In this article, we will discuss the 5 best forever stocks to buy now. If you want to see some more of the valuable companies, go directly to 12 Best Forever Stocks to Buy Now.
5. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 109
Berkshire Hathaway Inc. (NYSE:BRK-B) is an Omaha, Nebraska-based conglomerate with a diversified range of businesses ranging from insurance, banking, and railroad services. Furthermore, the company has taken a significant stake in the leading corporations of the world through its investment arm.
The company is led by Warren Buffett, who is considered a wizard in finding the best long-term stocks by employing the philosophy of value investing. On September 21, James Shanahan at Edward Jones upgraded Berkshire Hathaway Inc. (NYSE:BRK-B) stock from a Hold to a Buy rating.
Between 2016-2021, Berkshire Hathaway Inc. (NYSE:BRK-B) has observed its operating cash flow rise at a compound annual growth rate (CAGR) of 3.8% from $32.64 billion to $39.41 billion. The stock currently trades at 1.5x book value and 2.6x sales. Keeping these factors in consideration, analysts think Berkshire Hathaway Inc. (NYSE:BRK-B) should be trading at more than double its current share price. Over the next five years, Berkshire is expected to expand its annual revenues by 10% each year due to growth in its energy and manufacturing businesses.
Here’s what Berkshire Hathaway said about Berkshire Hathaway Inc. (NYSE:BRK-B) in its Q4 2021 investor letter:
“BERKSHIRE HATHAWAY INC.
To the Shareholders of Berkshire Hathaway Inc.:
Charlie Munger, my long-time partner, and I have the job of managing a portion of your savings. We are honored by your trust.
Our position carries with it the responsibility to report to you what we would like to know if we were the absentee owner and you were the manager. We enjoy communicating directly with you through this annual letter, and through the annual meeting as well.
Our policy is to treat all shareholders equally. Therefore, we do not hold discussions with analysts nor large institutions. Whenever possible, also, we release important communications on Saturday mornings in order to maximize the time for shareholders and the media to absorb the news before markets open on Monday.
A wealth of Berkshire facts and figures are set forth in the annual 10-K that the company regularly files with the S.E.C. and that we reproduce on pages K-1 – K-119. Some shareholders will find this detail engrossing; others will simply prefer to learn what Charlie and I believe is new or interesting at Berkshire.
Alas, there was little action of that sort in 2021. We did, though, make reasonable progress in increasing the intrinsic value of your shares. That task has been my primary duty for 57 years. And it will continue to be.
What You Own
Berkshire owns a wide variety of businesses, some in their entirety, some only in part. The second group largely consists of marketable common stocks of major American companies. Additionally, we own a few non-U.S. equities and participate in several joint ventures or other collaborative activities.
Whatever our form of ownership, our goal is to have meaningful investments in businesses with both durable economic advantages and a first-class CEO. Please note particularly that we own stocks based upon our expectations about their long-term business performance and not because we view them as vehicles for timely market moves. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers…” (Click here to see the full text)
4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is a California-based tech giant that has emerged as the biggest publicly listed company in the US.
Apple Inc.’s (NASDAQ:AAPL) current stock price of $140 represents that the stock is trading close to 20x its forward PE ratio. Given the company has a 100% return on capital employed (ROCE), this is an attractive valuation. The company is also transitioning from being a provider of hardware to a provider of subscription services through its various platforms. Since the start of this year, Apple Inc. (NASDAQ:AAPL) has added over 30 million paid subscribers to its various platforms. The revenue growth of the subscription business is faster than the overall revenue growth of Apple Inc. (NASDAQ:AAPL). Analysts term Apple Inc. (NASDAQ:AAPL) as one of the best long-term stocks due to the company’s proven record of consistent growth and strong operations.
Apple Inc. (NASDAQ:AAPL) was discussed in the Q2 2022 investor letter of Wedgewood Partners. Here’s what the investment management firm said:
“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.
3. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 191
Alphabet Inc. (NASDAQ:GOOGL) is a Mountain View, California-based holding company that owns Google, YouTube, and several other subsidiaries.
In a research note issued on October 4, Justin Post at Bank of America gave Alphabet Inc. (NASDAQ:GOOGL) a target price of $114 and reiterated a Buy rating. In the current uncertain macroeconomic environment, the analyst anticipates the company’s EPS to remain resilient as Alphabet Inc. (NASDAQ:GOOGL) is working on controlling its costs. This is similar to what the company did in 2009 following the financial crisis of 2008. Mr. Post highlighted Alphabet Inc. (NASDAQ:GOOGL) stock as a top-value stock in the tech sector.
Around 90% of Alphabet Inc.’s (NASDAQ:GOOGL) revenue is generated from Google, which has a market share of 84% in the online search segment. Google is likely to sustain its leadership position in the industry in the long run. Alphabet Inc. (NASDAQ:GOOGL) is currently trading at its 10-year low P/E, allowing investors an attractive opportunity to invest in one of the best long-term stocks in the market.
Polen Capital shared its outlook on Alphabet Inc. (NASDAQ:GOOGL) in its Q2 2022 investor letter. Here’s what the firm said:
“Alphabet, a large weighting in the Portfolio, was the top detractor during the period, as e-commerce growth slowed during the quarter on tough comps from the prior year. That said, Alphabet continues to deliver robust revenue and profit growth. Google Cloud Platform (GCP) continues to grow at a healthy pace, and we do not believe the share price decline was a reflection of weak business performance.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based e-commerce giant that has ventured into cloud services, digital streaming, consumer electronics, and various other segments. The company has become a mainstay in the lives of the US consumer.
Amazon.com, Inc. (NASDAQ:AMZN) is gearing up for the holiday season as it intends to hire 150,000 employees across the US. Despite concerns related to retail spending and the growth of cloud services, JPMorgan highlighted Amazon.com, Inc. (NASDAQ:AMZN) as its top pick by a wide margin. The financial services firm thinks that Amazon.com, Inc. (NASDAQ:AMZN) will continue to experience YoY revenue growth, margin expansion, and moderation in capital expenditure in the coming years. These factors will provide a tailwind to the bottom line of the company. JPMorgan also anticipates Amazon Prime services to perform well in the upcoming quarters due to faster delivery times and better stocking levels.
Diamond Hill Capital Management also presented a long-term bullish outlook on Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2022 investor letter:
“Amazon.com, Inc. (NASDAQ:AMZN)’s shares underperformed as valuations of fast-growing companies continued to compress in Q2. Amazon’s growth investments over the past two years have pressured earnings as consumer demand has been weaker than anticipated. However, we believe the company will be able to grow into its infrastructure investments over time. These investments have obscured the magnitude of sustainable free cash flow as well as the attractive valuation of the business relative to peers.”
Hedge funds also consider Amazon.com, Inc. (NASDAQ:AMZN) as one of the best long-term stocks, as it is the second most popular company in Insider Monkey’s database of 895 elite funds as of Q2 2022.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based tech giant that was co-founded by Bill Gates. The company has dominated the hardware and software segment through its various offerings.
Microsoft Corporation (NASDAQ:MSFT) has continuously reinvented itself throughout the decades, and it seems that the company intends to leverage enterprise customers by offering cloud-based offerings like Azure and Office 365 to gain an advantage in this decade. Microsoft Corporation (NASDAQ:MSFT) has tried to gain leadership in the gaming industry by acquiring Activision Blizzard for a sum of $68.7 billion. The company is already home to Xbox 360, which is one of the leading gaming consoles in the world.
In a note issued on September 22, analysts at Morgan Stanley shared that Microsoft Corporation (NASDAQ:MSFT) stock offers an attractive risk and reward profile. On October 8, Microsoft Corporation (NASDAQ:MSFT) also announced a 10% increase in the quarterly dividend to $0.68 per share. The company’s dividend increase, coupled with the EPS growth in the high-teens highlight’s Microsoft Corporation (NASDAQ:MSFT) solid return profile. These factors have led us to term Microsoft Corporation (NASDAQ:MSFT) as one of the best long-term stocks in the market.
Here’s what Baron Funds said about Microsoft Corporation (NASDAQ:MSFT) in its Q1 2022 investor letter:
“Shares of mega-cap software company Microsoft Corporation (NASDAQ:MSFT) pulled back with the broader software sector. The company posted another solid quarter, highlighted by total revenues increasing 20% and Microsoft Cloud revenues, now 45% of total revenues, growing 32%. These results were driven, in large part, by strong demand for large Azure contracts. We believe Microsoft can compound revenue in the low double digits for the next three years, underpinned by its expansion in its total addressable market and market share gains.”
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