In this article, we will look at the 11 best long-term stocks to buy now.
The current market situation is not ideal for short-term investors and day traders. As of October 5, the S&P 500 has tanked over 21% year to date, the tech-heavy Nasdaq is down 30% for the year, and the Dow has lost 17.35% since the beginning of 2022. The stock market is in shambles, but for long-term investors, it has started to look like an attractive entry point.
Wharton’s Jeremy Siegel: “If You’re a Long-Term Investor, I Would Absolutely Buy Now”
Jeremy Siegel is a professor of finance at the Wharton School of the University of Pennsylvania and is a notable commentator on the economy and capital markets. Mr. Siegel recently appeared on CNBC’s ‘Squawk Box’ where he discussed his view on why now is an attractive buying opportunity for long-term investors. Here are some comments from the professor of finance at one of the top business schools in the world:
“If you’re a long-term investor, I would absolutely buy now. I think these are absolutely great long-term values. Could it go down more? Of course in the short-run and in bear markets (historical), it has gone down more. But when you’re talking about 16 times earnings and even if they are clipped by a recession, you shouldn’t just base it on recession earnings you should base it on longer-term earnings, which I think are very favorable looking beyond the dip. I think these are just absolutely excellent values. Short-term, anything can happen in the short term.”
While short-term investors are unwinding their positions and triggering major sell-offs, they are in fact creating a buying opportunity for long-term investors. Some of the best long-term stocks to buy now include Johnson & Johnson (NYSE:JNJ), NVIDIA Corporation (NASDAQ:NVDA), and Microsoft Corporation (NASDAQ:MSFT).
Photo by Roberto Júnior on Unsplash
Our Methodology
To determine the 11 best long-term stocks to buy now, we picked out blue chip companies with track records of profitability and strong balance sheets. We picked stocks from a variety of sectors including consumer staples, healthcare, and technology. Along with each stock, we have mentioned the hedge fund sentiment, analyst ratings, and salient features that make it a good candidate for long-term investors. The hedge fund sentiment was derived from Insider Monkey’s database, which tracks roughly 900 elite hedge funds.
Best Long-Term Stocks To Buy Now
11. Colgate-Palmolive Company (NYSE:CL)
Number of Hedge Fund Holders: 55
Colgate-Palmolive Company (NYSE:CL) is one of the best long-term stocks to buy now because of its rich dividend history, defensive business model, and strong pricing power due to a solid brand image in global markets. On September 9, Colgate-Palmolive Company declared a quarterly cash dividend of $0.47 per share. The dividend is payable on November 15, to shareholders of record on October 21. As of October 5, the stock is offering a forward dividend yield of 2.64%.
On August 1, Wells Fargo analyst Chris Carey raised his price target on Colgate-Palmolive Company to $80 from $71 and upgraded the stock to Equal Weight from Underweight. This August, Barclays analyst Lauren Lieberman raised his price target on Colgate-Palmolive Company to $74 from $71 and maintained an Equal Weight rating on the shares.
At the end of Q2 2022, 55 hedge funds held stakes in Colgate-Palmolive Company. The total value of these stakes amounted to $2.93 billion, up from $2.59 billion a quarter ago, with 50 positions. The hedge fund sentiment for the stock is positive.
As of June 30, First Eagle Investment Management is the largest investor in Colgate-Palmolive Company and has stakes worth $899 million in the company.
Here is what First Eagle Investments had to say about Colgate-Palmolive Company in its second-quarter 2022 investor letter:
“Shares of consumer staples giant Colgate-Palmolive have performed well as investors rotated into more recessionary-resilient defensive stocks amid the broader selloff during the second quarter. The company raised revenue guidance for 2022 but lowered its margin outlook because of higher costs for raw materials, packaging and logistics; we believe that the company’s size and market share provide it with options to mitigate the inflation challenges it faces. We continue to like Colgate- Palmolive’s dividend and previously announced $5 billion stock buyback program.”
10. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 60
The Coca-Cola Company (NYSE:KO) has the ability to drive long-term shareholder value and is one of the best long-term stocks to buy now. The company has been awarding shareholders with dividends for roughly 6 decades. At the close of the second quarter of 2022, 60 hedge funds were long The Coca-Cola Company and held stakes worth $28.3 billion in the company. This is compared to 64 hedge funds in the previous quarter that had stakes worth $29 billion in the company.
Wall Street is bullish on The Coca-Cola Company and sees upside to the stock. This July, Deutsche Bank analyst Steve Powers raised his price target on The Coca-Cola Company to $65 from $64 and maintained a Hold rating on the shares. On September 6, HSBC analyst Carlos Laboy raised his price target on The Coca-Cola Company to $76 from $72 and reiterated a Buy rating on the shares.
As of June 30, Berkshire Hathaway is the largest shareholder in The Coca-Cola Company and owns 400 million shares. Warren Buffett has owned the stock for over a decade and the investment covers 8.38% of his hedge fund’s second-quarter 2022 investment portfolio.
Some of the top blue-chip companies that should be on long-term investors’ radars include The Coca-Cola Company, Johnson & Johnson, NVIDIA Corporation, and Microsoft Corporation.
9. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 64
On September 22, Costco Wholesale Corporation (NASDAQ:COST) released earnings for the fourth quarter of fiscal 2022. The company reported earnings per share of $4.20 and generated a revenue of $72 billion, up 15% year over year, and ahead of Wall Street estimates by $90 million. As of October 5, the stock has gained 6.8% over the past twelve months.
Costco Wholesale Corporation is one of the best long-term stocks to buy now because the company has a track record for profitability and financial growth. Over the past ten years, Costco Wholesale Corporation has returned 20% to investors, outperforming the S&P 500’s return of 12% for the same time period.
Shortly after the company’s earnings release, Jefferies analyst Corey Tarlowe reiterated his $610 price target and Buy rating on Costco Wholesale Corporation and also said that the stock remains his “top pick”.
At the end of Q2 2022, 64 hedge funds were bullish on Costco Wholesale Corporation and held stakes worth $4.76 billion in the company. This is compared to 61 hedge funds in the preceding quarter with stakes worth $5.41 billion.
As of June 30, Fisher Asset Management is the leading shareholder in Costco Wholesale Corporation and has stakes of more than $2 billion in the company. The investment covers 1.47% of Ken Fisher’s 13F portfolio.
8. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Walmart Inc. (NYSE:WMT) is one of the largest retailers in the world by revenue and is one of the best long-term stocks to buy now. Walmart Inc. is a cash-rich and profitable business that can meet its long-term financial goals and drive long-term shareholder value. As of July 31, Walmart Inc. has a debt-to-equity ratio of 0.58. The company has a trailing twelve-month operating margin of 4% and has free cash flows of $5.4 billion.
Analysts see upside to Walmart Inc.. This August, Morgan Stanley analyst Simeon Gutman raised his price target on Walmart Inc. to $150 from $145 and maintained a buy-side Overweight rating on the shares. On September 14, KeyBanc analyst Bradley Thomas started coverage of Walmart Inc. with an Overweight rating and a $155 price target.
Walmart Inc. is a prominent backer of the metaverse. On September 26, the company launched two new experiences, Walmart Land and Walmart’s Universe of Play, in Roblox Corporation’s (NASDAQ:RBLX) metaverse platform. The Walmart Land and Walmart’s Universe of Play feature Walmart’s aisles in a virtual world.
At the end of Q2 2022, 67 hedge funds disclosed ownership of stakes in Walmart Inc.. These funds held collective stakes of $3.78 billion in the company. As of June 30, GQG Partners owns more than 9.8 million shares of Walmart Inc. and is the most prominent investor in the company.
7. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
The Procter & Gamble Company is one of the best dividend-paying long-term stocks to buy now. The company’s defensive business model makes it less vulnerable to changes in economic cycles and allows it to maintain its profitability. The Procter & Gamble Company has a trailing twelve-month operating margin of 23.3% and has free cash flows of $13.5 billion. Over the past ten years, The Procter & Gamble Company has returned 9.68% to investors.
The Procter & Gamble Company has a consensus Buy rating among Wall Street analysts. On August 2, Barclays analyst Lauren Lieberman revised her price target on The Procter & Gamble Company to $154 from $157 and maintained a buy-side Overweight rating on the shares.
At the end of the second quarter of 2022, 71 hedge funds were eager on The Procter & Gamble Company and held stakes worth $5.53 billion in the company. As of June 30, Bridgewater Associates is the largest shareholder in the company and has stakes worth $970 million. The investment covers 4.1% of Ray Dalio’s 13F portfolio.
Like The Procter & Gamble Company, other profitable cash-rich companies include Johnson & Johnson, NVIDIA Corporation, and Microsoft Corporation.
6. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Merck & Co., Inc. is presenting an attractive entry point for long-term investors and is trading at bargain levels. As of October 5, the stock has a trailing twelve-month PE ratio of 13.47 and is offering a forward dividend yield of 3.15%. Merck & Co., Inc. has consistently grown its dividends for the past decade and the stock is one of the best undervalued long-term stocks to buy now.
Analysts are bullish on Merck & Co., Inc.. On August 25, Erste Group analyst Hans Engel upgraded Merck & Co, Inc. to Buy from Hold. The analyst noted that the company is leading its sector and has above-average profitability. On September 14, Berenberg analyst Luisa Hector raised her price target on Merck & Co., Inc. to $100 from $95 and upgraded the stock to Buy from Hold. As of October 5, Merck & Co., Inc. has gained 14.75% year to date and has a trailing twelve-month operating margin of 34.9%.
At the close of Q2 2022, 79 hedge funds were bullish on Merck & Co., Inc. and held stakes worth $6.11 billion in the company. This is compared to 84 hedge funds in Q1 2022 with stakes worth $5.86 billion.
As of June 30, Fisher Asset Management owns more than 12 million shares of Merck & Co., Inc. and is the largest investor in the company. The investment covers 0.78% of Ken Fisher’s 13F portfolio.
Here is what Chartwell Investment Partners had to say about Merck & Co., Inc. in its second-quarter 2022 investor letter:
“In the Dividend Equity accounts, the three best performers in Q2 includes Merck (NYSE:MRK, 3.6%), up 12.0%. Merck, like other pharma companies, is in a defensive business, but the stock also did well as peak-sales estimates for their flagship drug, Keytruda, have gone up (JPMorgan estimates $32 billion in sales by 2026).”
5. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson is one the best long-term stocks to buy now because of the company’s global presence, pricing power, and industry-leading position. Over the past fifteen years, Johnson & Johnson has returned 9.48% to investors, beating the S&P 500’s return of 8.36% over the same period. Johnson & Johnson has a trailing twelve-month operating margin of 26.3% and as of October 5, the stock has gained 3.15% over the past twelve months.
Johnson & Johnson is a cash-rich company that reinvests in itself. On September 14, Johnson & Johnson announced that the Board of Directors has authorized a share repurchase program of $5 billion. The company has free cash flows of $19.95 billion.
Over the past three months, Johnson & Johnson has received 6 Buy ratings from Wall Street analysts. On October 5, Citi analyst Joanne Wuensch revised her price target on Johnson & Johnson to $198 from $201 and reiterated a Buy rating on the shares.
At the close of Q2 2022, 83 hedge funds were bullish on Johnson & Johnson and held stakes worth $6.76 billion in the company. As of June 30, GQG Partners owns more than 6.5 million shares of Johnson & Johnson and is the largest shareholder in the company.
Here is what Distillate Capital Partners LLC had to say about Johnson & Johnson in its second-quarter 2022 investor letter:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
4. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 84
NVIDIA Corporation is a secular growth company and a leader in semiconductors, AI, machine learning, and data centers. At the end of the second quarter of 2022, 84 hedge funds were long NVIDIA Corporation and held stakes worth $3.3 billion in the company. Of those, Fisher Asset Management was the leading shareholder with stakes worth $1.15 billion.
Over the past ten years, NVIDIA Corporation has returned 45.36% to shareholders, outpacing the S&P 500’s return of 12% for the same period. The stock is one of the best long-term stocks to buy now.
On September 21, Susquehanna analyst Christopher Rolland revised his price target on NVIDIA Corporation to $190 from $200 and maintained a Positive rating on the shares. This September, JPMorgan analyst Harlan Sur maintained an Overweight rating on NVIDIA Corporation and his $220 price target on the shares.
Here is what Baron Funds had to say about NVIDIA Corporation in its second-quarter 2022 investor letter:
“At the company-specific level, there was a broad correction across the entire portfolio. While four of our holdings contributed to performance, the contribution to absolute returns was less than 100bps combined, as unfortunately none of them were large enough to move the needle. We had 16 investments detracting over 100bps each with NVIDIA (NASDAQ:NVDA), our second largest detractor, costing the Fund 254bps.
NVIDIA’s stock was hit even harder, down 44.4%, impacted by concerns over the health of the consumer, dramatic declines in crypto, and COVID-related lockdowns in China. Despite the sell-off and the increased near-term volatility in its gaming business, NVIDIA’s revenues grew 46% year-over-year with 48% operating margins, driven by continued strength in its data center business as companies across industries adopt AI and ML…” (Click here to see the full text)
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is a high-margin and cash-rich business that has the ability to drive long-term shareholder value. The company has free cash flows of more than $107 billion and its strong pricing power allows it to sustain and grow its margins. The company has a trailing twelve-month operating margin of 30.5%. Over the past ten years, Apple Inc. has gained 21.75% while the S&P 500 has gained 12%.
Wall Street analysts are positive about the company’s outlook. On September 20, Evercore ISI analyst Amit Daryanani raised his price target on Apple Inc. to $190 from $185 and maintained an Outperform rating on the shares. On September 28, KeyBanc analyst Brandon Nispel reiterated his buy-side Overweight rating and $185 price target on Apple Inc.
At the end of the second quarter of 2022, 128 hedge funds disclosed ownership of stakes in Apple Inc.. These funds held collective stakes of $143 billion in the company. As of June 30, Warren Buffett’s Berkshire Hathaway is the leading investor in Apple Inc. and has stakes worth $122 billion in the company.
Here is what Distillate Capital Partners LLC had to say about Apple Inc. in its second-quarter 2022 investor letter:
“Apple was largest new purchase in the quarter, at a 2% weight. Apple underperformed the overall market last quarter, and given very minimal debt, this price weakness translated into a commensurate fall in its enterprise value. For stocks with higher debt levels, it takes a disproportionately bigger market cap drop to achieve the same valuation improvement and this is a key reason we avoid highly leveraged names where significant price weakness can be experienced during a revaluation process. Alongside this decline in EV for Apple, its estimated free cash flows have risen steadily throughout the year. This contrast between a falling enterprise value and rising free cash flow, which is highlighted in Figure 12, made the stock sufficiently better valued such that it entered the portfolio. While Apple’s valuation is now attractive enough to warrant inclusion in the portfolio, it still ranks in the bottom quartile of the portfolio’s holdings and so the stock’s initiating weight is capped at a 2%. This contrasts significantly with Apple’s near-7% position in the S&P 500 benchmark, and reflects both our preference to avoid too much concentration risk as well our goal of ensuring that the overall portfolio valuation is as attractive as possible while balancing characteristics of stability and low indebtedness.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
Wall Street is bullish on Alphabet Inc. (NASDAQ:GOOG). This August, Tigress Financial analyst Ivan Feinseth raised his price target on Alphabet Inc. to $186 from $183 and maintained a Strong Buy rating on the share. On October 4, BofA analyst Justin Post revised his price target on Alphabet Inc. to $114 from $125 and maintained a Buy rating on the shares.
Alphabet Inc. has a rich portfolio of products and is leading a variety of industries, including cloud, data centers, AI, machine learning, and other high-growth industries that are expected to dominate the tech sector. Alphabet Inc. is one of the best long-term stocks to invest in now because of the company’s current valuation, free cash flows, and profitability. As of October 5, Alphabet Inc. is trading at a PE multiple of 19x, has an operating margin of 29.6%, and has free cash flows of $65 billion.
At the close of Q2 2022, 153 hedge funds disclosed ownership of stakes in Alphabet Inc.. These funds held collective stakes of roughly $22 billion in the company. As of June 30, TCI Fund Management is the largest shareholder in Alphabet Inc. and has stakes worth $5.4 billion.
Here is what Lakehouse Capital had to say about Alphabet Inc. in its second-quarter 2022 investor letter:
“Alphabet Inc. (NASDAQ:GOOG) reported another strong quarterly result despite the tough macroeconomic conditions. Revenue increased by 13% as Search proved resilient, primarily led by strength in the travel and retail verticals. YouTube advertising growth was lighter and moderated due to a tough comparison period and a general softening in brand advertising spend. That said, YouTube’s user engagement and time spent still continues to grow which bodes well for future monetisation opportunities. Google Cloud outpaced the company’s overall growth with revenue increasing by 36% and while it has yet to show any signs of profitability, we remain supportive of Alphabet continuing to reinvest in its cloud business given the size of the market opportunity ahead. On the cost front, the company added another 10,000 employees during the quarter, but notably, the CFO mentioned that hiring will likely slow down over the next twelve months as the company focuses on greater operating efficiency. Overall, we’re pleased with how the company has performed and are confident that management will be able to control costs, if or when the economic environment becomes more challenging.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
At the end of Q2 2022, 258 hedge funds held stakes in Microsoft Corporation. These stakes were valued at $56 billion. As of June 30, Fisher Asset Management is the leading investor in Microsoft Corporation and has stakes worth $7.36 billion in the company.
On September 29, Raymond James analyst Andrew Marok reiterated his $300 price target and buy-side Outperform rating on Microsoft Corporation when he resumed coverage of the stock. The analyst said that Microsoft Corporation has “a collection of sustainable advantages,” which include its leading position in cloud computing, gaming, and digital advertising.
Microsoft Corporation is a software behemoth with free cash flows of $65 billion and a forward dividend yield of 1.1%. The company has outperformed the S&P 500 over the past 10 years and has returned 26% to investors, verifying its ability to drive long-term growth. Microsoft Corporation is one of the best long-term stocks to buy now.
Here is what Diamond Hill Capital Management had to say about Microsoft Corporation in its second-quarter 2022 investor letter:
“The recent market environment has enabled us to initiate positions in some high-quality names that have sold off indiscriminately and are trading at prices we haven’t seen in quite some time. Microsoft Corporation (NASDAQ:MSFT) is one example. Microsoft’s stock price declined amid the broader selloff of technology companies. This presented an opportunity for us to purchase shares at an attractive discount to our estimate of the intrinsic value. We expect the business to continue generating strong revenue growth and benefiting from operating leverage. Microsoft’s cloud computing services business, Azure, is also generating robust growth, confirming its competitive positioning.”
You can also take a look at 10 Best Stagflation Stocks To Buy and 10 Best Cheap Technology Stocks To Buy.
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