In this piece, we will take a look at the 11 best stocks to buy for the next ten years. If you want to skip our take on what's happening in the stock market right now and some future predictions, then you can take a look at the 5 Best Stocks to Buy for the Next 10 Years.
As 2023 comes to an end, the stock market of today is vastly different from what investors were used to just a couple of years back. Just like the reverberations from the 2008 Great Recessions were felt for years, right now, the market is reflective of the after effects of the coronavirus pandemic. The pandemic, which led to global lock downs, carried the risk of shuttering down economies. To combat this, central banks drastically reduced interest rates and governments provided generous stimulus checks. Combined with the higher demand for tech products, this was a boon for the stock market as major indexes reversed their post coronavirus losses within months.
However, the biggest side effect of this fiscal largess came in the form of high inflation that was compounded by the Russian invasion of Ukraine. To combat this and ensure that inflation does not become a permanent feature of the economy, central banks responded by rapidly jacking up interest rates. This had broad implications for the stock market, as stocks fell due to the tighter credit conditions that higher rates place on businesses as well as due to the leveraged nature of the hedge fund industry.
The latter bit is why today's stock market isn't what it was in 2019. If the costs of raising capital for leveraged investments grows, then naturally hedge funds become more selective about their investments. At the same time, corporate valuations are also affected since they now reflect the higher opportunity costs of investing in a company, than say Treasury securities or bank accounts. This also leads to fewer IPOs as boards are unwilling to go public at a time when their valuations might be lower than what they would have been in a low rate environment.
All these shifts lead to investors watching the Federal Reserve with eagle eyes as they try to guess when the current status quo gives way to the golden era of the past. Watching the Fed means watching the data that the central bank uses for its interest rate decisions. On this front, November was a pivotal month as slowing inflation fed into investor optimism of quicker interest rate cuts. Indexes such as the S&P 500 and the NASDAQ Composite posted gains for consecutive days, and for a brief moment, it appeared that the rate clouds were finally dissipating.
However, the start of December shows that perhaps rapid interest rate cut expectations might be a bit too optimistic. As an example, consider the Institute of Supply Management's (ISM) non-manufacturing Purchasing Managers Index (PMI). This PMI stood at 52.7 in November 2023, with a reading above 50 indicating growth. Growth means inflation and more leeway for the Fed to further raise rates, and the data saw major currencies pare back some of their November gains against the dollar. For the bulls, though, the data also shows that services inflation marginally slowed down in November, in a silver lining that might cull the worrying services inflation that has been a crucial factor in the Fed's monetary policy decisions.
Another central component of the Fed's playbook is the Labor Department's Job Openings and Labor Turnover Survey (JOLTS) data report which measures the state of the labor market. The latest data, which was for October, showed that job openings in America fell to more than a two year low as higher interest rates and inflation take their bite. The implications of a cooling labor market are two fold. At one end, it shows investors that since the market is cooling, inflation is also likely to drop and therefore reduce the incentive that the central bank has to further increase rates. At the other though, a sharp contraction can signal weaker economic growth in the future, which is something that never bodes well for the stock market as capital flows into safe haven assets such as the U.S. dollar.
Finally, the last piece in the December data dump is the non-farm payrolls report that will provide investors a deeper dive into the U.S. labor market to help them decide whether the much hyped 'soft landing' for the economy really can materialize or if we're in the midst of heading into a full blown recession.
With investors looking at 2024 as the year when rate cuts begin, we decided to see which stocks are suitable to buy for the next ten years. Some notable picks are Exicure, Inc. (NASDAQ:XCUR), Imperial Petroleum Inc. (NASDAQ:IMPP), and Netcapital Inc. (NASDAQ:NCPL).
A close-up of a computer monitor displaying real-time financial data on the stock market.
To make our list of the best stocks for the next 10 years, we made a list of firms with at least 20% average annualized revenue growth for five years. Then, they were ranked by their trailing price to earnings ratio and the best stocks for the next decade are as follows.
Best Stocks to Buy for the Next 10 Years
11. FinVolution Group (NYSE:FINV)
Trailing P/E Ratio: 3.77
FinVolution Group (NYSE:FINV) is a Chinese financial technology company whose platform allows consumers to secure loans. It marks a strong start to our list of the best stocks for the next ten years as the shares are rated Strong Buy on average and analysts have set an average share price target of $6.51.
By the end of this year's third quarter, nine out of the 910 hedge funds part of Insider Monkey's database had held a stake in FinVolution Group (NYSE:FINV). Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital was the firm's largest shareholder as it owned 2.5 million shares that are worth $12.7 million.
Just like Imperial Petroleum Inc. (NASDAQ:IMPP), Exicure, Inc. (NASDAQ:XCUR), and Netcapital Inc. (NASDAQ:NCPL), FinVolution Group (NYSE:FINV) is a top stock based on revenue growth and valuation.
10. JinkoSolar Holding Co., Ltd. (NYSE:JKS)
Trailing P/E Ratio: 3.23
JinkoSolar Holding Co., Ltd. (NYSE:JKS) is a Chinese solar power company that sells products used to generate electricity. Despite a slow Chinese economy, the firm has beaten analyst EPS estimates in three out of its four latest quarters and the shares are rated Buy on average.
After digging through 910 hedge funds for their shareholdings during 2023's September quarter, Insider Monkey found that 12 had invested in the firm. JinkoSolar Holding Co., Ltd. (NYSE:JKS)'s biggest hedge fund investor is Paul Marshall and Ian Wace's Marshall Wace LLP as it owns $22.1 million worth of shares.
9. AGM Group Holdings Inc. (NASDAQ:AGMH)
Trailing P/E Ratio: 3.22
AGM Group Holdings Inc. (NASDAQ:AGMH) is a Hong Kong based technology company that develops chips used in blockchain technologies. 2022 was a good year for the firm on the financial front as it managed to grow its earnings per share by a strong 186%. The firm's annualized average revenue growth rate for the past five years is 80.82% according to data from Morningstar Financial.
8. KLX Energy Services Holdings, Inc. (NASDAQ:KLXE)
Trailing P/E Ratio: 3.20
KLX Energy Services Holdings, Inc. (NASDAQ:KLXE) is an American backend oil exploration firm that provides drilling equipment and associated products and services to oil exploration firms. The firm's third quarter financial results saw it report $221 million in revenue and $8 million in profit.
Insider Monkey's third quarter of 2023 survey covering 910 hedge funds revealed that 12 had bought and owned KLX Energy Services Holdings, Inc. (NASDAQ:KLXE)'s shares. Jeffrey Gendell's Tontine Asset Management was the largest shareholder among these due to its $17.8 million stake.
7. Teekay Tankers Ltd. (NYSE:TNK)
Trailing P/E Ratio: 3.12
Teekay Tankers Ltd. (NYSE:TNK) is an ocean based oil and gas transportation company headquartered in Hamilton, Bermuda. Its average revenue growth rate is a strong 33.04% according to Morningstar Financial, the shares are rated Strong Buy on average, and analysts have set an average share price target of $63.83.
For their September quarter of 2023 investments, 20 out of the 910 hedge funds profiled by Insider Monkey had held a stake in the company. Israel Englander's Millennium Management owned 640,821 shares that were worth $26.6 million, making it Teekay Tankers Ltd. (NYSE:TNK)'s biggest investor in our database.
6. Callon Petroleum Company (NYSE:CPE)
Trailing P/E Ratio: 3.03
Callon Petroleum Company (NYSE:CPE) is an American oil and gas exploration and production company headquartered in Houston, Texas. 2023 has been a rather slow year for the firm, as after buying and exiting multiple properties in May, the firm has made no major moves.
30 out of the 910 hedge funds part of Insider Monkey's Q3 2023 database had invested in Callon Petroleum Company (NYSE:CPE). Ryan Schedler And Bradley Shisler's Condire Investors was the firm's largest shareholder due to its $62 million stake.
Exicure, Inc. (NASDAQ:XCUR), Callon Petroleum Company (NYSE:CPE), Imperial Petroleum Inc. (NASDAQ:IMPP), and Netcapital Inc. (NASDAQ:NCPL) are some top stocks for the next ten years.
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Disclosure: None. 11 Best Stocks to Buy for the Next 10 Years is originally published on Insider Monkey.