In this piece, we will take a look at 14 best stocks for long term growth. If you want to skip our analysis of the stock market and the driving forces behind it, head on over to 5 Best Stocks for Long Term Growth.
The last week of June doesn't appear to have glad tidings for the stock market. The first three weeks of the month saw a slew of data releases from the Labor Department, most of which indicated that the Federal Reserve will now consider taking a slower approach to its current interest rate hiking cycle. Consequently, investors had penciled in a fifty basis point increase for the remainder of this year, with this decision reflected in both foreign currency and stock markets.
Yet, the market is still quite jittery from the shocks that it has been dealt with over the past year. The recent jitters felt as June's final week kicks off came after fresh remarks by the Chairman of the Federal Reserve Mr. Jerome Powell to the U.S. Senate. Chair Powell, who discussed a wide ranging series of topics with senators, commented on the role of the central bank during the multiple failures earlier this year, the determinants behind the Fed's decision to raise interest rates, and whether it will increase rates later this year. While Mr. Powell's statements were in line with market expectations, when combined with the latest developments in key sectors of the U.S. economy, there are worries that more trouble might be headed our way.
One such sector is the real estate industry. Real estate is highly receptive to interest rate hikes since both builders require access to capital to finance their projects and buyers need loans or mortgages to make costly purchases. Higher rates slow down the market, and since interest rates are at historic highs these days, the real estate sector is feeling the brunt. Not to mention, the aftermath of the coronavirus pandemic saw workers shift to home. This trend has persisted, and a fresh report from Capital Economics believes that office buildings in America are unlikely to regain their pre pandemic values until 2040. With this dour backdrop, the worries of a potential recession and if the Fed's ten interest rate hikes since March 2022 are yet to fully make their impact is driving market downs.
The talk of a recession in the economy has been going on for nearly a year now. And this talk seems to have returned now, with another Fed official jumping into the debate of future interest rate hikes. In an exclusive interview with Reuters, San Francisco Federal Reserve Bank Mary Daly shared that two additional interest rate hikes are a real probability for the course of this year. Right now, investors are worried that the Fed might have tightened too fast, and Ms. Daly's comments saw them price in a potential recession down in the future into markets today. As of the early afternoon on June 22nd, the S&P 500 was down 0.658%, the NASDAQ 100 had lost 0.89% and the Dow Jones Industrial Index was down 0.54%.
However, talk of the Fed raising interest rates more later this year is not a surprise. Therefore, to explain recent downturns in the stock market, we'll have to look elsewhere as well. And this elsewhere is Europe's economic health. Economies of both France and Germany - two of Europe's biggest - shared disappointing data that made investors flee to the safe haven of treasuries. And those in the U.S. followed as they were already spooked by comments from the Fed officials. For U.S. markets, the risks of downfall are even higher as this year's recovery is not sector agnostic; instead, it is focused on a handful of sectors such as artificial intelligence that have provided investors an opportunity to break out from the dour sentiment of 2022.
At this point, you might be wondering what were those statements by Chair Powell that once again spooked investors. Well, during his hearing at Senate's Committee on Banking, Housing, and Urban Affairs, he shared:
So you know the risk is that we, the reason we've slowed down really since last December we slowed from 75 to 50 basis points per meeting to 25 at every meeting. And now as we reach, as we get closer and closer to what we believe will be our, it's uncertain, we think our destination is, we've slowed down a little further. So we're trying to avoid the mistake of going too far. And that's all it is. It's, as you can see, overwhelmingly, people on the Committee do believe, it will be appropriate to raise hikes one or two additional times. A strong majority believes two times this year if the economy performs as expected.
With these details in mind, let's take a look at some great stocks for long term growth, out of which the top picks are UnitedHealth Group Incorporated (NYSE:UNH), NVIDIA Corporation (NASDAQ:NVDA), and Berkshire Hathaway Inc. (NYSE:BRK-B).
To compile our list of the best long term stocks, we first made a list of stocks that have share price upside and an analyst recommendation of Buy or better. Then, the stocks were ranked by the percentage of share price upside, and out of the top forty, the ones with the highest number of hedge fund investors out of Insider Monkey's database of 943 hedge funds for the first quarter of 2023 were selected for the final list of best long term stocks to buy.
Deere & Company (NYSE:DE) is primarily a farming and agricultural equipment company. Its average analyst share price target is $440, which is quite higher than the shares that trade around $400. The firm manufactures tractors, harvesters, loaders, pickers, and other heavy machines.
By the end of 2023's first quarter, 65 of the 943 hedge funds part of Insider Monkey's database had bought a stake in Deere & Company (NYSE:DE). Out of these, the firm's biggest investor is Michael Larson's Bill & Melinda Gates Foundation Trust with a $1.6 billion stake.
Along with NVIDIA Corporation (NASDAQ:NVDA), UnitedHealth Group Incorporated (NYSE:UNH), and Berkshire Hathaway Inc. (NYSE:BRK-B),Deere & Company (NYSE:DE) is a top long term stock finding favor with hedge funds.
TransDigm Group Incorporated (NYSE:TDG) ranks 13th on our list of hte best stocks for long-term growth. TDG is an aircraft parts maker based in Cleveland, Ohio. Its latest share rating was kept at Outperform by Cowen, and the average analyst share price target is $888 - for a greater than $30 upside over the current share price.
67 of the 943 hedge funds profiled by Insider Monkey for their March quarter of 2023 investments had held the firm's shares. TransDigm Group Incorporated (NYSE:TDG)'s biggest investor in our database is Mark Massey's AltaRock Partners with a $1 billion stake.
Humana Inc. (NYSE:HUM) is a Kentucky based firm that provides medical and health plan coverage. While its shares currently trade at around $445, the average analyst consensus is a whopping $596 - for quite a sizeable upside. However, recently, Argus and Truist have downgraded and held the share rating to Hold.
Insider Monkey dug through 943 hedge funds for their first quarter of this year's shareholdings to find out that 68 had invested in Humana Inc. (NYSE:HUM). Rajiv Jain's GQG Partners is the biggest shareholder, with a $1 billion investment.
Broadcom Inc. (NASDAQ:AVGO) is an important semiconductor company that designs and sells signals and radio frequency products. The average price target is $871 while the share rating is a solid Buy.
Insider Monkey's Q1 2023 study of 943 hedge fund portfolios discovered that 72 had held the firm's shares. Broadcom Inc. (NASDAQ:AVGO)'s largest hedge fund investor is Ken Fisher's Fisher Asset Management with a $766 million stake.
Booking Holdings Inc. (NASDAQ:BKNG) has one of the more expensive shares on our list, with a share price north of $2,600. However, average analyst price target estimates are an even higher $2,874 and the firm has seen some love recently from Wedbush and Wells Fargo, both of who have initiated coverage.
77 out of the 943 hedge funds part of Insider Monkey's March quarter of 2023 database had invested in Booking Holdings Inc. (NASDAQ:BKNG). Its biggest shareholder is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital with a $923 million investment.
Elevance Health, Inc. (NYSE:ELV) ranks 9th on our list of the best stocks to buy for long-term growth. ELV, formerly known as Anthem, is a healthcare services provider that provides clinical, pharmaceutical, and other care services. Its average share price target has an upside of more than $120 with an average rating score slightly higher than Buy.
Insider Monkey dug through 943 hedge funds for their first quarter of 2023 shareholdings to find out that 81 had held a stake in the firm. Elevance Health, Inc. (NYSE:ELV)'s biggest hedge fund investor is Andreas Haloversen's Viking Global since it owns 2.1 million shares that are worth $990 million.
MercadoLibre, Inc. (NASDAQ:MELI) is a Uruguayan electronic commerce firm that enables both businesses and individuals to sell their products online. Its highest share price target is a whopping $1,810, with JP Morgan and Citigroup maintaining Buy and Overweight ratings recently.
85 out of the 943 hedge funds part of Insider Monkey's database had bought stakes in MercadoLibre, Inc. (NASDAQ:MELI). David Blood and Al Gore's Generation Investment Management is its biggest investor, through a $814 million investment.
Intuit Inc. (NASDAQ:INTU) is a software company that provides different products such as financial management systems and payroll systems. It has a nearly $40 share price upside over the current share price and an average rating of Buy, with the latest coming from Mizuho.
As of March 2023, 86 of the 943 hedge funds polled by Insider Monkey had invested in the firm. Intuit Inc. (NASDAQ:INTU)'s largest hedge fund shareholder is Ken Fisher's Fisher Asset Management with a $1.1 billion stake.
ServiceNow, Inc. (NYSE:NOW) is one of the biggest cloud computing companies in the world. It provides hosting and other services. Needham initiated coverage of the firm's shares in mid June, and assigned a Buy rating.
By the end of 2023's first quarter, 96 of the 943 hedge funds profiled by Insider Monkey had bought and invested in ServiceNow, Inc. (NYSE:NOW)'s shares. Rajiv Jain's GQG Partners is the biggest shareholder since it has a $713 million investment.
UnitedHealth Group Incorporated (NYSE:UNH), ServiceNow, Inc. (NYSE:NOW), NVIDIA Corporation (NASDAQ:NVDA), and Berkshire Hathaway Inc. (NYSE:BRK-B) are some great stocks poised for long term growth.
