We recently compiled a list of the 13 Best Forever Stocks to Buy Right Now. In this article, we are going to take a look at where DaVita Inc. (NYSE:DVA) stands against the other forever stocks.
State of The Market in The Wake of The CPI Report
The first month of 2025 was an interesting one, with inflation rising faster than expected, giving another motivation for the Federal Reserve to keep interest rates unchanged. The consumer price index, a comprehensive measure of expenses in goods and services throughout the US economy, increased by a seasonally adjusted 0.5% for January, bringing the annual inflation rate to 3%. Excluding volatile food and energy costs, the CPI increased 0.4%, bringing the 12-month inflation rate to 3.3%, higher than the projections of 0.3% and 3.1%, respectively. According to Josh Jamner, investment strategy analyst at ClearBridge Investments, the report spells the end of the Fed’s rate-cutting cycles:
“The ‘wait and see’ Fed is going to be waiting longer than anticipated after a red-hot January CPI inflation report. This report puts the final nail in the coffin for the rate cut cycle, which we believe is over.”
In addition, policymakers are also keeping a watch on the White House in the wake of President Donald Trump’s advocacy for high tariffs, which might boost prices and make it more difficult for the Fed to reach its goal. Speaking on this, James Knightley, chief international economist at ING, said the following:
“There is no getting away from the fact that this is a hot report and with the sense that potential tariffs run upside risk for inflation the market is understandably of the view the Federal Reserve is going to find it challenging to justify rate cuts in the near future,”
While the consumer price index release is a widely cited inflation gauge, it isn’t the principal metric the Federal Reserve uses. Rather, the Fed’s preferred inflation measure is the personal consumption expenditures price index, which the Bureau of Economic Analysis will publish later this month, although it also monitors the CPI and other comparable pricing indices. In his remarks before the House Financial Services Committee on February 12, Fed Chair Jerome Powell acknowledged the Fed’s increased emphasis on the PCE measure but acknowledged that “we’re not quite there yet” on inflation, despite the “great progress” that has been done so far.
In such a macroeconomic environment, the notion of acquiring the best “forever stocks” might appear challenging. That said, although investors may gravitate toward riskier options with bigger potential returns, it is crucial to recognize that long-term stock investments have their worth and importance.
Our Methodology
When it comes to long-term investing, who better to emulate than Warren Buffett, arguably the most well-known investor on Wall Street? To come up with our list of the best forever stocks, we began by evaluating Buffett’s stock portfolio, focusing on stock holdings that had been in his portfolio for at least 5 years. Next, we looked at the number of hedge fund investors linked with each stock using Insider Monkey’s database of 900 funds in the third quarter of 2024. The following names are ranked according to hedge fund sentiments around them.
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).
Clinical laboratory technicians running tests in the comprehensive kidney care services.
DaVita Inc. (NYSE:DVA)
Number of Hedge Fund Holders: 39
DaVita Inc. (NYSE:DVA) provides renal dialysis treatments to individuals suffering from chronic kidney failure in the United States. The firm runs renal dialysis clinics and offers associated lab services at outpatient dialysis centers. It also provides outpatient, hospital inpatient, and home-based hemodialysis services and manages clinical laboratories that conduct standard laboratory testing for dialysis.
In the third quarter of 2024, the company recorded consolidated revenues of $3.2 billion. Furthermore, operating income was $535 million, demonstrating the company’s capacity to profit from its core businesses while eliminating non-operational costs such as taxes and interest. Additionally, diluted profits per share was $2.50, while adjusted diluted earnings per share was $2.59. With 2028 as the nearest maturity date, DaVita Inc. (NYSE:DVA) has properly controlled its debt, and its leverage is within acceptable limits.
DaVita Inc. (NYSE:DVA) managed recent operational challenges well, reducing the impact of storms and maintaining labor and medical cost management. The company anticipates supply chain circumstances to return to normal by early 2025 as it prepares for a regulatory move involving oral-only pharmaceuticals into Medicare Part B, which may increase patient access and efficiency.
Overall DVA ranks 11th on our list of the best forever stocks to buy right now. While we acknowledge the potential of DVA as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
