Investing in the stock market for the long term is perhaps the surest of the ways to expand your wealth. On the books it sounds very easy: just invest your money in stocks for the long term and forget. But the pull of the short-term cycles and volatility is so strong that many give in and cash out or change their strategies before their investments could bear fruit. While panic selling or cashing out doesn’t hurt in the short term, when you contextualize these short-term, often irrational decision making based on data, the real toll of short-term thinking comes to light.
For example, a study by Franklin Templeton Investments shows that if you had invested $10,000 in the S&P 500 Index on January 1, 2003, your original investment would have grown to $62,755 by the end of 2022. But that’s not the most interesting part. What makes the study interesting is that its data shows that if you missed just 10 days out of this 20-year period (total 5,035 trading days), your final return would be reduced by a whopping 64%. That means not having your money invested in the stock market for just 10 days in this 20-year period would give you $28,750 at the end of 2022, and not $62,755. That’s because individual days in the stock market have a lot of ups and downs. If you cash out or panic sell during bad days, you lose the potential profits that come on good days.
The kind of volatility and turmoil investors are seeing in 2023 amid the collapse of SVB and recession warnings is unprecedented. In this backdrop the importance of long-term investing becomes more important. That’s why we decided to take a look at some of the best long-term stocks according to Wall Street analysts.
Most Promising Long-Term Stocks According to Analysts
For this article, we scanned the top 50 holdings of Vanguard Total Stock Market ETF and picked 15 stocks which have the highest upside potential from their current levels based on their one-year average price targets. We used the Vanguard Total Stock Market ETF because it’s one of the safest and best long-term ETFs available and consists of safest and stable stocks for the long term. With each stock we have mentioned its one-year average price estimate, taken from Yahoo Finance.
Most Promising Long-Term Stocks According to Analysts
Having increased its dividends consistently for over 45 years now, McDonald's Corporation (NYSE:MCD) is one of the best stocks for the long term. McDonald's Corporation (NYSE:MCD)’s one-year price target stands at $294, according to Yahoo Finance. McDonald's Corporation (NYSE:MCD) was recently picked up by BofA’s dividend growers screen.
At the end of the fourth quarter of 2022, 57 hedge funds reported owning stakes in McDonald's Corporation (NYSE:MCD). The total worth of these stakes was over $2.7 billion. The biggest stakeholder of McDonald's Corporation (NYSE:MCD) was Ray Dalio’s Bridgewater Associates which has a $416 million stake in the company.
As of March 14, The Home Depot, Inc. (NYSE:HD) stock is trading at around $287, while its one-year average price target stands at $327.41. In February, The Home Depot, Inc. (NYSE:HD) declared a quarterly dividend of $2.09 per share, which was a 10% increase from its previous dividend. During the fourth quarter, The Home Depot, Inc. (NYSE:HD)’s GAAP EPS came in at $3.30, beating estimates by $0.02.
Matrix Asset Advisors made the following comment about The Home Depot, Inc. (NYSE:HD) in its Q3 2022 investor letter:
“During the quarter, we re-established a position in The Home Depot, Inc. (NYSE:HD) sold earlier this year, after the shares declined sharply on big picture concerns about a softer housing market and lower consumer spending. We believe that HD is a very well-managed company, positioned to continue showing good profits even as the economy decelerates. The products it carries in inventory are in year-round demand from contractors and homeowners wanting to maintain and improve their homes. The company has historically been shareholder friendly, repurchasing shares and increasing the dividend, most recently by 15% earlier this year. On September 30, HD’s current dividend yield was 2.8%.”
Walmart Inc. (NYSE:WMT) is one of the best long-term stocks to buy due to several reasons. Recently, Walmart Inc. (NYSE:WMT) was picked up by BofA’s dividend growers screen which ranks S&P stocks that have consistently growth their dividends each year from 1981-2022. Analysts are also bullish on Walmart Inc. (NYSE:WMT)’s Walmart+ membership plan. Morgan Stanley estimates that Walmart+ has 18.4 million members.
Walmart Inc. (NYSE:WMT) is also expanding its healthcare footprint. Walmart Inc. (NYSE:WMT) plans to open 28 new healthcare centers in the U.S. in 2024. This initiative will double Walmart Inc. (NYSE:WMT)’s healthcare footprint from the current levels.
Rajiv Jain’s GQG Partners owns a $993 million stake in Walmart Inc. (NYSE:WMT) as of the end of the fourth quarter of 2022.
Broadcom Inc. (NASDAQ:AVGO) is being praised by Wall Street analysts as the company recently disclosed it expects its high-speed cloud switch sales to rise four times to a whopping $800 million. These products are relevant to generative AI. Broadcom Inc. (NASDAQ:AVGO) recently posted strong fiscal Q1 results. Bernstein analyst Stacy Rasgon was impressed by Broadcom Inc. (NASDAQ:AVGO)’s AI revelation, and said that the stock may be an "AI story at a smartphone price."
Similarly, Bank of America analyst Vivek Arya reiterated his Buy rating on Broadcom Inc. (NASDAQ:AVGO) and set a $725 price target on AVGO, which shows a strong upside potential from the current levels.
Carillon Eagle Growth & Income Fund made the following comment about Broadcom Inc. (NASDAQ:AVGO) in its Q4 2022 investor letter:
Broadcom Inc. (NASDAQ:AVGO) outperformed in the fourth quarter, driven by strong quarterly results and a positive outlook for 2023. The company also reiterated its confidence in closing an important acquisition of an enterprise software company by end of its fiscal 2023 year.
BofA recently called AbbVie Inc. (NYSE:ABBV) a “sleep at night” stock. AbbVie Inc. (NYSE:ABBV) has a strong dividend growth history and a strong pipeline for future growth.
AbbVie Inc. (NYSE:ABBV) is trading at around $151 as of March 14. Its one-year average price estimate is $163.
At the end of the fourth quarter of 2022, 73 hedge funds reported having stakes in AbbVie Inc. (NYSE:ABBV). The total worth of these stakes was over $1.5 billion. The most notable hedge fund stakeholder of AbbVie Inc. (NYSE:ABBV) was Cliff Asness’ AQR Capital Management which owns a $229 million stake in the company.
Eli Lilly and Company (NYSE:LLY) ranks 10th in our list of the most promising long-term stocks according to analysts. Recently, Wells Fargo upgraded Eli Lilly and Company (NYSE:LLY) to Overweight from Equal Weight. The firm believes the recent weakness of Eli Lilly and Company (NYSE:LLY) is a buying opportunity. Wells Fargo analysts upped Eli Lilly and Company (NYSE:LLY) price target to $375 from $360.
At the end of the fourth quarter of 2022, 76 hedge funds reported owning stakes in Eli Lilly and Company (NYSE:LLY). The biggest hedge fund stakeholder of Eli Lilly and Company (NYSE:LLY) was Rajiv Jain’s GQG Partners which owns a $603 million stake in the company.
Baron Funds made the following comment about Eli Lilly and Company (NYSE:LLY) in its Q4 2022 investor letter:
“Eli Lilly and Company (NYSE:LLY) is a large-cap pharmaceutical company. Shares increased on investor optimism about Lilly’s new product pipeline, which includes Mounjaro for diabetes and obesity and Donanemab for Alzheimer’s disease. We continue to think Lilly has a healthy base business with limited near-term patent expirations, a strong pipeline, and potential for significant margin expansion, which should translate to strong revenue and earnings growth over at least the next five years.”
Oil giant Exxon Mobil Corporation (NYSE:XOM) has gained about 30% over the past 12 months and analysts believe the stock has more room to run. Its one-year average price target sits at around $127.15, according to Yahoo Finance.
At the end of the last quarter of 2022, 79 hedge funds reported owning stakes in Exxon Mobil Corporation (NYSE:XOM). The most notable hedge fund stakeholder of Exxon Mobil Corporation (NYSE:XOM) was Rajiv Jain’s GQG Partners which owns a $3.63 billion stake in the company.
While Tesla, Inc. (NASDAQ:TSLA) is under pressure after the SVB collapse, the stock remains a long-term pick of several analysts as the company is a dominant player in the EV market which is expected to see huge growth in the years to come.
One of the biggest Tesla, Inc. (NASDAQ:TSLA) bulls, Cathie Wood, earlier this year said Tesla stock could hit $500 per share by 2026 based on its EV business alone
ClearBridge Large Cap Growth Strategy made the following comment about Tesla, Inc. (NASDAQ:TSLA) in its Q4 2022 investor letter:
“Tesla, Inc. (NASDAQ:TSLA), meanwhile, also fits squarely within our earnings reset group. We took advantage of its enterprise multiple falling back to historic lows to initiate a starter position in the leading manufacturer of electric vehicles (EV) and developer of battery technologies. Tesla has a significant structural cost advantage in battery production, EV manufacturing and EV selling, which gives it industry-leading operating margins in EVs. As the auto cycle has softened, the stock has sold off substantially with the rest of the automakers, despite EVs continuing to have a secular growth advantage. Tesla has a clean balance sheet with negative net debt and enormous revenue growth, EBITDA growth and free cash flow generation. Its margin buffer also gives the company the ability to cut prices while still protecting earnings better than competitors, which should help support continued volume growth. There is also significant upside optionality driven by its software offerings, which we do not believe is currently priced into the stock.
UnitedHealth Group Incorporated (NYSE:UNH) is one of the best long-term stocks to buy as the company pays solid dividends and has stable fundamentals. Recently, BofA’s new low volatility stocks screen picked up UnitedHealth Group Incorporated (NYSE:UNH).
As of the end of the fourth quarter of 2022, 110 hedge funds out of the 943 hedge funds in Insider Monkey database reported having stakes in UnitedHealth Group Incorporated (NYSE:UNH). The biggest stakeholder of UnitedHealth Group Incorporated (NYSE:UNH) was Rajiv Jain’s GQG Partners which owns a $2 billion stake in the company.
Here is what Distillate Capital has to say about UnitedHealth Group Incorporated (NYSE:UNH) in its Q3 2022 investor letter:
“The largest sector change in the rebalance was a six-percentage point increase in technology. The biggest component of this increase was the introduction of a 4% weight in Apple, which is discussed further below. Offsetting this increased tech weight was a 3-percentage point decrease in industrials and a two-percentage point decline in health care. The biggest reductions in weight were UnitedHealth Group Incorporated (NYSE:UNH), which is capped at a 2% weight as it ranks in the bottom quartile of the fund by valuation.”
That Apple Inc. (NASDAQ:AAPL) is a strong long-term stock pick is hardly contended by anyone, including hedge funds, retail investors and Wall Street analysts. This is because of Apple Inc. (NASDAQ:AAPL)’s strong product line, its services and software growth and its long-term bets on innovation. Recently, Wedbush Securities analyst Dan Ives said that his recent checks in China have been "incrementally more positive" amid the country’s reopening. Ives has an Outperform rating on Apple Inc. (NASDAQ:AAPL). Ives also increased his price target on Apple Inc. (NASDAQ:AAPL) to $190 from $180, which shows a strong upside potential from current levels. On average, Apple Inc. (NASDAQ:AAPL)’s one-year price estimate by analysts is $169.38.
Insider Monkey’s database of 943 hedge funds shows that 135 funds had stakes in Apple Inc. (NASDAQ:AAPL) at the end of the fourth quarter of 2022. The biggest hedge fund stakeholder of Apple Inc. (NASDAQ:AAPL) was Warren Buffett’s Berkshire Hathaway which owns a $116 billion stake in the company.
Here is what Distillate Capital has to say about Apple Inc. (NASDAQ:AAPL) in its Q3 2022 investor letter:
“The largest new purchase was Apple Inc. (NASDAQ:AAPL), which after underperforming saw its valuation improve significantly. Over the course of the last year, Apple’s consensus estimated forward free cash flows rose modestly, while its enterprise value fell by around 30%. Apple ranks below the 25th most attractive name in the portfolio and so its weight is capped at 4% vs. 6% for names in the top quartile.”
