We recently compiled a list of the 10 stocks that will make you rich in 5-10 years. In this article, we are going to take a look at where Palo Alto Networks Inc (NASDAQ:PANW) stands against the other the Stock That Will Make You Rich in 5-10 Years.
Economic Resilience and Surprising Rate Cut Amid Geopolitical Tensions
The US economy grew by 3% in the second quarter, and the stock market hit all-time highs in the third quarter, averting fears of a recession at hand. While the economy has remained resilient for the better part of the year, the US Federal Reserve’s 50 basis point rate cut surprised many analysts.
Jamie Dimon believes the steep cut might be justified as geopolitical uncertainties can potentially disrupt the gains achieved by affecting supply chains and triggering uncertainties and fears in the market.
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Powell and other Fed officials are open to further lowering interest rates after last month’s half-point cut, but there’s market debate on the pace.
Soaring tensions in the Middle East with Israel invading Lebanon and threatening to attack Iran have triggered a layer of uncertainty, which Dimon believes could have a significant impact on the economy. Consequently, the banker believes that the 50 basis point cut could offer the much-needed economic support as inflation continues to drop.
Nevertheless, James Demerit, Main Street Research CIO, believes the upward momentum in the equity markets will persist as the macro environment improves. While valuations appear to have gotten out of hand, there are still opportunities for stocks trading below their fair value as the investment environment improves.
Apart from the magnificent seven stocks whose valuations have gotten out of hand, other stocks are trading at 16 times earnings, which, according to Demmert, is cheap considering the strong fundamentals that support a further rally. Companies that have consistently grown sales and profits should continue delivering regardless of the uncertainties around the US election and soaring geopolitical tensions.
According to Emily Bowersock Hill, CEO of Bowersock Capital Partners, it is time to be upbeat about the market heading into year-end. “The bull market has survived the year’s historically weakest quarter,” said Hill in an interview with CNBC. “It is likely to remain intact through at least the end of the year, as earnings remain strong, interest rates are moving lower and consumers are still spending.”
Which Stocks Could Make You Rich in 5 to 10 Years?
When considering which stocks to buy, it’s beneficial to ask, “Which industries are experiencing the most rapid growth?” Despite some sectors facing challenges post-pandemic, many are flourishing, offering abundant opportunities. The global economy is rapidly evolving, with industries like artificial intelligence (AI), healthcare, travel, online retail, cybersecurity, and green energy experiencing significant growth. The AI market alone is projected to reach $407 billion by 2027 (according to estimates from Markets and Markets). The Bureau of Labor Statistics projects that between 2020 and 2030, total employment in the United States will expand by 11.9 million, or 7.7%, to 165.4 million from 153.5 million.
Some of the top stocks that will make you rich in 5 to 10 years are companies that can rally as the global economy grows on the back of favorable monetary policies. Additionally, they include stocks of companies that are leaders in their respective fields and well-poised to benefit from technological changes such as artificial intelligence.
In an interview with CNBC, Savita Subramanian, BofA Securities head, reiterated utilities and large-cap real estate stocks are well positioned to perform heading into year end. Likewise, industrials and financials should receive a significant boost if the overall economy improves.
According to Subramanian, the idea of the Fed cutting is not only liquidity inducing that should benefit the equity market but a move that ends up cutting money market yields. With liquidity slowly moving out of short-term bonds, most of it is ending up in equity markets as investors take note of high-risk reward opportunities at highly discounted valuations. Subramanian believes dividend stocks and growth stocks are well-positioned to generate significant value going forward.
With this economic perspective in mind, let’s start our list of stocks that will make you rich in 5-10 years.
Source: pixabay
Our Methodology
To compile the list of the stocks that will make you rich in 5-10 years, we sifted through multiple reports and rankings and compiled an initial list of 20 possible stocks that experts and analysts believe have multi-year growth opportunities. We then selected the 10 stocks that were the most popular among hedge funds and ranked them in ascending order based on the number of hedge funds that held stakes in them, as of the end of Q2 2024.
At Insider Monkey, we are obsessed with 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).
Palo Alto Networks Inc (NASDAQ:PANW)
Number of Hedge Fund Holders as of Q2: 66
Palo Alto Networks, Inc. (NASDAQ:PANW) is one of the stocks that will make you rich in 5-10 Years as cyber threats intensify. The company has achieved success by launching several ground-breaking inventions and developing an all-encompassing cybersecurity platform that includes cloud, endpoint, and network security.
Over the past five years, the stock has returned 394%, riding a wave of robust growth and increasing profitability. Likewise, Palo Alto Networks, Inc. (NASDAQ:PANW) is in a good position to benefit from new cyber-attacks. It boasts a complete defence platform, with a strong platform offering product leadership in 23 cyber categories.
The company’s competitive advantage is highlighted by the fact that Change Healthcare hired it to clean up its attack. Its recent expansion further supports this theory. Over the previous five years, revenues have increased at a compound annual growth rate of 23%.
Additionally, it is a technological leader in many important product categories, such as secure access service edge (SASE), which bundles various network and cloud security services into a single package, despite the fact that this always raises questions about the quality of security.
Palo Alto Networks, Inc. (NASDAQ:PANW) exceeded its own projections for revenue growth for the third quarter of its fiscal 2024 by growing revenue by 15% year over year to $2 billion. While the stock is trading at a premium with a price-to-earnings multiple of 52, it is expected of a company with tremendous opportunities for growth.
By the end of the second quarter, 66 hedge funds tracked by Insider Monkey had positions in Palo Alto Networks, Inc. (NASDAQ:PANW). Citadel Investment Group emerged as the largest shareholder, with 2.84 million shares in the company.
TimesSquare Capital Management U.S. Focus Growth Strategy stated the following regarding Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q2 2024 investor letter:
“Our cybersecurity holdings were also beneficial to the strategy this quarter. The global provider of network and cloud-based cybersecurity systems, Palo Alto Networks, Inc. (NASDAQ:PANW), chipped in with a 19% return. Its revenues and earnings were higher than anticipated as Palo Alto shifted its marketing strategy to emphasize larger platform contracts.”
Overall PANW ranks 8th on our list of 10 stocks that will make you rich in 5-10 years. While we acknowledge the potential of PANW as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PANW, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
