In this piece, we will look at the 15 best stocks for long-term growth. If you want to skip our introduction to the current drivers of stock market performance, then check out 5 Best Stocks For Long Term Growth.
The stock market in 2024 is characterized by a notably optimistic and forward-looking sentiment compared to the beginning of the previous year. Not only did the U.S. economy avoid tipping into recession, but stock markets also maintained their stability, defying expectations of a significant downturn. In fact, February 2024 witnessed the flagship S&P 500 index achieve a historic milestone by crossing the 5,000-point mark for the first time. This feat underscores the resilience and buoyancy of the stock market, highlighting investor confidence in the economic outlook. Additionally, the NASDAQ Composite, which is heavily influenced by the technology sector, approached its all-time high levels during the same period, further accentuating the positive sentiment in the market, albeit experiencing a slight pullback after the breakout.
The mention of “AI” among S&P 500 companies increased to 36% from 31% in the third quarter, with the information technology sector retaining its position as the sector with the most companies discussing AI. However, the energy sector experienced the largest increase in companies discussing this technology, as highlighted by David Kostin and his team of strategists at Goldman Sachs. In addition, NVIDIA Corporation (NASDAQ:NVDA), the blockbuster chipmaker prominently associated with AI, has witnessed remarkable growth, with its shares surging nearly 50% in the year, following a more than tripling in value in 2023. This surge has propelled NVIDIA Corporation (NASDAQ:NVDA) to become the third-largest U.S. company by market value, surpassing giants like Amazon.com, Inc. (NASDAQ:AMZN) and Alphabet Inc. (NASDAQ:GOOG).
When it comes to stock selection, targeting growth stocks is a common strategy for long-term investors seeking substantial returns. These stocks typically command higher share prices relative to their earnings per share, as they are expected to experience significant growth in the future. One key metric used to identify growth stocks is the price-to-earnings (P/E) ratio, which compares the current share price to the company’s earnings per share. A high P/E ratio, especially compared to industry benchmarks, suggests that investors are optimistic about the company’s growth potential and are willing to pay a premium for its stock. This optimism is based on the expectation that the company will deliver strong earnings growth in the future, thereby justifying the higher price paid today.
Taking a long-term perspective on investment opportunities, growth stocks, particularly within the technology sector, showcase promising prospects. Among the noteworthy companies featured in our selection of the best stocks for long-term growth are Salesforce, Inc. (NYSE:CRM), MercadoLibre, Inc. (NASDAQ:MELI), and industry giants like NVIDIA Corporation (NASDAQ:NVDA), Uber Technologies, Inc. (NYSE:UBER), and Advanced Micro Devices, Inc. (NASDAQ:AMD), among others.
A large stock market board displaying the S&P 500 and S&P 500 Growth Index.
Our Methodology
For the following list of the best long-term growth stocks to invest in, we compiled a list of stocks that recorded a P/E ratio greater than 50. The list of companies was narrowed down further based on the number of hedge funds holding stakes in them according to Insider Monkey’s hedge fund data for the fourth quarter of 2023. The stocks are ranked based on this metric, from the lowest to the highest number of hedge funds holding stakes in them.
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). That’s why we pay very close attention to this often-ignored indicator.
15. The Trade Desk, Inc. (NASDAQ:TTD)
Number of Hedge Fund Holders: 41
P/E Ratio: 248.55
The Trade Desk, Inc. (NASDAQ:TTD) is a multinational technology company based in the United States, specializing in real-time programmatic marketing automation technologies, products, and services. The company focuses on delivering personalized digital content while advocating for Unified ID 2.0 (UID2), a protocol aimed at balancing relevant advertising with user privacy.
Following the release of strong first-quarter guidance and revenue beat, shares of The Trade Desk, Inc. (NASDAQ:TTD) surged over 18%. The company reported a 23% increase in fourth-quarter sales, rising from $491 million to $97 million year-over-year. Additionally, net income saw a 37% rise, reaching $97 million compared to $71 million in the corresponding quarter the previous year.
During last year’s December quarter, 41 out of the 933 hedge funds profiled by Insider Monkey were the firm’s shareholders. The Trade Desk, Inc. (NASDAQ:TTD)’s biggest investor is Israel Englander’s Millennium Management as it owns 3.32 million shares that are worth $239 million.
Similar to Salesforce, Inc. (NYSE:CRM), MercadoLibre, Inc. (NASDAQ:MELI), and industry giants like NVIDIA Corporation (NASDAQ:NVDA), Uber Technologies, Inc. (NYSE:UBER), and Advanced Micro Devices, Inc. (NASDAQ:AMD), The Trade Desk, Inc. (NASDAQ:TTD) is one of the best long-term stocks to invest in.
14. Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 44
P/E Ratio: 270.65
Palantir Technologies Inc. (NYSE:PLTR) is a software company specializing in data fusion platforms, facilitating both machine-assisted and human-driven data analysis. Its product platform includes Palantir Gotham, Palantir Apollo, and Palantir Foundry.
Following encouraging financial results in the fourth quarter, Palantir Technologies Inc. (NYSE:PLTR) saw a 19% surge in its stock. Revenue increased by 20% to $608 million, driven by robust demand for its Artificial Intelligence Platform (AIP) among commercial customers, although growth in the government segment remained subdued. Additionally, GAAP net income tripled to $93 million as Palantir focused on cost control measures.
After digging through 933 hedge fund portfolios for 2023’s December quarter, Insider Monkey found that 44 had held a stake in Palantir Technologies Inc. (NYSE:PLTR). D. E. Shaw was the biggest investor, owning 20.75 million shares that are worth $356.39 million.
13. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 68
P/E Ratio: 903.22
Shopify Inc. (NYSE:SHOP) is a leading provider of internet infrastructure for commerce, offering tools that enable businesses to launch, grow, market, and manage retail operations across various scales. With its platform and services utilized by millions of businesses in 175 countries, Shopify plays a crucial role in supporting a diverse range of enterprises.
At the end of December 2023, 68 out of the 933 hedge funds surveyed by Insider Monkey held shares of Shopify Inc. (NYSE:SHOP). Among them, the largest shareholder was Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital, which held shares worth $1.6 billion.
12. DexCom, Inc. (NASDAQ:DXCM)
Number of Hedge Fund Holders: 69
P/E Ratio: 89.30
Based in San Diego, California, DexCom, Inc. (NASDAQ:DXCM) is a medical devices company focused on the development and marketing of Continuous Glucose Monitoring (CGM) systems. These systems are intended for ambulatory use by individuals with diabetes and are utilized by healthcare providers in the treatment of diabetes.
Insider Monkey examined 933 hedge fund holdings for the fourth quarter of 2023 and identified 69 shareholders of DexCom, Inc. (NASDAQ:DXCM).
Aristotle Atlantic Focus Growth Strategy stated the following regarding DexCom, Inc. (NASDAQ:DXCM) in its fourth quarter 2023 investor letter:
“DexCom, Inc. (NASDAQ:DXCM) contributed to portfolio performance during the quarter, following a better-than-expected earnings report and an increase in full-year guidance. The company is benefiting from a new product introduction with the G-7 series and new Medicare reimbursement for basal insulin users. Additionally, Dexcom has been under pressure most of 2023 on the success of GLP-1 companies and the fear that these novel weight loss therapies could hurt the prospects for companies operating in obesity-related comorbidities such as Diabetes. The shares had a broad reversal of this trend in the fourth quarter and many of the affected names rebounded, including Dexcom.”
11. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 79
P/E Ratio: 78.60
Established in 1849 by German entrepreneurs Charles Pfizer and Charles F. Erhart, Pfizer Inc. (NYSE:PFE) stands as a prominent multinational pharmaceutical and biotechnology corporation, headquartered at The Spiral in Manhattan, New York City. Renowned globally for its significant contributions to medical research, development, and production, Pfizer operates across diverse medical fields, including immunology, oncology, cardiology, endocrinology, and neurology.
Insider Monkey examined 933 hedge fund portfolios for their investments in the fourth quarter of 2023, identifying 79 investors in Pfizer Inc. (NYSE:PFE). The largest shareholder among them is D. E. Shaw’s D E Shaw, with a $418 million investment in the company.
10. Mercadolibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 81
P/E Ratio: 91.11
MercadoLibre, Inc. (NASDAQ:MELI) is a prominent e-commerce technology company based in Buenos Aires, Argentina, serving Latin America. Established in 1999, it operates through its core platforms, MercadoLibre.com and MercadoPago.com, providing a range of solutions for online buying, selling, advertising, and payment transactions.
Insider Monkey examined 933 hedge fund portfolios and identified 81 investors in MercadoLibre, Inc. (NASDAQ:MELI) as of the end of Q4 2023. Generation Investment Management, led by David Blood and Al Gore, held the largest stake in the company with a $673 million investment.
9. Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders: 81
P/E Ratio: 1280.33
Workday Inc. (NASDAQ:WDAY) specializes in developing enterprise cloud applications customized for finance and human resources. Its suite of applications includes solutions for financial management, human capital management, and analytics, serving a diverse range of organizations, including companies, educational institutions, and government agencies.
In the December quarter of last year, 81 out of the 933 hedge funds profiled by Insider Monkey held shares of Workday, Inc. (NASDAQ:WDAY). The largest investor in Workday, Inc. (NASDAQ:WDAY) is Andreas Halvorsen’s Viking Global, with ownership of 4.1 million shares valued at $1.1 billion.
8. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Hedge Fund Holders: 82
P/E Ratio: 75.30
Intuitive Surgical, Inc. (NASDAQ:ISRG) is a U.S.-based corporation focused on developing, manufacturing, and marketing robotic products aimed at enhancing clinical outcomes for patients through minimally invasive surgery, notably with its da Vinci Surgical System. This system comprises a surgeon’s console, a patient-side cart with four robotic arms, a 3D vision system, and proprietary instruments. In the fourth quarter of 2023, the firm continued its growth trajectory as the DaVinci platform saw procedures increase by 21%.
Among the 933 hedge funds tracked by Insider Monkey for their fourth-quarter 2023 investments, 82 held shares in Intuitive Surgical, Inc. (NASDAQ:ISRG). The largest hedge fund investor in Intuitive Surgical, Inc. (NASDAQ:ISRG) is Ken Fisher’s Fisher Asset Management, with a stake valued at $1.5 billion.
7. ServiceNow Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 91
P/E Ratio: 90.89
Headquartered in Santa Clara, California, ServiceNow, Inc. (NYSE:NOW) is a leading American software company specializing in cloud computing platforms designed to streamline digital workflows for enterprise operations. Its focus areas include IT service management, IT operations management, and IT business management.
Tyler Radke at Citigroup maintained a Buy rating and an $896 price target on ServiceNow, Inc. (NYSE:NOW) on January 26.
As of the end of December 2023, Insider Monkey’s analysis of 933 hedge fund portfolios revealed that 91 funds held shares of ServiceNow, Inc. (NYSE:NOW). Ken Fisher’s Fisher Asset Management emerged as the largest shareholder of the company for the quarter.
6. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 98
P/E Ratio: 966.64
Merck & Co., Inc. (NYSE:MRK), a renowned American multinational pharmaceutical company headquartered in Rahway, New Jersey, traces its origins back to the Merck Group, established in Germany in 1668. Originally the American arm of this venerable group, the company operates under the names Merck Sharp & Dohme or MSD outside the United States and Canada. It holds a prominent position in the pharmaceutical industry, specializing in the development of medicines, vaccines, biologic therapies, and animal health products.
Demonstrating a consistent pattern of dividend growth for 11 consecutive years, the company currently offers a quarterly dividend of $0.77 per share, translating to a dividend yield of 2.41% as of February 17.
During Q4 2023, 98 out of the 933 hedge funds polled by Insider Monkey had invested in Merck & Co., Inc. (NYSE:MRK). Ken Fisher’s Fisher Asset Management was the largest shareholder due to its $1.4 billion stake.
In addition to Salesforce, Inc. (NYSE:CRM), MercadoLibre, Inc. (NASDAQ:MELI), and industry giants like NVIDIA Corporation (NASDAQ:NVDA), Uber Technologies, Inc. (NYSE:UBER), and Advanced Micro Devices, Inc. (NASDAQ:AMD), Merck & Co., Inc. (NYSE:MRK) ranks as one of the best long-term stocks hedge funds love.
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Disclosure: None. 15 Best Stocks For Long Term Growth is originally published on Insider Monkey.
