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In this article, we will discuss the 12 best forever stocks to buy now. If you want to see some more of the valuable companies, go directly to 5 Best Forever Stocks to Buy Now.
The S&P 500, NASDAQ, and Dow indices have experienced a significant dip since the start of 2022, providing attractive investment opportunities to long-term investors. Jeremy Siegel, a renowned finance professor at Wharton Business School, believes that some of the best long-term stocks are trading at very cheap valuations in the market currently. He believes that the raging inflation, hovering around a four-decade high, can be expected to come under control as the housing market is cooling down. Since the start of the COVID-19 pandemic, the US government has increased the money supply by 40%, and historically, earnings have increased with an expansion in the money supply. Mr. Siegel observed that, at one point, numerous established stocks saw a surge of 50% to 55% compared to their levels before the pandemic. However, the recent weakness in the stock market has pulled back these gains to around 20% only, bringing down the valuation of companies.
It is widely believed that the majority of the wealth created in the stock market is due to the success of the best long-term stocks, such as Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOGL). A study conducted at the business school of Arizona State University concluded that over 55% of the stocks listed in the US and 57% of the stocks listed in other leading stock markets globally underperformed in comparison to the relative performance of risk-free US Treasury bonds during the three-decade period between 1990 and 2020. Meanwhile, over $75 trillion of the global wealth created in the stock markets was due to the strong performance of only 2.4% of the stocks listed on these exchanges. This makes it necessary to undertake careful research to identify the best long-term stocks and avoid underperforming stocks that are in the majority.
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Our Methodology
We have shortlisted the best long-term stocks after looking into the past performance of these companies and the future prospects being offered. While these stocks might not have experienced the highest stock price appreciation in the recent past, they have been able to generate significant shareholder wealth by offering healthy dividends and share buyback programs. The analyst ratings and hedge fund sentiment as of Q2 2022 have also been discussed.
12 Best Forever Stocks to Buy Now
12. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Walmart Inc. (NYSE:WMT) is a Bentonville, Arkansas-based retailer that has the distinction of being the biggest retailer in the world. The company has over 10,500 retail locations and a headcount of over 2.2 million employees as of 2022.
In a research note issued on October 5, Hans Engel at Erste Group upgraded Walmart Inc. (NYSE:WMT) stock from a Hold to a Buy rating. The analyst believes that Walmart Inc. (NYSE:WMT) offers low but stable growth in sales and is one of the best long-term stocks in the consumer sector. Furthermore, Engel anticipates expansion in Walmart Inc.’s (NYSE:WMT) operating margin next year, along with a moderate growth trend in the coming years. Walmart Inc.’s (NYSE:WMT) top line is expected to surpass $600 billion by 2025 as the company is investing heavily to combat the rise of Amazon.
On October 6, Walmart Inc. (NYSE:WMT) revealed that it had finalized a deal to buy Alert Innovation, a provider of automated e-grocery fulfillment software. The acquisition is expected to increase the long-term operational efficiency of Walmart Inc. (NYSE:WMT). Walmart Inc.’s (NYSE:WMT) annual forward dividend yield stands at 1.74% as of October 10.
At the end of Q2 2022, Walmart Inc. (NYSE:WMT) was held by 67 hedge funds.
11. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
The Procter & Gamble Company (NYSE:PG) is a Cincinnati, Ohio-based consumer goods company.
Analysts think The Procter & Gamble Company (NYSE:PG) is one of the best long-term stocks to invest in as it is a defensive company that is expected to hold ground during uncertain macroeconomic times. The stock has a beta of only 0.39, implying low volatility in performance. In a research note issued to investors on August 2, Lauren Lieberman at Barclays increased the price target on The Procter & Gamble Company (NYSE:PG) from $154 to $157 and reiterated an Overweight rating on the stock. The analyst anticipates The Procter & Gamble Company (NYSE:PG) stock to outperform the broader market if the company markets its defensive nature efficiently.
The Procter & Gamble Company (NYSE:PG) offers an annual forward dividend yield of 2.94% as of October 10, translating into an annual payout of $3.65. The company generated solid shareholder returns in 2022 with share buyback programs of $10 billion and total dividends higher than $9 billion. Analysts think The Procter & Gamble Company (NYSE:PG) is currently trading at a discount of nearly 42% to its fair value.
10. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is one of the most prominent names in the electric vehicle (EV) segment as a vertically integrated EV corporation under the leadership of Elon Musk.
On October 6, Vijay Rakesh at Mizuho gave positive comments on Tesla, Inc. (NASDAQ:TSLA) stock. The analyst believes that the company’s Q3 2022 results were in line with expectations. Although the EV industry is continuing to face challenges related to supply chain and logistics, the demand side is showing very few signs of weakness as a shift towards electrification is under process in China and other leading countries of the world. The analyst gave Tesla, Inc. (NASDAQ:TSLA) stock a Buy rating with a target price of $370.
On October 9, The China Passenger Car Association (CPCA) revealed that Tesla, Inc. (NASDAQ:TSLA) sold a record 83,135 EVs in China in September. This reflected an increase of 8% from the sales made in August. Analysts think that Tesla, Inc. (NASDAQ:TSLA) offers an optimistic growth story and is likely to observe an increase in per-unit margins due to its advanced manufacturing abilities. The company's solid operations merit its inclusion among the best long-term stocks to buy.
Fiduciary Management shared its outlook on Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter. Here’s what the firm said:
“Remarkably, the Nasdaq-100 and Russell 2000 indices are up 6.25% and 3.90% through 3/31/22, respectively, since the war started. Tesla, Inc. (NASDAQ:TSLA) went up 57% from its low on February 24 ($700) to the close on March 29th ($1099), which equates to an advance of $413 billion. To put that in perspective, the 24-trading day gain in Tesla was greater than the entire market value of Walmart, Inc.! Tesla trades for 120 times estimated 2022 GAAP2 earnings, compared to Walmart’s (NYSE:WMT) 21.8 multiple (1/2023 fiscal year).”
9. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 72
Exxon Mobil Corporation (NYSE:XOM) is a Texas-based diversified energy giant that is considered by analysts as one of the best long-term stocks to hold.
In a research note issued on September 22, Neil Mehta at Goldman Sachs reiterated a Buy rating on Exxon Mobil Corporation (NYSE:XOM) stock with a target price of $112 following a meeting with CEO Darren Woods and other members of the senior management. The analyst believes that Exxon Mobil Corporation (NYSE:XOM) has an important role to play in the transition towards renewable energy as the company is focusing on projects that are related to biofuels, hydrogen, and carbon capture and storage (CCS). Mehta also added that Exxon Mobil Corporation (NYSE:XOM) could repurpose its crude oil refining facilities into biofuel, chemical, lubricant, and plastic recycling facilities.
Exxon Mobil Corporation (NYSE:XOM) has generated returns of over 60% in the last year. The company is undertaking initiatives to optimize its costs and is expected to surpass the profit margin expectations for this year. Exxon Mobil Corporation (NYSE:XOM) has a forward dividend yield of 3.48% as of October 10.
Here’s what First Eagle Investments said about Exxon Mobil Corporation (NYSE:XOM) in its Q2 2022 investor letter:
“Integrated oil and gas giant Exxon Mobil performed well in the second quarter as continued high prices for energy products supported the stock. As the largest refiner in the US, the company has benefitted from wide “crack spreads,” or the margin between the cost of crude oil and the petroleum products extracted from it. Exxon continues to invest in refining capacity in the US, which industrywide has been in steady decline since 2019. We are pleased that Exxon has been using its strong cash flows to reduce debt and to return cash to shareholders through dividends and stock repurchases.”
As of Q2 2022, Exxon Mobil Corporation (NYSE:XOM) was held by 72 hedge funds.
8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 72
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a Hsinchu, Taiwan-based leading semiconductor manufacturing company that has a wide range of applications in the electronics industry.
Rick Hsu at Daiwa upgraded Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) from a Buy to an Outperform rating on September 14. Despite an expectation of an industry-wide correction, the analyst believes that Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) will experience top-line growth as it continues to gain market share and more pricing power.
Experts see the revenue of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) to be counter-cyclical due to the company’s advanced technical capabilities leading to its dominance. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is also in discussion with Apple regarding the production of 2 nm chips, as the maker of the iPhone is interested in integrating the smaller chips into its products in the future. Taiwan Semiconductor Manufacturing Company Limited’s (NYSE:TSM) bright growth prospects make it one of the best long-term stocks to invest in.
RiverPark Funds discussed its stance on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2022 investor letter. Here’s what the firm said:
“Taiwan Semiconductor detracted from performance despite a business performance that saw revenue accelerate to over +30% growth. The Company is one of the few fabs in the world that is capable of manufacturing leading-edge integrated circuits (IC). The Company’s leading-edge capacity is being absorbed by high-performance computing applications, particularly by Apple, which has become an integrated circuit powerhouse over the past decade.
The Company’s aggressive investment in leading-edge equipment, tight development with fabless IC designers, and embrace of open development libraries should continue to foster a superior competitive position and attractive long-term growth.”
7. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) is a New Jersey-based healthcare company with a rich history of over 135 years. The company has a headcount of over 140,000 employees.
Joanne Wuensch at Citi gave Johnson & Johnson (NYSE:JNJ) stock a target price of $198 and maintained a Buy rating in a research note issued on October 5. Ahead of Johnson & Johnson’s (NYSE:JNJ) Q3 results, the analyst shared a bullish take on the company’s device utilization levels, along with improved pricing for the medical supplies and technology segment. Wuensch thinks that the best outcome for Johnson & Johnson (NYSE:JNJ) would be to post inline delivery numbers and reiterate its 2022 forecasts. Johnson & Johnson (NYSE:JNJ) is spinning off its consumer healthcare segment to focus more on the pharmaceutical and medical technology business.
Johnson & Johnson (NYSE:JNJ) is on the Dividend Kings list, implying that the company has raised its dividends for the last 50+ consecutive years. The company marked its 60th consecutive year of dividend growth in April this year, with a 6.6% increase in the quarterly dividend. Furthermore, Johnson & Johnson (NYSE:JNJ) has seen its free cash flow grow steadily to almost $20 billion over the last ten years. These fundamentals reflect the company’s consistent growth, making it one of the best long-term stocks to buy now.
Distillate Capital Partners LLC shared its stance on Johnson & Johnson (NYSE:JNJ) in its Q2 2022 investor letter. Here’s what the firm said:
“Johnson & Johnson was among the 2 largest trims at around 1% each. Each stock was up 1% in the quarter compared to the 16% price decline for the S&P 500 and the positions were reduced as the valuations became somewhat less appealing, though still attractive enough to warrant inclusion.”
Fisher Asset Management raised its stake in Johnson & Johnson (NYSE:JNJ) by 798% during Q2 2022.
6. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
JPMorgan Chase & Co. (NYSE:JPM) is one of the most prominent firms in the global financial services industry. The biggest bank in the US in terms of assets has incorporated 1,200 financial institutions in its portfolio.
Keith Horowitz at Citi added JPMorgan Chase & Co. (NYSE:JPM) stock to a “positive stock watch” list on October 4, prior to the company’s Q3 2022 results. The analyst has assigned JPMorgan Chase & Co. (NYSE:JPM) stock a target price of $135 and a Buy rating. Horowitz is forecasting that JPMorgan Chase & Co. (NYSE:JPM) will surpass the consensus revenue estimates for the period, revise its 2022 guidance and assume an improved run rate next year.
Analysts think the current economic situation provides an opportunity for investors to look for solid ‘contrarian investments.’ JPMorgan Chase & Co. (NYSE:JPM) fits this criterion as it is amongst some of the leading banks with high dividend yields trading at very low valuations. JPMorgan Chase & Co. (NYSE:JPM) has generated strong returns on equity (ROE) consistently and is well-positioned to continue this trend. Ariel Investments shared its stance on JPMorgan Chase & Co. (NYSE:JPM) in its Q4 2021 investor letter. Here’s what the firm said:
“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.”
In addition to JPMorgan Chase & Co. (NYSE:JPM), Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOGL) are also some of the best long-term stocks trading at attractive valuations currently.
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Disclose. None. 12 Best Forever Stocks to Buy Now is originally published on Insider Monkey.
