Best long-term stocks of November 2023
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BLUEPRINT
Published 12:16 p.m. UTC Nov. 9, 2023
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The longer your investment time horizon, the more likely the market will be your friend since trading stocks with a short-term horizon is extremely challenging.
The first step in buying high-quality stocks to hold long term is identifying high-quality stocks. To do so, look for companies with competitive advantages in growing or stable businesses that are profitable and attractively valued based on fundamental metrics such as price-to-earnings ratios, price-to-book ratios and dividend yields.
For our selection of the best long-term stocks to buy, we screened for stocks with significant upside, earning stability, strong valuations, forward multiples of less than 20, bullish ratings from Wall Street analysts and potential for earnings and dividend growth.
Why trust our investing experts
Experienced stock analysts select our best stock selections based on screening for several must-have metrics. These metrics often include but are not limited to forward price-to-earnings, risk, earning stability and Wall Street “buy” consensus. Among all of our 70-plus stock selections, the average return beats the S&P 500. But investors should note that before purchasing any stocks, it’s important to do plenty of research and ensure their selections align with their financial goals and risk tolerance. You can read more about our methodology below.
- 500+ companies screened.
- 3 levels of fact checking.
- 3-step editorial review.
- Altimeter stock grade of B or higher.
Best long-term stocks to buy now
UnitedHealth (UNH)
Elevance Health (ELV)
Applied Materials (AMAT)
Alibaba Group Holding Ltd (BABA)
Cisco Systems Inc. (CSCO)
Compare the best long-term stocks
Methodology
The best long-term stocks under above all trade on a major U.S. stock exchange and meet the following criteria:
- An Altimeter overall grade of at least a B. In selecting the best stocks for this list, we applied a screen, considering only stocks rated a B or better by Altimeter. The overall grade takes into account profitability, earning stability, valuation and earning expectations. Grades of B or higher for both are stocks that are ranked in the top quarter of nearly 5,000 stocks in Altimeter’s stock database. This indicates that these companies have strong valuations with the ability to improve returns.
- Market capitalization of at least $10 billion. If a company has a leading market share and competitive advantages in a sizable industry, it will have a market cap greater than $10 billion. The general thinking is that small- and mid-cap growth stocks tend to have a higher degree of uncertainty and risk associated with their business outlook.
- Consensus analyst recommendation of “buy” or better. A high number of analyst “buy” ratings indicates an expectation the stock will outperform the overall market.
- Forward earnings multiple less than 20. Stocks with low forward earnings multiples are considered attractively valued based on analysts’ projected future earnings. The S&P 500’s median forward P/E ratio is currently 16.5, according to Yardeni Research.
Why other stocks didn’t make the cut
There are plenty of stocks in the market that have performed extremely well and have impressive business models and attractive valuations. But long-term investing is largely about minimizing risk and betting on reliability and durability rather than momentum or potential.
Some of the best long-term stocks aren’t going to put up huge returns in any given year. But they will minimize downside during periods of market weakness and deliver consistent, market-beating returns over the long haul.
Final verdict
Long-term investors shouldn’t lose sleep over volatility in the economy or the stock market tied to cyclical factors such as inflation, interest rates or economic growth.
“Over long periods, the market has reliably provided positive returns,” said Owen Murray, director of investments for Horizon Wealth Advisors.
If you’re investing long term, then you can mostly ignore the wild up-and-down swings the stock market experiences short term. You can reasonably expect your money to grow in the long term, but in the short term, portfolio losses routinely occur.
Are long-term stocks safe?
Investing results are never guaranteed, but research suggests that holding stocks for the long run can yield positive results. For example, a paper from Melville Wealth Management of Raymond James looked at investing $1 from 1926 until 2010.
That $1 in 1926 would have the same purchasing power as $12 in 2010 due to inflation. However, investing $1 in a portfolio of large-cap stocks in 1926 would leave you with $2,982 in 2010. If you invested it in small-cap stocks, you’d have $16,055 by 2010.
Investors can also view the 100-year Dow Jones Industrial Average historical chart. It shows that the Dow, an index of 30 prominent companies in the United States, has increased over the past 100 years despite many recessions and the Great Depression.
As mentioned, investing results are not guaranteed, and past performance doesn’t guarantee future performance. However, research suggests that holding stocks for a longer period can lead to a higher chance of success than short-term investments.
Tips for long-term investing
Long-term investing means committing to an investment strategy for several years or even decades. As a result, it’s best to pick a strategy to which you can fully commit. These tips may help:
- Set clear goals. Decide what you want to achieve and when. Make your goals ambitious but attainable. This will help ensure you remain motivated and less likely to quit before achieving your goals.
- Diversify. Consider spreading your investment over not just several stocks but also many investment classes, such as stocks, bonds, real estate and cash. This can reduce risk, as some investments may struggle while others do well.
- Try dollar-cost averaging. Some investors prefer to stagger their investment, such as by investing once per month instead of with a lump sum. This can reduce the impact of market volatility and lower the purchasing cost over time.
- Have patience. Having patience is perhaps easier said than done, but all portfolios will struggle from time to time. Don’t let your emotions get the best of you, especially during market downturns.
- Have an emergency fund. Having a separate emergency fund in cash, perhaps in a high-yield savings account, will help you avoid having to sell investments if you experience an unexpected expense or loss of income.
Long-term investing is, as the term suggests, a long-term commitment. It’s not one to take lightly, which is why it’s important to build a sustainable strategy. While you can reevaluate your strategy over time, you want one that will remain mostly unchanged at its core.
Long-term investors typically look at investing time horizons in years rather than months or weeks. “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes,” legendary long-term value investor Warren Buffett once famously said.
Buying and holding a stock for 10 or 20 years doesn’t automatically make it a safe investment. You can minimize the risk of large losses by selecting only the highest-quality stocks to hold and diversifying your investments in several stocks rather than putting all your eggs in one basket.
If you’re investing long term, it’s a good idea to focus on companies with competitive advantages in growing or stable markets that are profitable and attractively valued based on fundamental metrics.
You can also diversify your portfolio by buying one or more popular index exchange-traded funds, such as the SPDR S&P 500 ETF Trust (SPY) or the Vanguard Total Stock Market Index Fund ETF (VTI).
The main benefit of holding on to your stocks is that it allows you to weather short-term market volatility. Every stock experiences ups and downs, but holding stocks for the long term can increase your chances of seeing positive results. Some long-term stocks pay dividends, which can reward investors who continue to hold on to their stocks.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
