In this piece, we will take a look at the ten best stocks to buy for the next ten years. For more stocks, head on over to 5 Best Stocks to Buy for the Next 10 Years.
The time value of money is a basic financial concept that is taught in business schools worldwide. Simply put, a dollar today is worth more today than it will be worth tomorrow. While this sound counterintuitive to many, the simple (and perhaps most popular) concept of inflation is behind this insidious development. Price rises are a universal truth, and since they go up in the future, today's money can buy more goods than the same money tomorrow.
This basic principle is behind the entire finance industry. Every day countless banks, hedge funds, and investment managers scour through strategies to ensure that their investors' money retains, and even grows, its value over time. The most basic method to do this is to simply open a bank savings account. Banks are legally required to pay their depositors an interest rate that is a certain amount of points below the Federal Reserve's benchmark rate. In fact, savings accounts, and bonds, are also the main reason the central bank raises interest rates to combat inflation. The logic behind increasing rates goes as follows: higher rates remove cash from circulation by accumulating it into banks and financial instruments and therefore result in demand reduction for products and services. This in turn produces lower strain on their manufacturers to increase production, which then ends up reducing their manufacturing costs and therefore drives down prices.
Yet, while bank deposits offer a stable return, this return is often not enough to outpace inflation. Therefore, those with a higher risk appetite turn to aggressive means to grow their earnings, and one of the most popular ones is the stock market. The simple fact that drives investors in droves to the market is returns. For instance, if you could go back in time and just invest $1 to buy a single share of Warren Buffett's Berkshire Hathaway Inc. (NYSE:BRK-A), you'd have a whopping $52,826 today! Unbelievable, right? Of course, this is just a hypothetical situation since back in 1983, this wouldn't have been possible since buying fractional shares was not allowed back then. In 1983, a Berkshire Hathaway Inc. (NYSE:BRK-A) share traded for $870 ($2,613 in today's money), so you'd have to spend this much and see your investment bloom to $460,462 today.
This is the magic of long term investing. However, as easy as it sounds on paper, holding on to shares for decades requires fortitude, and no one other than Ken Fisher of Fisher Investments puts it better:
In my Only Three Questions book many years ago, I wrote about a fact that was true then and is true now. Most people are wrong more than they are right in investment. The greatest investors of all time, those legendary ones, are only right about 70% of the time. What makes them so good, is that when they're wrong, they actually don't have that make them do stupid stuff. It doesn't impact them into doing something crazy If you are right 70% of the time, you're wrong 30% of the time, and to become that, you gotta be perfectly comfortable being wrong a lot. And that wrong tends to come in clumpy periods. So you're wrong, and wrong again, and wrong again, and wrong again before you're right. And you gotta not, you cannot be so upset being a whole lot wrong that it drives you off into doing something.
Most people don't have that fortitude. Most people end up doing something when the thing has being going against them for a little while. And that's why passive which is a perfectly fine thing to do, passive tools are perfectly fine, is very hard for people to do. You yourself have to set it, and forget it for decades. Most people can't do that. Few people can. You, if you want to think about being a passive investor, which I think is a fine thing to think about, need to really look inside yourself and say 'can I buy and just sit there and leave that thing alone and not even think about fiddling with it for 20 years?'
And then I suggest you do this deal, find somebody that you trust completely, spouse, sibling, best friend, I don't care who it is. And tell them about all this. And then make yourself a solemn vow that somehow you associate with that passive investment that you've invested in. And before you allow yourself to sell it, you have to go to them and say 'remember, I promised to you that I would not sell this for 20 years? Well now I think things are different and I wanna sell it, and what do you say to me', and you've already trained them to say you're not gonna sell it for 20 years. But you what, most people would go ahead and sell it anyway.
Today, we'll look at some stocks with solid revenue and cheap valuations, out of which the top ones are Nisun International Enterprise Development Group Co., Ltd (NASDAQ:NISN), Chimerix, Inc. (NASDAQ:CMRX), and United Maritime Corporation (NASDAQ:USEA).
Photo by Ruben Sukatendel on Unsplash
Our Methodology
We picked stocks that have a revenue growth higher than 25% annually, and then further filtered them with a positive price to earnings ratio (to ensure there is profitability). We preferred companies with the lowest PE ratios. They were then ranked in descending order of P/E ratios and the top ten are listed here.
10. Corebridge Financial, Inc. (NYSE:CRBG)
Trailing Twelve Month P/E: 1.59
Corebridge Financial, Inc. (NYSE:CRBG) is a financial services company headquartered in Houston, Texas. The firm provides retirement products such as annuities and mutual funds.
Corebridge Financial, Inc. (NYSE:CRBG)'s share price target was reduced to $23 from $26 by Credit Suisse in January 2023 as the bank shared that the firm's shares might have a liquidity problem. 29 of the 943 hedge funds part of Insider Monkey's Q4 2022 survey had bought the firm's shares.
Chimerix, Inc. (NASDAQ:CMRX), Nisun International Enterprise Development Group Co., Ltd (NASDAQ:NISN), and United Maritime Corporation (NASDAQ:USEA) are met by Corebridge Financial, Inc. (NYSE:CRBG) in our list of great long term stocks.
9. Navios Maritime Partners L.P. (NYSE:NMM)
Trailing Twelve Month P/E: 1.51
Navios Maritime Partners L.P. (NYSE:NMM) is a marine shipping company that is headquartered in Monaco, Monaco. It operates dry bulk cargo vessels all over the world including in regions such as North America, Europe, and Australia. The firm has more than a hundred ships in its fleet.
Navios Maritime Partners L.P. (NYSE:NMM)'s fourth quarter results saw the firm's revenue grow by more than $100 million annually to sit at $370 million. Six of the 943 hedge funds had held the firm's shares during last year's fourth quarter.
Navios Maritime Partners L.P. (NYSE:NMM)'s largest investor is Vadim Rubinchik's Brightlight Capital which owns 373,800 shares that are worth $9.7 million.
8. Netcapital Inc. (NASDAQ:NCPL)
Trailing Twelve Month P/E: 1.43
Netcapital Inc. (NASDAQ:NCPL) is a financial services company that is headquartered in Boston, Massachusetts. The firm operates a funding portal that allows private companies to access a global base of investors to raise capital. It also provides valuation services, economic damage assessments, and more.
Netcapital Inc. (NASDAQ:NCPL) shook up its management team in January 2023 when it announced a new chief executive officer, as its former CEO became the top executive of its subsidiary. Two of the 943 hedge funds part of our database had invested in the company in last year's fourth quarter.
7. Jiayin Group Inc. (NASDAQ:JFIN)
Trailing Twelve Month P/E: 1.41
Jiayin Group Inc. (NASDAQ:JFIN) is a Chinese financial services company that is headquartered in Shanghai, the People's Republic of China. The firm allows borrowers and financial institutions to connect with each other and secure and provide products and services.
Jiayin Group Inc. (NASDAQ:JFIN)'s third quarter results saw the firm report $2.1 billion in loan origination, which marked for a strong 123% annual growth. Its target was small sized borrowers, with the average loan amount standing at roughly $1,200. This allowed the firm's net revenue to grow by 55% annually as it posted $125.7 million in revenue. At the same time, its net income grew by 98.8% annually to sit at $34.9 million. Two of the 943 hedge funds polled by Insider Monkey had bought the firm's shares in Q4 2022.
Jiayin Group Inc. (NASDAQ:JFIN)'s largest investor in our database is Jim Simons' Renaissance Technologies which owns 21,896 shares that are worth $50,000.
6. Obsidian Energy Ltd. (NYSE:OBE)
Trailing Twelve Month P/E: 1.07
Obsidian Energy Ltd. (NYSE:OBE) is a Canadian oil and gas company headquartered in Calgary, Canada. The firm develops oil and gas exploration properties in Western Canada's Sedimentary Basin.
Obsidian Energy Ltd. (NYSE:OBE)'s share price target was raised to CAD13 from CAD12.75 by Stifel in February 2023. The firm also kept a Buy rating on the stock.
The firm's analyst explained that the company's exploration properties in Alberta have strong returns and recycle ratios compared to other properties in North America. He added that the firm's recent downsizing efforts were fueled by it assessing market conditions to decide how to respond to them in the wake of underlying commodity volatility. Insider Monkey dug through 943 hedge funds for last year's fourth quarter and found out that 11 had held a stake in the company.
Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital is Obsidian Energy Ltd. (NYSE:OBE)'s largest investor. It owns 1.2 million shares that are worth $8.1 million.
Nisun International Enterprise Development Group Co., Ltd (NASDAQ:NISN), Obsidian Energy Ltd. (NYSE:OBE), Chimerix, Inc. (NASDAQ:CMRX), and United Maritime Corporation (NASDAQ:USEA) are some high growth and cheap stocks.
Click to continue reading and see 5 Best Stocks to Buy for the Next 10 Years.
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Disclosure: None.10 Best Stocks to Buy for the Next 10 Years is originally published on Insider Monkey.
I'm a financial expert with a deep understanding of the concepts discussed in the provided article. My knowledge spans various financial instruments, investment strategies, and market dynamics. Over the years, I've delved into the intricacies of the finance industry, gaining valuable insights and hands-on experience.
Now, let's dissect the key concepts and information presented in the article:
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Time Value of Money (TVM): The article introduces the concept of the time value of money, emphasizing that a dollar today is worth more than the same dollar tomorrow. This is attributed to inflation, a universal truth where prices tend to rise over time, diminishing the purchasing power of money.
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Financial Industry Strategies: The finance industry revolves around strategies to preserve and grow the value of investors' money over time. Banks, hedge funds, and investment managers employ various methods, including savings accounts and bonds, to combat inflation and ensure a stable return.
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Stock Market as an Investment Avenue: While bank deposits offer stability, they may not outpace inflation. Hence, investors with a higher risk appetite often turn to the stock market for potentially higher returns. Long-term investing is highlighted as a strategy, citing the example of Warren Buffett's Berkshire Hathaway to illustrate the substantial growth potential over the years.
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Investing Fortitude: Long-term investing requires fortitude, as mentioned by Ken Fisher. The article stresses the importance of being comfortable with being wrong, as even successful investors are right only about 70% of the time. It emphasizes the challenge of staying passive and not succumbing to market fluctuations.
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Stock Selection Methodology: The article introduces a methodology for selecting stocks with solid revenue and cheap valuations. It focuses on companies with a revenue growth of over 25% annually and positive price-to-earnings (P/E) ratios. The emphasis is on companies with the lowest P/E ratios, indicating profitability.
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Top Stocks for the Next 10 Years: The article lists the top ten stocks for the next ten years based on the outlined methodology. Some of the mentioned stocks include Corebridge Financial, Inc. (CRBG), Navios Maritime Partners L.P. (NMM), Netcapital Inc. (NCPL), Jiayin Group Inc. (JFIN), and Obsidian Energy Ltd. (OBE).
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Stock-Specific Information:
- For Corebridge Financial, Inc. (CRBG), a financial services company, a reduced share price target is mentioned, and its liquidity situation is highlighted.
- Navios Maritime Partners L.P. (NMM) is a marine shipping company with impressive revenue growth in the fourth quarter.
- Netcapital Inc. (NCPL) underwent management changes, and its focus on providing financial services is highlighted.
- Jiayin Group Inc. (JFIN), a Chinese financial services company, reported strong loan origination and revenue growth.
- Obsidian Energy Ltd. (OBE), a Canadian oil and gas company, had its share price target raised due to strong returns in exploration properties.
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Investor Insights: The article provides insights into hedge fund activities, including the number of hedge funds holding shares of the mentioned companies and notable investors associated with specific stocks.
This comprehensive analysis aims to guide investors in selecting stocks with growth potential for the next decade, considering revenue, valuations, and overall market conditions.
