In this article, we will take a look at the 7 best stocks to buy for the long term.
Market Strategist Says The Economy May Re-Accelerate on its Own
On September 23, Chris Watling, Longview Economics founder, CEO, and chief market strategist, appeared in an interview on Yahoo Finance to discuss the rate easing path and the impact it may have on the market.
According to Walting, the market is deeply divided on not two but three different sides. While some analysts and investors foresee a recession, others believe the economy is going towards a soft landing, and of those a small minority believe that the economy may accelerate at a rapid pace. Walting also added that while predicting the appropriate terminal rate is interesting, there is a lot more going on with the economy. Comparing economic conditions to the 2008 recession, households and corporations are in much better shape, hinting that a recession may not be the most likely outcome.
He believes that the economy may be slowing right now but it may experience faster reacceleration than before without the need for further falls. His advice to investors is to judge the economy based on multiple data points. As for the appropriate portfolio, Walting suggests that bonds are overcooked and gold must be given a pause. At the moment, the market is rotating away from tech into defensive sectors, and in the future, it may rotate more towards cyclical stocks.
The Fed is Thinking About Growth
As the S&P 500 recorded an upside following the Fed’s easing cycle, investors and analysts alike eye a soft landing for the economy. On September 26, Liz Miller, Summit Place Financial Advisors founder and president, appeared in an interview on Yahoo Finance to discuss the future of markets.
Miller states that the pivot has been great for the financial markets and now that the Fed is thinking about growth, investors are hopeful of a soft landing. She suggests that stocks in sectors such as housing, rental, finance, and consumer goods may benefit immensely from the easing interest rate cycle.
Miller suggests that the S&P 500 is not the best way to measure the performance of financial markets, given that it is skewed to the mega-cap tech stocks. Looking at other indices, other sectors have not made highs since December 2021. She believes the market may be flat but there is huge potential for upsides. Miller shares concerns over the Chinese economy and how it influences the global outlook. She suggests that for the global economy to balance, companies must work to regain consumer confidence in China.
Now that we have studied the appropriate portfolio mix for investors following the Fed’s decision, let’s take a look at the 7 best stocks to buy for the long term.
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Our Methodology
To come up with the 7 best stocks to buy for the long term we examined promising stocks hedge funds are piling into. These are blue chip stocks with wide moats and have long track records of driving shareholder returns. We have ranked the stocks in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Best Stocks to Buy for Long Term
7. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 68
The Coca-Cola Company (NYSE:KO) ranks seventh on our list of the best stocks to buy for the long term. The Coca-Cola Company (NYSE:KO) is a soft drink manufacturer with headquarters in Atlanta, United States. The company has more than 500 brands that sell in more than 200 countries.
In the second quarter of 2024, The Coca-Cola Company (NYSE:KO) announced plans to launch a ready-to-drink cocktail in partnership with Bacardi Limited. In addition to that, the company has shifted its focus to sponsoring events such as the Olympics, music festivals, and the Euro 2024 Football Championship from regular retailing in Europe. More recently, the company partnered with Electronic Arts (EA) to sponsor the upcoming EA SPORTS College Football 25 with its Coca-Cola Zero Sugar beverage.
In the second quarter of 2024, the company logged $12.3 billion in revenue, up by 3% year-over-year. The company is known for its consistent performance, growing its net sales from $33 billion in 2020 to $46 billion in 2023. Over the past 5 years, The Coca-Cola Company (NYSE:KO) has grown its revenue at a compound annual growth rate (CAGR) of 6% and its free cash flow at a CAGR of 7%.
The company’s financial performance has made it one of the largest dividend-paying companies. The company has grown its dividends consistently for 61 years, paid out $8 billion in dividends in 2023, and expects to pay $8.4 billion in dividends in 2024.
To sum it up, The Coca-Cola Company (NYSE:KO) is not just promising as a company, but also as a reliable dividend payer, contributing to its position on our list. This explains why analysts and hedge funds are bullish on KO.