A longer investment horizon involves “looking for business models and strategies that are likely to remain relevant and profitable 10, 20, or even 40 years from now.”
Investing for the long term is not at all easy, considering the uncertainty present in the markets. A longer investment horizon, extending more than a year, involves "looking for business models and strategies that are likely to remain relevant and profitable 10, 20 or even 40 years from now," says David Dietze, managing partner and senior strategist at Peapack Private Wealth Management.
One way to test this is to evaluate how demand for a company’s products has evolved over the past decade, he suggests.
Here are the top picks preferred by fund managers:
PepsiCo
Dietze likes PepsiCo despite the possibility of weaker demand, with weight-loss drugs and a healthy lifestyle taking center stage.
When asked how the brand compares to its rival Coca-Cola, the strategist said he prefers PepsiCo because its product portfolio includes snacks.
Shares of PepsiCo fell slightly after its quarterly revenue slipped for the first time in four years in February.
However, Dietze remains optimistic, noting that "Pepsi’s 3.3% dividend is double the S&P 500’s 1.5%."
Shares of PepsiCo have fallen about 4% over the past 12 months.
Of the 23 analysts following the stock, 13 rate it a Buy or Overweight, 9 have Hold ratings and one has a Sell rating. The average target price for PepsiCo is $186.77, according to FactSet data, offering a potential upside of 6.7%.
Anheuser-Busch
Elsewhere in the consumer goods sector, Dietze likes the Anheuser-Busch brewery, which he sees as having "good long-term prospects."
The Belgian company recently reported annual revenue of $59.38 billion, up 7.8% but below analysts’ expectations of $60.48 billion.
The brewery faced a social media-driven boycott of its flagship beer Bud Light in the United States in mid-2023. However, Dietze believes it "can overcome these challenges."
"Anheuser-Busch is currently undervalued. But it owns almost half of the world’s top 20 beer brands. It has shares in major beer distributors in South America, a large distribution network, and strong global marketing. So it can bounce back", he noted.
More recently, in March, shares of the world’s largest brewer suffered a setback following a brief halt following the announcement by Altria, the US tobacco giant, that it would reduce its stake by around 10%. % in the society.
Over the past 12 months, Anheuser-Busch shares have fallen 7.94% on the Brussels Stock Exchange. It is also listed on the New York Stock Exchange.
According to FactSet data, out of 30 analysts, 18 give the stock a buy or overweight rating while 12 have a hold rating. The average target price is $70.78, offering a potential upside of 16.2%.
Edenred
Michael Field, European market strategist at Morningstar, is bullish on growth stocks, citing French business services company Edenred as a stock to watch in the long term.
Edenred shares plummeted in February after it announced that Italian authorities were investigating a public tender in 2019.
However, Field remains bullish on the stock, especially after it reported 30% growth in gross earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2023. The company expects EBITDA growth of more than 12% in 2024.
Over the past 12 months, Edenred shares have fallen by around 9.31% on the Euronext Paris stock exchange.
According to FactSet data, out of 18 analysts, 14 give the stock a buy or overweight rating, three have a hold rating and one has a sell rating. The average target price is 63 euros, offering a potential upside of 27.4%.
Microsoft
When investing for the long term, Jason Hsu prefers the technology sector, especially artificial intelligence.
The president and chief investment officer of Rayliant Global Advisors sees AI “revolutionizing virtually every aspect of work – just as the internet has done.”
His top choice is Microsoft.
The revenue that can be derived from AI will further complement the tech giant’s revenue from its businesses in operating systems, browsers, software and apps, pushing it to grow further in the long term, Hsu noted.
Microsoft and OpenAI are now working on a data center project worth nearly $100 billion featuring an artificial intelligence supercomputer that is expected to launch in 2028.
Over the past 12 months, Microsoft shares have risen nearly 46%.
Of the 57 analysts following the stock, 54 rate it a Buy or Overweight at an average price of $472.62, according to FactSet data. This offers a potential upside of 12.3%.
Pinduoduo
Also on Hsu’s radar is the online marketplace PDD, which he describes as a "heavily discounted retail platform in China."
The tech giant entered the scene in 2015 and has grown to become one of China’s largest players thanks to a combination of social features, gamification, and low prices.
Parent company Temu’s third-quarter revenue nearly doubled, far outpacing Alibaba’s 9% growth in the same period.
Shares of the Nasdaq-listed giant rose last week, following a 90% increase in its revenue in 2023 to 247.64 billion yuan ($34.26 billion).
PDD shares are up about 53.2% over the past 12 months.
Of the 46 analysts following the stock, 44 rate it a Buy or Overweight while two have Hold ratings. The average price target for PDD is $180.12, according to FactSet data, offering a potential upside of 54.9%.
|Disclaimer
The information and considerations contained in this article should not be used as the sole and principal basis on which to make investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk appetite and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation for public savings.|
Original article published on Money.it Italy 2024-04-25 07:04:00. Original title: Le 5 azioni da comprare per rendimenti elevati a lungo termine
