In this article, we discuss 13 best stocks to buy and hold forever. If you want to skip our discussion on the stock market landscape, head over to 5 Best Stocks To Buy and Hold Forever.
The equity strategy team at UBS has recently shared a forward-looking forecast for potential surprises that might unfold throughout the course of 2024. In a note written by analyst Andrew Garthwaite and his team, they clarified that the predictions outlined carry long odds and are not reflective of the bank’s base-case scenario or market consensus. One of the noteworthy surprises highlighted by UBS involves the possibility of China’s nominal GDP experiencing a slowdown to 3%, contrary to expectations of acceleration. Additionally, the forecast includes a potential steepening of the yield curve to 2%, challenging current market expectations. Moreover, the UBS team envisions a scenario where a candidate other than Joe Biden or Donald Trump emerges as the victor in the November election, adding an element of unpredictability to the political landscape.
Among the bold predictions outlined in UBS’s report, a particularly interesting insight is the transformative impact of generative artificial intelligence tools on productivity. The strategists suggest that these tools are already making a substantial impact and expect that the existing infrastructure could facilitate a 2.5% increase in productivity growth. Drawing parallels to the IT revolution in the late 1990s, such an uptick in productivity could potentially ignite a significant rally for equities. The UBS team forecasts that instead of productivity staying around 1.5%, it could increase to 2.5%. They believe this could lead to lower inflation and a slow decrease in unemployment. If this happens, the central bank might be able to cut interest rates more quickly than what people in the markets expect. The UBS analysts also say that if productivity grows by 2.5%, it could cause a big 20% increase in the S&P 500 throughout the year.
The United States economy is currently experiencing what some experts are categorizing as a “Goldilocks” moment. Economists from the National Association for Business Economics (NABE) anticipate faster growth, reduced inflation, and robust job creation in 2024. This outlook stands in stark contrast to the recession fears that prevailed in 2023. The NABE now predicts a 2.2% rise in gross domestic product (GDP) for 2024, a more optimistic forecast compared to just two months ago. Inflation, a key concern impacting multiple spending categories, is expected to continue decreasing this year. NABE forecasts a decline in the Consumer Price Index (CPI) to an annual rate of 2.4%, compared to 4.1% in 2023 and 8% in 2022. Another important indicator for the Federal Reserve, the Personal Consumption Expenditures gauge, is also predicted to ease further. The NABE anticipates the Federal Reserve initiating a reduction in its benchmark interest rate between April and June, aiming to lower borrowing costs for individuals and businesses. The record-high performance of the stock market, with both the S&P 500 and Dow Jones Industrial Average reaching new highs, contributes to the positive sentiment in the American stock market.
Ed Yardeni, chief investment strategist for Yardeni Research, told CBS News on February 26:
“As occurred during the second half of the 1990s, the stock market is having a significantly positive wealth effect on the economy now that the major stock market indexes are at record highs.”
To benefit from the growth potential in the stock markets, some of the best stocks to buy include Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and NVIDIA Corporation (NASDAQ:NVDA).
Our Methodology
We referred to long-term hedge funds that rarely buy and sell stocks, then found 13 stocks that they have held consistently for at least 10 years. These are the best stocks to buy and hold forever. These hedge funds include Warren Buffett’s Berkshire Hathaway, Nelson Peltz’s Trian Partners, and Cliff Asness’ AQR Capital Management. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).
Image by Sergei Tokmakov Terms.Law from Pixabay
Best Stocks To Buy and Hold Forever
13. The Wendy’s Company (NASDAQ:WEN)
Number of Hedge Fund Holders: 23
The Wendy’s Company (NASDAQ:WEN) is a quick-service restaurant company operating in the United States and globally. It operates through three segments – Wendy’s U.S., Wendy’s International, and Global Real Estate & Development. On February 15, The Wendy’s Company (NASDAQ:WEN) declared a quarterly dividend of $0.25 per share, in line with previous. The dividend is distributable on March 15, to shareholders on record as of March 1. It is one of the best stocks to buy.
According to Insider Monkey’s fourth quarter database, 23 hedge funds were bullish on The Wendy’s Company (NASDAQ:WEN), compared to 18 funds in the prior quarter. Nelson Peltz’s Trian Partners is the leading stakeholder of the company, with 31.4 million shares worth $613 million. Trian Partners has held a stake in The Wendy’s Company (NASDAQ:WEN) consistently since 2013.
In addition to Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and NVIDIA Corporation (NASDAQ:NVDA), The Wendy’s Company (NASDAQ:WEN) is one of the best stocks to buy.
Oakmark Equity and Income Fund made the following comment about The Wendy’s Company (NASDAQ:WEN) in its Q1 2023 investor letter:
“The Wendy’s Company (NASDAQ:WEN)’s is the second-largest quick-service burger chain in the U.S. This iconic brand generates $13.3 billion of systemwide sales from 7,095 restaurant locations around the world. Wendy’s is an asset-light franchisor that earns most of its profits from royalties, franchise fees and rent. The business is insulated from food and labor inflation since 95% of the restaurant base is owned and operated by franchisees. Wendy’s topline has proven remarkably resilient through diverse economic climates, producing 12 straight years of positive same-restaurant sales. The company is well-positioned for accelerating topline growth due to its recent launch of a breakfast menu, steady market share gains, international expansion and new restaurant openings. Despite these favorable characteristics, we had an opportunity to purchase shares at ~17x free cash flow, representing a discount to its quick-service restaurant peers as well as private market transactions.”
12. Moody’s Corporation (NYSE:MCO)
Number of Hedge Fund Holders: 56
Moody’s Corporation (NYSE:MCO) is a global risk assessment firm with two main segments – Moody’s Analytics and Moody’s Investors Service. The company provides institutional risk management, credit research and structured finance solutions, credit ratings, and assessment services for debt obligations and entities. Moody’s Corporation (NYSE:MCO) is one of the best stocks to buy. On February 15, Moody’s Corporation (NYSE:MCO) declared a $0.85 per share quarterly dividend, a 10.4% increase from its prior dividend of $0.77. The dividend is payable on March 15, to shareholders on record as of February 23. On February 5, Moody’s Corporation (NYSE:MCO) also authorized an additional $1 billion in share repurchase authority.
According to Insider Monkey’s fourth quarter database, 56 hedge funds were bullish on Moody’s Corporation (NYSE:MCO), compared to 58 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the largest stakeholder of the company, with 24.6 million shares worth $9.6 billion.
L1 Capital International Fund made the following comment about Moody’s Corporation (NYSE:MCO) in its Q3 2023 investor letter:
“Portfolio adjustments during the September 2023 quarter were modest, diversified, but meaningful. In total around 10% of the Fund was divested and reinvested into opportunities we consider provide a superior risk-adjusted base case return.
We continued to trim our investment in high-quality technology businesses such as Intuit, mentioned previously. These adjustments were purely for valuation considerations, rather than any business concerns and some of these companies remain significant portfolio holdings.
The Fund’s remaining investment in Moody’s Corporation (NYSE:MCO)’s was fully divested during the September quarter. Moody’s is the world’s leading credit rating, risk assessment and analytics business. The core credit ratings business is largely a duopoly with S&P Global, with modest competition from Fitch Ratings and regional competitors – a great example of our preferred ‘Noah’s Ark’ industry structure.
The share price of Moody’s has been volatile over recent times, often reacting too greatly to changes in short-term capital markets conditions. During the quarter we took advantage of positive market sentiment to divest our holding at a share price we considered to be above fair value. Moody’s is very well managed and ‘ticks all our boxes’ for one of the world’s highest-quality businesses. The company has moved from our Portfolio to our Bench of potential investments. Having a Bench of ‘ready to go’ investment opportunities is a core aspect of our investment process. We continue to analyze Moody’s as if we owned it and are excited by the pull-back in the share price from recent highs.”
11. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 62
The Coca-Cola Company (NYSE:KO), the American multinational beverage giant, is one of the best stocks to buy. On February 15, The Coca-Cola Company (NYSE:KO) declared a $0.485 per share quarterly dividend, a 5.4% increase from its prior dividend of $0.460. The dividend is payable on April 1, to shareholders on record as of March 15. The company’s revenue in Q4 2023 increased 7% year-over-year to $10.8 billion, exceeding Wall Street estimates by $150 million.
According to Insider Monkey’s fourth quarter database, 62 hedge funds held stakes in The Coca-Cola Company (NYSE:KO), compared to 57 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the leading stakeholder of the company, with 400 million shares worth $23.5 billion.
Hayden Capital made the following comment about The Coca-Cola Company (NYSE:KO) in its third 2023 investor letter:
“It’s not just emerging markets either, where one could argue a “scarcity premium” given fewer quality public companies. Even in the US, The Coca-Cola Company (NYSE:KO) trades at ~30x P/E despite having the same earnings as 10 years ago.
Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.
I find it ironic that all these companies trade as “bond-equivalents” in the minds of investors – even commanding lower yields than US treasuries, the safest security in the world. But it’s clear that their businesses are not nearly as safe. Coca-Cola is facing disruption risk from consumers shifting to new, healthier beverage brands.
But these companies are ~35% more expensive than US Treasuries, despite the heightened risk. On a risk-adjusted basis, one could argue the implied premium is even higher.”
Perhaps the explanation is simply the price volatility difference between these stocks and treasuries over the last two years. For example, 10-year Treasury bonds are down ~-20% since the beginning of 2022. By comparison, KO and PG are remarkably down only -4 – 6% over that time frame.”
10. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 64
American Express Company (NYSE:AXP) is an integrated payments company operating globally, providing credit cards, charge cards, banking, and related payment and financing products. The company operates through four segments – U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services. American Express Company (NYSE:AXP) is one of the best stocks to buy and hold forever.
American Express Company (NYSE:AXP) provided optimistic guidance for 2024, surpassing analyst expectations, despite the Q4 2023 earnings per share (EPS) and revenue falling short of estimates. American Express plans to raise its quarterly dividend by 17% to $0.70, starting from the Q1 declaration. The projected 2024 EPS is between $12.65 and $13.15, exceeding the consensus estimate of $12.30, with an anticipated revenue growth of 9%-11%. This guidance implies a 2024 revenue range of $66.0 billion to $67.2 billion, compared to the consensus of $66.2 billion.
According to Insider Monkey’s fourth quarter database, 64 hedge funds were long American Express Company (NYSE:AXP), compared to 74 funds in the earlier quarter. Warren Buffett’s Berkshire Hathaway is the largest position holder in the company, with 151.6 million shares worth $28.4 billion.
In its fourth quarter 2023 investor letter, Oakmark Select Fund stated the following regarding American Express Company (NYSE:AXP):
“American Express Company (NYSE:AXP) is one of the largest credit card issuers and payment networks in the world. We believe the company’s closed-loop network, brand equity and scale represent durable competitive advantages. Unlike most card issuers that process credit card transactions over third-party networks, American Express processes transactions over its own network. This allows American Express to earn greater economics than peers on each card transaction. The company retains part of this advantage in the form of higher profitability and reinvests the rest in enhanced customer rewards and service. Over time, these investments have helped American Express build its brand and attract more lucrative, high-spending card customers. We expect this business model and customer-centric approach will continue to drive industry-leading growth for years to come. Concerns over the near-term economic outlook allowed us to purchase shares of American Express at a 13x P/E on next year’s consensus earnings estimate. We think that is an attractive valuation for a company with this combination of business quality and growth.”
9. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 98
Merck & Co., Inc. (NYSE:MRK) is a global healthcare company operating in two segments: Pharmaceutical and Animal Health. The Pharmaceutical segment provides a range of human health products, including oncology, immunology, cardiovascular, and vaccine products. The Animal Health segment focuses on veterinary pharmaceuticals, vaccines, and health management solutions. Merck & Co., Inc. (NYSE:MRK) is one of the best stocks to buy. On February 1, the company announced a Q4 non-GAAP EPS of $0.03 and a revenue of $14.6 billion, outperforming Wall Street estimates by $0.14 and $120 million, respectively.
According to Insider Monkey’s fourth quarter database, Merck & Co., Inc. (NYSE:MRK) was part of 98 hedge fund portfolios, compared to 85 in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with a position worth nearly $1.5 billion.
Carillon Eagle Mid Cap Growth Fund made the following comment about Merck & Co., Inc. (NYSE:MRK) in its Q3 2023 investor letter:
“Merck & Co., Inc. (NYSE:MRK) underperformed in the third quarter, based on what we view as largely macroeconomic-related factors. The company continues to execute well, both clinically and fundamentally, but much of the biopharmaceutical industry has been weak as investors are gravitating to other, more cyclical sectors.”
8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 105
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is a leading manufacturer and provider of integrated circuits and semiconductor devices. TSMC ranks 7th on our list of the best stocks to buy. On January 18, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) reported a Q4 GAAP EPADR of $1.44 and a revenue of $19.62 billion, outperforming Wall Street expectations by $0.05 and $50 million, respectively.
According to Insider Monkey’s fourth quarter database, 105 hedge funds were long Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), compared to 107 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with 31 million shares worth $3.2 billion.
Baron Emerging Markets Fund stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its fourth quarter 2023 investor letter:
“Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) contributed in the fourth quarter due to investor expectations for a cyclical recovery in semiconductors heading into 2024 and significant incremental demand for artificial intelligence (AI) chips. We retain conviction that Taiwan Semi’s technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, 5G, and IoT, will allow the company to sustain strong double-digit earnings growth over the next several years.”
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 120
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a global semiconductor company with operations worldwide. It operates through Data Center, Client, Gaming, and Embedded segments. On January 30, Advanced Micro Devices, Inc. (NASDAQ:AMD) reported a Q4 non-GAAP EPS of $0.77, in line with market consensus. The revenue increased 10.7% year-over-year to $6.2 billion, outperforming Wall Street estimates by $60 million.
According to Insider Monkey’s fourth quarter database, 120 hedge funds were bullish on Advanced Micro Devices, Inc. (NASDAQ:AMD), compared to 110 funds in the last quarter. Philippe Laffont’s Coatue Management is a prominent stakeholder of the company, with 12.4 million shares worth $1.8 billion.
Like Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD) is one of the best stocks to buy and hold forever.
Jackson Peak Capital stated the following regarding Advanced Micro Devices, Inc. (NASDAQ:AMD) in its fourth quarter 2023 investor letter:
“On the long side of the portfolio, a core theme we remain invested behind is the data center infrastructure buildout and AI chips arms race that we’ve discussed since our first letter in Q2. Some skepticism has crept into the market, and it’s understandable given the huge ramp in 2023. However, our research continues to suggest 2023 was the start of a multi-year platform shift. Value will accrue to varying segments of the AI value chain at different parts of the cycle. We continue to see value in the “boots on the ground” winners in the data center buildout (Vertiv, Modine Manufacturing, Celestica). Our positioning in AI semiconductor companies (NVDA and Advanced Micro Devices, Inc. (NASDAQ:AMD)) has ebbed and flowed given we are cognizant (perhaps too much so) that these names are crowded positions across investor style types. We’ve done well in these chip stocks since inception and NVDA is currently a long, and we’re trying to “let winners run” while using sizing to risk manage these names due to the market-wide positioning bias in semiconductors.”
6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) ranks 6th on our list of the best stocks to buy. On February 1, the company announced financial results for its fiscal 2024 first quarter ended December 30, 2023. Apple Inc. (NASDAQ:AAPL) reported a Q1 GAAP EPS of $2.18 and a revenue of $119.6 billion, outperforming Wall Street estimates by $0.07 and $1.34 billion, respectively.
According to Insider Monkey’s fourth quarter database, 131 hedge funds were long Apple Inc. (NASDAQ:AAPL), compared to 134 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the biggest stakeholder of the company, with 905.5 million shares worth $174.3 billion.
Horizon Kinetics stated the following regarding Apple Inc. (NASDAQ:AAPL) in its fourth quarter 2023 investor letter:
“The full point is that if BYD has turned its attention from its domestic market to direct global competition, then other Chinese companies can do the same. The next most visible example of Chinese commercially applied technological prowess relates to the 2nd highest-weight company in the S&P 500, Apple Inc. (NASDAQ:AAPL).
In September 2023, Huawei Technologies introduced its Mate 60 Pro smartphone. It uses its own, internally developed 5G enabled chip that is apparently competitive with the Apple A17 chip. For practical purposes it has the functionality of the iPhone 15 Pro. This came as a great surprise – perhaps even shock – to the U.S. technology community, because four years ago the U.S. placed strict sanctions on China’s access to state-of-the-art semiconductor manufacturing technology…” (Click here to read the full text)
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Disclosure: None. 13 Best Stocks To Buy and Hold Forever is originally published on Insider Monkey.
