Investing for the long term is no mean feat, given the amount of uncertainty in markets. A longer investment horizon spanning over a year involves “looking for business models and strategies that are likely to stay relevant and profitable for say 10, 20 or even 40 years from now,” says David Dietze, managing partner and senior portfolio strategist at Peapack Private Wealth Management. One way of ascertaining this is to assess how demand for a company’s products has evolved in the last decade, he suggests. CNBC Pro asked three fund managers for their stock picks to to buy now and hold for the longer term. Here are five of their top names. PepsiCo Dietze likes PepsiCo despite the possibility of weaker demand, with weight-loss drugs and healthy living taking the spotlight . “This is a brand that people have grown up with. Their drinks and snacks are consumed all over the world. And people continue to buy it even when they raise prices. So I think it’s here to stay even as people look to being healthier,” he said. When asked how the brand compares with its rival Coca Cola , the strategist said he prefers PepsiCo because its portfolio includes snacks. Shares in PepsiCo edged lower after its quarterly revenue slid for the first time in four years in February. Dietze remains bullish, however, highlighting that “Pepsi’s dividend of 3.3% is twice the 1.5% of the S & P 500.” “So that gives a sense that this is a value stock which you can also hold for the longer-term,” he added. Shares of PepsiCo are down around 4% in the last 12 months. Of the 23 analysts covering the stock, 13 give it a buy or overweight rating, 9 have hold ratings and one has a sell rating. The average price target for PepsiCo is $186.77, according to FactSet data, giving it potential upside of 6.7%. Anheuser-Busch Elsewhere in the consumer discretionary sector, Dietze likes brewer Anheuser-Busch , which he sees as having “good prospects in the long-term.” The Belgian company recently reported annual revenue of $59.38 billion, up 7.8% but shy of analyst expectations of $60.48 billion. The brewer faced a social media-driven boycott of its bestselling Bud Light beer in the U.S. in mid-2023. However, Dietze believes it “can overcome these challenges.” “Anheuser-Busch is out of favor now. But they have close to half of the world’s top 20 beer brands. They have stakes in big beer distributors in South America, a large distribution network and strong global marketing. So they can bounce back,” he noted. These challenges simply mean that investors can now “get the stock at a much lower price, before it bounces back,” he added. More recently in March, shares in the world’s biggest brewer took a hit following a brief suspension after U.S. tobacco giant Altria’s announcement that it would cut its approximately 10% stake in the company. Over the last 12 months, shares in Anheuser-Busch plunged 7.94% on the Brussels Stock Exchange. It is also listed on the New York Stock Exchange. According to Factset data, of 30 analysts, 18 give the stock a buy or overweight rating while 12 have a hold rating. Their average price target is 65.62 euros ($70.78), giving it 16.2% potential upside. Edenred Morningstar’s Europe market strategist Michael Field is bullish on growth stocks, naming French prepaid corporate services company Edenred as a name to look at in the long term. Calling it “close to [his] own heart,” he said Edenred has been “growing at a high percentage – and looks like it will continue that way for a long time.” “This is one of those stocks you could put into a portfolio and tuck away. And in five years, it’s going to be, double or triple the size of what you invested, if all goes well,” Field added. Edenred’s shares plummeted in February after an announcement that it was being invested by the Italian authorities over a public tender in 2019. However, Field remains confident in the stock, especially after it reported a 30% growth in its earnings before interest, taxes, depreciation and amortization (EBITDA) in 2023. The company also forecast EBITDA growth of more than 12% for 2024. Over the last 12 months, shares in Edenred have dropped by around 9.31% on the Euronext Paris Stock Exchange. According to FactSet data, of 18 analysts, 14 give the stock a buy or overweight rating, three have a hold rating and one has a sell rating. Their average price target is 63 euros, giving it 27.4% potential upside. Microsoft When investing for the longer term, Jason Hsu has a preference for tech — particularly, artificial intelligence. The chairman and chief investment officer of Rayliant Global Advisors sees AI “revolutionizing just about every facet of work – just like the internet did.” His top pick is Microsoft . “Microsoft is probably one of the safest AI names because it is already investing heavily in it. It has the best ability to distribute and monetize from AI,” he said, adding that the tech giant can gain more from its partnership with OpenAI. The revenue that can be generated from AI will further complement the tech giant’s income streams from its businesses in operating systems, browsers, software and apps, pushing it to grow further in the long-run, Hsu noted. Microsoft and OpenAI are now working on a nearly $100 billion data center project featuring an artificial intelligence supercomputer set to launch in 2028, according to news reports. OpenAI made headlines after Tesla CEO Elon Musk filed a lawsuit against it and co-founders Sam Altman and Greg Brockman, alleging breach of contract and fiduciary duty. The tech startup has since denied these allegations . Hsu, however, is unfazed, calling Altman “a genius in the domain of AI.” Over the last 12 months, shares in Microsoft are up almost 46%. Of 57 analysts covering the stock, 54 give it a buy or overweight rating at an average price of $472.62, according to FactSet data. This gives it upside potential of 12.3%. Pinduoduo Also on Hsu’s radar is online marketplace PDD , which he describes as a ” heavily discounted retail platform in China.” The tech giant debuted in 2015 and has since grown to become one of China’s largest players thanks to a combination of social features, gamification and low prices. And it is already “eating Alibaba ‘s lunch,” Hsu noted. The Temu parent’s third-quarter revenue nearly doubled , far outpacing Alibaba ‘s 9% growth during the same period. The asset manager sees Chinese consumers spending on the platform, even as the average person has tightened his purse strings. “The wealthier households aren’t spending as much, I think because they are squeezed. But the lower and segment households are spending meaningful more, and some of that may be just related to the overall government policy. So this shift in consumption profile is an interesting play to watch in the longer-term,” he added. Shares in the Nasdaq-listed giant picked up last week, following a 90% increase in its 2023 revenue to 247.64 billion yuan ($34.26 billion). PDD’s shares are up around 53.2% in the last 12 months. Of the 46 analysts covering the stock, 44 give it a buy or overweight rating while two have hold ratings. The average price target for PDD is $180.12, according to FactSet data, giving it potential upside of 54.9%.
Five stocks to buy and hold for the long term, according to the pros
Apr 2, 2024
