In this article, we discuss the 5 best stocks to buy for the next 50 years. If you want to see more stocks with unmatched long-term growth potential, click 10 Best Stocks to Buy for the Next 50 Years.
5. D.R. Horton, Inc. (NYSE:DHI)
Number of Hedge Fund Holders: 52
D.R. Horton, Inc. (NYSE:DHI) is a Texas-based homebuilding company that constructs and sells residential homes under the D.R. Horton, America’s Builder, Express Homes, Emerald Homes, and Freedom Homes brands. Over the next five-to-ten years, a new batch of homebuyers will enter a market in which D.R. Horton, Inc. (NYSE:DHI) offers affordable housing, which positions it as a beneficiary over the coming years.
In July, real estate and construction stocks gained despite recession fears, as dampening economic growth would result in slower rate hikes, which bodes well for potential homebuyers. On July 12, JPMorgan analyst Michael Rehaut reiterated an ‘Overweight’ rating on D.R. Horton, Inc. (NYSE:DHI) but lowered the price target on the shares to $80 from $82.50.
According to Insider Monkey’s data, 52 hedge funds were bullish on D.R. Horton, Inc. (NYSE:DHI) at the end of Q1 2022, with combined stakes of about $2 billion. John Armitage’s Egerton Capital Limited is the leading shareholder of the company, with 7.8 million shares worth $582.5 million.
Here is what Third Avenue Management Real Estate Value Fund had to say about D.R. Horton, Inc. (NYSE:DHI) in its Q1 2022 investor letter:
“Outside of these additions, the Fund also sold “out-of-the-money” put options on the common stock of D.R. Horton, Inc. (“DR Horton”)-the largest homebuilder in the U.S. that accounted for nearly 1 out 9 new homes sold in the U.S. last year. Having followed the company for years, Fund Management can say without hesitation that DR Horton is an incredibly efficient builder focused on delivering quality product at the entry-level price point (its average selling price was less than $325,000 last year) with leading positions in key Sunbelt markets including Dallas, Houston, Austin, Atlanta, and Phoenix.
While the near-term outlook for DR Horton is somewhat uncertain given mortgage rate and supply chain volatility, the medium-to-long-term prospects for volume-based homebuilders with super-strong balance sheets and scale advantages seem promising (such as DR Horton and Lennar Corp.) in Fund Management’s view. This is especially the case when considering that:
-
Residential inventories are at record- low levels in most major markets whether gauged by “month’s supply” or aggregate units available,
-
Demand for single- family residences is accelerating as the largest generation in U.S. history (the “millennial cohort”) enters its prime home buying years and desires more space not only due to “life events” but also “remote” and “hybrid” working arrangements, and
-
Significant inflation in rental rates for multi-family units in urban areas has left the rent-to-own proposition for single- family homes in suburban areas in a compelling range…” (Click here to see the full text)
4. Builders FirstSource, Inc. (NYSE:BLDR)
Number of Hedge Fund Holders: 57
Builders FirstSource, Inc. (NYSE:BLDR) supplies building materials and construction services to professional homebuilders, remodelers, and consumers in the United States. The housing market will experience a boom as Millennials start buying their first homes in a few years, which is a positive catalyst for Builders FirstSource, Inc. (NYSE:BLDR).
On May 17, BMO Capital analyst Ketan Mamtora reiterated an ‘Outperform’ rating on Builders FirstSource, Inc. (NYSE:BLDR) but lowered the price target on the shares to $90 from $96. The company’s Q1 earnings beat illustrated a “record quarter, with tight markets and faster pass-through of prices boosting Builders’ margins in the near term”, the analyst told investors in a research note. He observed that the company’s fortress balance sheet lends financial flexibility and the stock’s valuation is attractive at current levels.
Among the hedge funds tracked by Insider Monkey, 57 funds were bullish on Builders FirstSource, Inc. (NYSE:BLDR) at the end of Q1 2022, with consolidated stakes worth $1.8 billion. Coliseum Capital held the leading position in the company, with 5.5 million shares valued at $358.4 million.
Here is what Black Bear Value Fund had to say about FirstSource, Inc. (NASDAQ:BLDR) in its Q1 2022 investor letter:
“Builders FirstSource is a supplier and manufacturer of building materials for professional homebuilders, subcontractors, remodelers, and consumers. Their products include factory-built roof and floor trusses, wall panels and stairs, vinyl windows and custom millwork.
The fundamental discussion about homebuilders applies to BLDR. As more homes are built across the country, there will be an increased need for scaled sourcing of products to homebuilders. There is a large amount of fragmentation in the supply chain which provides BLDR a long runway for acquisitions and realistic synergies.
The management team has been using their prodigious free cash flow to both acquire new businesses and buy in their stock. While I historically always liked their business, their historic high-debt levels gave me pause. They have right sized their balance sheet and are taking a very thoughtful view on capital allocation on behalf of shareholders.
BLDR should be able to generate $7-$10 a share in cash in the medium term with significant upside if they can scale through acquisition and/or further penetrate existing markets. We own it at a 11-15% free-cash flow yield so little growth is needed for us to compound value at high rates.”
3. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 63
Cigna Corporation (NYSE:CI) is a Connecticut-based company that provides medical insurance and healthcare solutions in the United States. With an aging demographic in the United States, healthcare and insurance providers are set to achieve more customers in the years to come, making companies like Cigna Corporation (NYSE:CI) a top portfolio choice for the next 50 years.
Morgan Stanley analyst Ricky Goldwasser on June 22 upgraded Cigna Corporation (NYSE:CI) to ‘Overweight’ from ‘Equal Weight’ with a price target of $296, up from $283. According to the analyst, Cigna Corporation (NYSE:CI) is likely going to be the biggest beneficiary of Humira biosimilars in the healthcare services sector. Humira is an antibody treatment for multiple diseases, including rheumatoid arthritis, psoriatic arthritis, Crohn’s disease, and ulcerative colitis.
Among the hedge funds tracked by Insider Monkey, 63 funds were bullish on Cigna Corporation (NYSE:CI) at the end of Q1 2022, up from 53 funds in the previous quarter. Larry Robbins’ Glenview Capital is the biggest shareholder of the company, with 1.6 million shares worth $382.4 million.
Cigna Corporation (NYSE:CI) was mentioned in the Q4 2021 investor letter of Davis Funds. Here’s what the firm said:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, UnitedHealth Group, Viatris and Quest Diagnostics.”
2. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 103
UnitedHealth Group Incorporated (NYSE:UNH) is a diversified American healthcare company, offering insurance and consumer-oriented health benefit plans to employers. The company increased its quarterly per share dividend by 13.8% to $1.65 in June 2022. This marks the 11th-straight year of annual dividend increases by UnitedHealth Group Incorporated (NYSE:UNH).
On June 16, Loop Capital analyst Joseph France initiated coverage of UnitedHealth Group Incorporated (NYSE:UNH) with a ‘Buy’ rating and a $575 price target. The analyst said UnitedHealth Group Incorporated (NYSE:UNH) is one of the top managed care players, with leading market share in the commercial and government benefits markets. The analyst added that the company’s scale, sector leadership, and innovative technology are “major” competitive advantages.
According to Insider Monkey’s Q1 data, 103 hedge funds were bullish on UnitedHealth Group Incorporated (NYSE:UNH), up from 96 funds in the previous quarter. Boykin Curry’s Eagle Capital Management held the biggest stake in the company, with 2.90 million shares worth about $1.5 billion.
Here is what Baron Health Care Fund had to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q1 2022 investor letter:
“UnitedHealth Group Incorporated is a leading diversified health and well- being company whose divisions include insurance arm UnitedHealthcare and Optum, which offers care delivery and other services. Shares increased on a fourth quarter beat and a reaffirmation of what is likely conservative guidance for 2022. We believe UnitedHealth leads the healthcare industry in innovation and execution, as evidenced by its strong value proposition leading to Medicare Advantage share gains, strong cost controls, and its leadership position in the shift to value-based care.”
1. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 110
JPMorgan Chase & Co. (NYSE:JPM) is a New York-based multinational investment bank and financial services corporation. JPMorgan Chase & Co. (NYSE:JPM) is one of the best stocks to buy for the next 50 years, as the aging population means there are more chances for wealthy clientele. The company is also positioned to benefit from the popular shift to digital banking. JPMorgan Chase & Co. (NYSE:JPM) is also a notable dividend stock. It is set to pay a quarterly dividend of $1 per share on July 31, to shareholders of record as of July 6. The stock delivers a dividend yield of 3.57%.
Citi analyst Keith Horowitz on July 12 upgraded JPMorgan Chase & Co. (NYSE:JPM) to ‘Buy’ from ‘Neutral’ with a price target of $135, down from $145. The analyst believes investors will “look to high-quality franchises with strong management teams and a sound balance sheet” in the present macro environment. JPMorgan Chase & Co. (NYSE:JPM) “fits this narrative” and with the year-to-date decline in the share price and an attractive valuation, JPMorgan Chase & Co. (NYSE:JPM) represents a good buying opportunity, the analyst told investors in a research note.
In Q1 2022, 110 hedge funds were bullish on JPMorgan Chase & Co. (NYSE:JPM), up from 107 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management features as the leading stakeholder of the company, with 7.76 million shares worth over $1 billion.
Here is what Ariel Investments had to say about JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter:
“In our view, inflation will not just be a 2021 phenomenon. Inflationary expectations are only now working themselves into the labor market with historically low unemployment, resurgent labor unions, and higher wages. These labor cost pressures are only starting to show up in the Consumer Price Index. The most recent Producer Price Index showed a +9% year over year increase, the highest since it was created in 2010. Higher input prices generally lead to rising consumer prices.
“In our view, inflation will not just be a 2021 phenomenon.”
Consumer balance sheets are in excellent shape with lower unemployment and banked stimulus checks. A recent analysis from JP Morgan Chase (JPM) showed average checking accounts have 50% higher balances than pre-Covid. The U.S. money supply as measured by M2 (a calculation that includes cash, checking accounts, and “near cash” such as money market securities) is up +38% versus year-end 2019. Higher consumer cash holdings and higher money supply mean more spending and demand for goods. Some emphasize supply issues to explain current inflation. Going forward, we see very strong demand as well, too much money chasing too few goods.”
You can also take a look at 10 Commodity Stocks to Buy On The Dip and 10 Stocks That Cathie Wood and Steve Cohen Love.
