5 Best Stocks to Buy and Hold for a Lifetime

Published on February 24, 2023 at 12:19 pm by Insider Monkey Team in Hedge Funds, Lists

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1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 259

Microsoft Corporation (NASDAQ:MSFT) ranks #1 on our list of 10 Best Stocks to Buy and Hold for a Lifetime given 259 hedge funds in our database owned shares at the end of Q4. Microsoft Corporation (NASDAQ:MSFT) has potential in the long term given it could benefit from AI’s growth with more cloud processing demand. Microsoft Corporation (NASDAQ:MSFT) also could potentially gain market share with Bing even if AI still is inaccurate in many instances.

Polen Global Growth Strategy commented on Microsoft Corporation (NASDAQ:MSFT) in a Q4 2022 investor letter,

In the case of Microsoft Corporation (NASDAQ:MSFT), the company is performing very well. Azure now represents nearly 25% of the total business and continues to compound at a higher rate. Although growth is moderating a bit recently (as it is for AWS and Google Cloud Platform as well), these three platforms collectively generated more than $140 billion in revenue during the last 12 months and are still growing at a healthy rate. Further, Microsoft Cloud, or commercial cloud (which includes Azure and other cloud services, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other cloud properties) continues to grow roughly 30% and is now about half the business. Mathematically, commercial cloud could decelerate to 20% growth with all other segments decelerating to zero growth and total company revenue growth would still be at least double digits. We believe Microsoft is positioned to compound underlying earnings per share at a midteens rate over the next five years. At 22x earnings, we felt the valuation was attractive and that it should be a large position.

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