In this article, we will take a look at the 5 best stocks to buy and hold for 3 years. To see more such companies, go directly to 15 Best Stocks to Buy and Hold for 3 Years.
5. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 79
Exxon Mobil Corporation (NYSE:XOM) ranks 5th in our list of the best stocks to buy and hold for the next 3 years. Morgan Stanley, which has a $114 price target on Exxon Mobil Corporation (NYSE:XOM), believes that the stock would benefit from strong prices in the oil and gas sector. Morgan Stanley also likes Exxon Mobil Corporation (NYSE:XOM)’s proactive decarbonization strategy which it believes should “de-risk” the company’s longer term cash flows and “mitigate terminal value uncertainty.”
Exxon Mobil Corporation (NYSE:XOM) is also one of the best oil stocks to buy according to elite hedge funds. Insider Monkey’s proprietary database of 943 hedge funds shows that 79 hedge funds tracked by Insider Monkey had stakes in Exxon Mobil Corporation (NYSE:XOM). The biggest hedge fund stakeholder of the company is Rajiv Jain’s GQG Partners which owns a $3.6 billion stake.
4. Thermo Fisher Scientific Inc. (NYSE:TMO)
Number of Hedge Fund Holders: 92
Morgan Stanley “firmly” believes in Thermo Fisher Scientific Inc. (NYSE:TMO)’s ability to “outgrow its peers and end markets driven by a combination of increasing exposure to high-growth verticals.” The firm also likes Thermo Fisher Scientific Inc. (NYSE:TMO)’s “relentless focus” on stock gains fueled by “the breadth, depth and reach of their portfolio.” Morgan Stanley has a $670 price target on Thermo Fisher Scientific Inc. (NYSE:TMO).
As of the end of the last quarter of 2022, 92 hedge funds tracked by Insider Monkey had stakes in Thermo Fisher Scientific Inc. (NYSE:TMO). The total worth of these stakes was over $7 billion. The most significant stake in Thermo Fisher Scientific Inc. (NYSE:TMO) was owned by Thomas Steyer’s Farallon Capital which owns a $640 million stake in the company.
Polen Capital made the following comment about Thermo Fisher Scientific Inc. (NYSE:TMO) in its Q4 2022 investor letter:
“Thermo Fisher Scientific Inc. (NYSE:TMO) is a leader in attractive end markets with a skilled management team who has demonstrated the ability to consistently and wisely allocate capital. It is the world leader in serving science. It is a globally scaled supplier serving more than 400,000 customers working within pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, research institutions, and government agencies. Thermo provides many of the products and services that companies in these industries, particularly pharma and biotech, need to operate and drive science forward. The company manufactures and sells instruments, reagents, and consumables used for a wide range of applications in labs.
Sales are also well balanced geographically, including leading scale in emerging markets, according to our research.
The business meets all our financial guardrails. We view Thermo Fisher as an extremely durable business, and we expect mid- to high-single-digit organic revenue growth over the long term. With expanding margins and wise capital deployment, we expect mid-teens underlying earnings per share growth over the next three to five years.
We also think Thermo Fisher’s business would be very durable in an economic downturn as pharma and biotech customers account for roughly 60% of the company’s sales today and roughly 80% of sales are highly recurring consumables and services. Thermo received a COVID boost as they supply COVID PCR tests as well as some products used in the production of COVID vaccines. As such, it is in the process of growing over that excess demand. We expect the company to move past this growth headwind by the back half of 2023. At approximately 24x our estimate for nexttwelve-months earnings per share, we believe Thermo’s valuation is attractive for this type of consistent, well-managed, and durable business.”
3. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 100
Morgan Stanley likes the fact that 20% of JPMorgan Chase & Co. (NYSE:JPM)’s branch network is less than 10 years old. This percentage is much higher than the industry average of 12%, according to the investment firm. Morgan Stanley has a $173 price target for JPMorgan Chase & Co. (NYSE:JPM), which is also highly popular among the smart money investors. Insider Monkey’s proprietary database of 943 hedge funds shows that 100 hedge funds tracked by Insider Monkey were bullish on JPMorgan Chase & Co. (NYSE:JPM). The most significant shareholder of the company is Edgar Wachenheim’s Greenhaven Associates which owns a $643 million stake.
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 152
Alphabet Inc. (NASDAQ:GOOG) ranks 2nd in our list of the best stocks to buy and hold for the next 3 years according to Morgan Stanley. Alphabet Inc. (NASDAQ:GOOG) is also one of the most popular stocks to buy according to hedge funds. A total of 209 hedge funds tracked by Insider Monkey had stakes in Alphabet Inc. (NASDAQ:GOOG).
Morgan Stanley has a $135 price target for Alphabet. The firm believes Alphabet Inc. (NASDAQ:GOOG)’s management is “focused on durably reengineering the cost base.”
Oakmark Global Select Fund made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q1 2023 investor letter:
“Alphabet Inc. (NASDAQ:GOOG), a global communication services provider based in the U.S., was a top contributor to the Fund’s performance for the quarter. Fourth-quarter earnings for Alphabet came in around consensus expectations in most of its key business areas, and much of management’s discussion on the earnings call revolved around the recent AI developments and costs. CEO Sundar Pichai said Alphabet is an “AI-first company” that is “extremely well-positioned as AI reaches an inflection point.” He expressed excitement about the AI-driven developments the company plans to unveil in search and other areas. Chief Business Officer Philipp Schindler suggested that, just as mobile computing helped drive higher revenue and profits in search, AI should also have a positive impact on financial performance. Notably, CFO Ruth Porat pushed back on the idea that higher computing costs related to AI-driven services would incrementally pressure profitability. Pichai also said the company is “on an important journey to re-engineer our cost structure in a durable way.” Porat did not provide detail in terms of quantifying COMMENTARY Oakmark Global Select Fund: First Calendar Quarter 2023 March 31, 2023 Share: Á à savings. However, she noted that the company is slowing the pace of operating expenditures growth, including a meaningful slowing in the pace of hiring in 2023, with most of the impact expected to become more visible in the financials in 2024. She implied that margins are expected to go up over the next couple of years, mentioning that “revenues will grow faster than expenses.” Total capital expenditures in 2023 are expected to be in line with the 2022 level. In aggregate, management expressed confidence in the business prospects across search, YouTube, cloud and various other key businesses, but Porat observed that “the challenging macroeconomic climate is ongoing.” Overall, we believe the company is positioned well to reap the benefits of the scale of its search business and years of investment into AI capabilities. We also appreciate that the company is transforming its views on cost discipline and efficiency. Our research indicates that Alphabet is trading around its lowest relative price[1]to-earnings ratio on forward consensus earnings since its initial public offering 20 years ago. When we adjust our valuation for losses in its “Other Bets” segment and include an asset value for its cloud segment, we believe the stock trades at an even lower multiple. To us, this is too cheap of a valuation for a company with businesses, like search, YouTube and Android, which have durable competitive advantages and attractive secular growth outlooks.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 259
Everyone seems bullish on Microsoft Corporation (NASDAQ:MSFT) these days, as the company keeps making headlines with its AI advances. Microsoft Corporation (NASDAQ:MSFT) is also the most popular stock among the 943 hedge funds tracked by Insider Monkey. 259 hedge funds entered the first quarter of 2023 with Microsoft Corporation (NASDAQ:MSFT) in their portfolios.
Morgan Stanley thinks Microsoft Corporation (NASDAQ:MSFT) is on a path to deliver five quarters of “accelerating EPS growth from the Q2 trough.” The firm thinks Microsoft Corporation (NASDAQ:MSFT) is “significantly undervalued at current levels.” Morgan Stanley has a $307 price target on the stock. As of market close on April 13 Microsoft Corporation (NASDAQ:MSFT) was trading at around $289.
You can also take a peek at 10 Most Profitable Small Businesses in 2023 and 10 Best April Dividend Stocks To Buy.
