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Welcome to Episode #418 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey is going solo to explore stocks to buy and hold for the next 5 years. Most investors hold a stock only for a few months but Warren Buffett has discussed how long-term investors should be able to go to sleep and wake up years later, and not be worried about the status of the investments.
That’s a high bar for a company to meet. All companies go through rough periods where a new product fails, management changes, an event impacts a brand’s reputation. Great companies can overcome these things.
How do you find them?
A Key Ingredient for Buy and Hold Investors
Growth potential is key for investors who want to buy and hold for 5 years. Tracey looked at 5 companies, that have growth, as possible long-term investment opportunities.
There are no guarantees over a period as long as 5 years. After all, no one could have predicted the COVID pandemic and the impact that had on companies worldwide.
But a good place to start to find investing ideas is with growth.
Intuitive Surgical makes the DaVinci Surgical System. The growth is there. Earnings at Intuitive Surgical are expected to rise 16.8% this year and another 14.8% in 2025. Sales look equally strong with 13.7% sales growth expected in 2024 and another 15.8% in 2025.
Shares of Intuitive Surgical are up 170% over the last 5 years which beats the S&P 500 which has gained 94%. Intuitive Surgical is not cheap, with a forward P/E of 73.
Should investors make a bet that Intuitive Surgical can perform over the next 5 years like it did the last 5?
Costco is an American warehouse retailer which has hardcore, dedicated fans. Earnings are expected to rise 9.6% this fiscal year and another 8.4% next year even with fears of a consumer slowdown.
Shares of Costco have gained 217% over the last 5 years, beating the S&P 500 which was up 94%. Costco is trading near its all-time highs. It doesn’t come cheaply, though, with a forward P/E of 51.
Should Costco still be on an investor’s short list for a long-term investment?
Builders FirstSource is the largest supplier of structural building products for professionals, including homebuilders and remodelers. It has 570 distribution and manufacturing locations in the United States.
When the Fed raised rates, mortgage rates soared, and homebuilding slowed sharply. Builders FirstSource earnings and revenue fell.
In 2024, earnings are still expected to decline 20% and sales to fall 1.6%. But analysts expect a rebound next year due to Fed rate cuts. 2025 earnings are forecast to rise 9.2% and sales to grow 3.8%.
Shares of Builders FirstSource soared the last 5 years, gaining 870%. But Builders FirstSource is still cheap. It trades with a forward P/E of just 16.3.
Is there still time for long-term investors to buy Builders FirstSource?
Wingstop operates 2,214 restaurants in 11 global markets with the United States its largest market. In the second quarter of 2024, Wingstop grew its domestic same-store-sales by 28.7% even though 2023 was also a strong sales number.
Wingstop’s earnings are expected to rise 52% this year and another 22% next year. The revenue outlook is equally as robust. Analysts expect revenue growth of 36% this year and 18.7% next year.
Shares of Wingstop are up 382% the past 5 years to new highs. It doesn’t come cheap, with a forward P/E of 112.
Is there still a long-term investing opportunity in Wingstop after the recent rally?
Eli Lilly is a large pharmaceutical company that operates in the Alzheimer’s, cancer, diabetes, pain and obesity markets. Of course, it’s the weight-loss drugs that are dominating headlines and boosting Eli Lilly’s growth. Earnings are expected to rise 160% this year and another 45% next year. Sales look equally as robust, with growth of 36% this year and 27.5% next.
Shares of Eli Lilly have soared the last 5 years. It has gained 720% while the S&P 500 is up just 94%. Eli Lilly trades with a forward P/E of 55.
Is Eli Lilly’s growth only just beginning?
What else do you need to know about stocks to buy and hold for 5 years?
Tune into this week’s video podcast to find out.
[In full disclosure, Zacks Value Investor portfolio has owned BLDR since 2023.]
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Stocks to Buy and Hold for 5 Years
Welcome to Episode #418 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds, and ETFs and how it impacts your life.
This week, Tracey is going solo to explore stocks to buy and hold for the next 5 years. Most investors hold a stock only for a few months but Warren Buffett has discussed how long-term investors should be able to go to sleep and wake up years later, and not be worried about the status of the investments.
That’s a high bar for a company to meet. All companies go through rough periods where a new product fails, management changes, an event impacts a brand’s reputation. Great companies can overcome these things.
How do you find them?
A Key Ingredient for Buy and Hold Investors
Growth potential is key for investors who want to buy and hold for 5 years. Tracey looked at 5 companies, that have growth, as possible long-term investment opportunities.
There are no guarantees over a period as long as 5 years. After all, no one could have predicted the COVID pandemic and the impact that had on companies worldwide.
But a good place to start to find investing ideas is with growth.
5 Stocks to Buy and Hold for 5 Years
1. Intuitive Surgical, Inc. (ISRG - Free Report)
Intuitive Surgical makes the DaVinci Surgical System. The growth is there. Earnings at Intuitive Surgical are expected to rise 16.8% this year and another 14.8% in 2025. Sales look equally strong with 13.7% sales growth expected in 2024 and another 15.8% in 2025.
Shares of Intuitive Surgical are up 170% over the last 5 years which beats the S&P 500 which has gained 94%. Intuitive Surgical is not cheap, with a forward P/E of 73.
Should investors make a bet that Intuitive Surgical can perform over the next 5 years like it did the last 5?
2. Costco Wholesale Corp. (COST - Free Report)
Costco is an American warehouse retailer which has hardcore, dedicated fans. Earnings are expected to rise 9.6% this fiscal year and another 8.4% next year even with fears of a consumer slowdown.
Shares of Costco have gained 217% over the last 5 years, beating the S&P 500 which was up 94%. Costco is trading near its all-time highs. It doesn’t come cheaply, though, with a forward P/E of 51.
Should Costco still be on an investor’s short list for a long-term investment?
3. Builders FirstSource, Inc. (BLDR - Free Report)
Builders FirstSource is the largest supplier of structural building products for professionals, including homebuilders and remodelers. It has 570 distribution and manufacturing locations in the United States.
When the Fed raised rates, mortgage rates soared, and homebuilding slowed sharply. Builders FirstSource earnings and revenue fell.
In 2024, earnings are still expected to decline 20% and sales to fall 1.6%. But analysts expect a rebound next year due to Fed rate cuts. 2025 earnings are forecast to rise 9.2% and sales to grow 3.8%.
Shares of Builders FirstSource soared the last 5 years, gaining 870%. But Builders FirstSource is still cheap. It trades with a forward P/E of just 16.3.
Is there still time for long-term investors to buy Builders FirstSource?
4. Wingstop Inc. (WING - Free Report)
Wingstop operates 2,214 restaurants in 11 global markets with the United States its largest market. In the second quarter of 2024, Wingstop grew its domestic same-store-sales by 28.7% even though 2023 was also a strong sales number.
Wingstop’s earnings are expected to rise 52% this year and another 22% next year. The revenue outlook is equally as robust. Analysts expect revenue growth of 36% this year and 18.7% next year.
Shares of Wingstop are up 382% the past 5 years to new highs. It doesn’t come cheap, with a forward P/E of 112.
Is there still a long-term investing opportunity in Wingstop after the recent rally?
5. Eli Lilly and Co. (LLY - Free Report)
Eli Lilly is a large pharmaceutical company that operates in the Alzheimer’s, cancer, diabetes, pain and obesity markets. Of course, it’s the weight-loss drugs that are dominating headlines and boosting Eli Lilly’s growth. Earnings are expected to rise 160% this year and another 45% next year. Sales look equally as robust, with growth of 36% this year and 27.5% next.
Shares of Eli Lilly have soared the last 5 years. It has gained 720% while the S&P 500 is up just 94%. Eli Lilly trades with a forward P/E of 55.
Is Eli Lilly’s growth only just beginning?
What else do you need to know about stocks to buy and hold for 5 years?
Tune into this week’s video podcast to find out.
[In full disclosure, Zacks Value Investor portfolio has owned BLDR since 2023.]