rate: 6.79%
Number of Hedge Fund Holders: 51
Mondelez International, Inc. (NASDAQ:MDLZ) is on our list of the best stocks that will always grow and is one of the largest snack companies in the world with its products having a presence in more than 150 countries. On April 12, Barclays lowered the price target on Mondelez International, Inc. (NASDAQ:MDLZ) to $80 from $84 and maintained an Overweight rating on the shares.
17 Wall Street analysts have a Buy rating on Mondelez International, Inc. (NASDAQ:MDLZ), and the average price target of $82.12 has an upside of 17.33% from the last price of $69.89, as of May 3.
Mondelez International, Inc. (NASDAQ:MDLZ) was held by 51 hedge funds in the fourth quarter of 2023 and the stakes amounted to $1.37 billion. Holocene Advisors is the top investor of the company, and has a position worth $232.535 million, as of December 31, 2023.
9. Costco Wholesale Corporation (NASDAQ:COST)
1-year Revenue Growth Rate: 6.16%
3-year Revenue Growth Rate: 11.68%
5-year Revenue Growth Rate: 11.06%
Number of Hedge Fund Holders: 57
Costco Wholesale Corporation (NASDAQ:COST) operates membership-only big-box warehouse club retail stores and is one of the largest retailers in the world. Over the last 5 years, Costco Wholesale Corporation’s (NASDAQ:COST) revenue grew by 11.06%.
Costco Wholesale Corporation (NASDAQ:COST) has increased its dividend for 21 consecutive years. On April 10, the company raised its quarterly dividend by 13.7% to $1.16 per share and has a yield of 0.62%, as of May 3.
As of the fourth quarter of 2023, 57 hedge funds had positions worth $4.01 billion in Costco Wholesale Corporation (NASDAQ:COST). Fisher Asset Management is the company’s most prominent shareholder with 2.79 million shares worth $1.84 billion, as of December 31, 2023.
8. PG&E Corporation (NYSE:PCG)
1-year Revenue Growth Rate: 15.80%
3-year Revenue Growth Rate: 13.72%
5-year Revenue Growth Rate: 10.60%
Number of Hedge Fund Holders: 58
PG&E Corporation (NYSE:PCG) is a dominant player in the US utilities sector. The company’s revenue jumped 10.60% over the past 5 years.
PG&E Corporation (NYSE:PCG) has a consensus Buy rating among 9 analysts, and its average price target of $19.68 implies an upside of 12.01% from present levels, as of May 3. Additionally, on April 22, Barclays raised the price target on PG&E Corporation (NYSE:PCG) to $20 from $19 and kept an Overweight rating on the shares.
In the fourth quarter of 2023, 58 hedge funds had stakes in PG&E Corporation (NYSE:PCG), with total positions worth $2.9 billion. As of December 31, 2023, Third Point is the largest shareholder in the company and has a position worth $1.043 billion.
7. Novo Nordisk A/S (NYSE:NVO)
1-year Revenue Growth Rate: 31.26%
3-year Revenue Growth Rate: 22.31%
5-year Revenue Growth Rate: 15.74%
Number of Hedge Fund Holders: 58
Novo Nordisk A/S (NYSE:NVO) is seventh on our list of the best stocks that will always grow and the company is one of the three key players in the insulin market.
Over the past five years, Novo Nordisk A/S’s (NYSE:NVO) revenue grew by 15.74%. On April 22, the company announced its plan to repurchase B shares over the next twelve months worth up to DKK 20 billion (1 DKK = US$0.14). The program began on February 6 and the company has already purchased 2.1 million B shares for DKK 1.85 billion.
58 hedge funds had investments in Novo Nordisk A/S (NYSE:NVO) in Q4 of 2023 worth $4.2 billion. The largest shareholder in the company is Fisher Asset Management with a position worth $1.46 billion as of the fourth quarter of 2023.
Polen Capital stated the following regarding Novo Nordisk A/S (NYSE:NVO) in its fourth quarter 2023 investor letter:
“As we discussed in last quarter’s commentary, Novo Nordisk A/S (NYSE:NVO) is a newer addition to the strategy. Over the fourth quarter, we continued to build the position to an average weight. As a reminder, Novo Nordisk is a global pharmaceutical company based in Denmark and has long been the leader in developing insulin for diabetes patients. In recent years, the company’s innovation into GLP-1 drugs has been shown not only to help diabetics control blood sugar levels but also to have significant efficacy in weight loss. Obesity has become a global epidemic, creating materially negative knock-on effects for humans that range from an increase in cardiovascular events and, thus, higher mortality to a lower general quality of life. We believe that, over time, payors will recognize the value of these obesity treatments to both patients and the overall healthcare system.”
6. The Coca-Cola Company (NYSE:KO)
1-year Revenue Growth Rate: 6.39%
3-year Revenue Growth Rate: 11.49%
5-year Revenue Growth Rate: 5.93%
Number of Hedge Fund Holders: 62
The Coca-Cola Company (NYSE:KO) is another key operator in the beverage industry, and its revenue grew 5.93% over the last five years. At a stake value of $26.97 billion, 62 hedge funds held positions in The Coca-Cola Company (NYSE:KO). As of Q4 of 2023, Warren Buffett’s Berkshire Hathaway is the top shareholder in the company and has a position worth $23.572 billion.
On April 23, The Coca-Cola Company (NYSE:KO) took a step forward in its journey of digital transformation by signing a strategic partnership agreement with Microsoft Corporation (NASDAQ:MSFT). Through this 5-year deal, the company plans to use Microsoft Cloud and its generative AI capabilities to make way for innovation, improve productivity, and enable the use of advanced technology across the company’s businesses.
The Coca-Cola Company (NYSE:KO) is one of the best stocks that will always grow, in addition to UnitedHealth Group Incorporated (NYSE:UNH), Eli Lilly and Company (NYSE:LLY), and Intuitive Surgical, Inc. (NASDAQ:ISRG).
Hayden Capital made the following comment about The Coca-Cola Company (NYSE:KO) in its third 2023 investor letter:
“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, The Coca-Cola Company (NYSE:KO) trades at ~30x P/E despite having the same earnings as 10 years ago.
Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.
I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Coca-Cola is facing disruption risk from consumers shifting to new, heathier beverage brands.
But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.”
Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”
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Disclosure. None. 13 Best Stocks That Will Always Grow is originally published on Insider Monkey.