We recently published a list of the 10 Best Stocks to Buy and Hold For 3 Years. In this article, we are going to take a look at where Pfizer Inc. (NYSE:PFE) stands against the other best stocks to buy and hold for 3 years.
What to Expect From the Stock Market in 2025?
On December 12, Tom Lee, Fundstrat Global Advisors managing partner and head of research, joined CNBC’s ‘Closing Bell’ to discuss his playbook for 2025. Following two years of significant gains, his playbook suggests an optimistic yet cautious outlook for the stock market next year. Lee anticipates that the S&P 500 will rise to approximately 7,000 by mid-2025, before retreating to around 6,600 by the end of the year. This reflects an overall expected increase of about 8% for the year, which is consistent with historical averages for stock market returns. In terms of Earnings Per Share (EPS) estimates Lee projects EPS for the S&P 500 at $260 in 2025 while estimating $300 for 2026. This is slightly below the consensus estimates from Wall Street, which average around $268 for 2025.
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Explaining his investment thesis, Lee pointed towards several themes that could drive the market in 2025. He predicts a “tale of two halves,” where the first half of the year will see stronger market performance due to factors like Federal Reserve policies and business-friendly initiatives under President Trump. Conversely, he expects a pullback in the second half, reflecting historical trends after strong consecutive years. He sees potential in small-cap stocks, which have underperformed relative to large-cap stocks historically. Lee also talked about the mega caps that are leading. He mentioned that investors reach for these companies when there is even slight risk in the market. Secondly, mega-cap stocks are highly sensitive to falling interest rates. With the December cut in effect, the market is bullish for tech, thereby further solidifying the investment case for megacaps.
Despite his generally positive outlook, Lee acknowledges several risks that could impact market performance. For instance, he thinks the newly formed Department of Government Efficiency (DOGE) could potentially lead to reduced government spending and slower economic growth if it is too effective in cutting costs. Moreover, the implementation of tariffs could adversely affect economic conditions and corporate profits. Lee pointed out that historical patterns suggest that after two years of substantial gains, markets often experience declines in the latter half of the third year.
A medical technician wearing protective gloves and a mask mixing a biopharmaceutical solution.
Our Methodology
To compile the list of 10 best stocks to buy and hold for 3 years, we applied a consensus approach. We sifted through recent articles to get an aggregated list of the best stocks to buy and hold for 3 years. Next, we ranked these stocks based on the number of hedge fund holders as of Q3 2024, sourced from Insider Monkey’s database.
Why do we care about what hedge funds do? 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).
Pfizer Inc. (NYSE:PFE)
Number of Hedge Funds: 80
Pfizer Inc. (NYSE:PFE) is a global biopharmaceutical company that heavily focuses on research, development, and sale of drugs and specialty treatments. The company has made significant progress in oncology and primary care and has a portfolio that spans over 100 drugs sold internationally.
The company experienced record sales and came under the spotlight due to its COVID-19 vaccine, generating $100 billion in revenue during 2022. Although the COVID-19 threat has been averted, Pfizer Inc. (NYSE:PFE) still has growth potential as management has shifted focus to its Oncology segment. The company demonstrated its interest by acquiring Seagen for $43 billion in 2023 and plans to expand its oncology portfolio by adding 8 potential cancer treatments by 2030.
The segment is already contributing significant growth. During the fiscal third quarter of 2024, Pfizer Inc. (NYSE:PFE) generated $17.7 billion in revenue driven by a robust 31% year-over-year growth coming from its Oncology segment. In addition, management has also been focused on improving its cost savings. On December 17, the company announced that it had successfully achieved its goal of $4.0 billion in net cost savings through 2024 and now anticipates an additional $500 million in savings in 2025 as part of its ongoing cost realignment program. It is one of the best stocks to buy and hold for 3 years.
Parnassus Value Equity Fund stated the following regarding Pfizer Inc. (NYSE:PFE) in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
Overall, PFE ranks 8th on our list of best stocks to buy and hold for 3 years. While we acknowledge the potential of PFE to grow, our conviction lies in the belief that 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 PFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.