In this piece, we will take a look at the 16 most promising long-term stocks according to analysts. If you want to skip our overview of long term investing, then you can take a look at 5 Most Promising Long-Term Stocks According to Analysts.
While investing comes in all sizes and flavors, the one approach that leads to billions of dollars in wealth is typically long term capital appreciation. Investing in the right set of companies, coupled with years of low interest rates to help stimulate stock market growth has produced nearly all of America's biggest billionaires. Most of the world's richest men, such as Bill Gates of Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) co founders Page & Brin, Tesla, Inc. (NASDAQ:TSLA) co-founder Elon Musk, or Berkshire Hathaway's Warren Buffett got into the right stocks or set up the right companies decades back and then patiently waited for the shares to appreciate.
Over the long term, stocks tend to produce sizeable returns. For instance, both of Wall Street's leading stock indexes - the S&P 500 and the NASDAQ Composite - have outpaced inflation. Starting from the year 2000, the former has posted 228% in returns and the latter is up by 357%. So, if you had invested a dollar in either of the indexes, you'd have made more than if you'd bought a security that grew the principal by the annual inflation rate. This makes stocks quite a lucrative way of slowly growing the value of money over time and ensuring that the growth outpaces any inflationary after effects.
Crucially though, just as an inflation protected security also pays a coupon rate annually, stocks also offer a similar opportunity through dividends. Dividends are typically paid by established companies that can balance investor payouts with growth investments. A dividend is a share in a firm's profits after taxes and interest payments have been accounted for. In financial analysis, models such as the Gordon Growth Model enable investors to evaluate whether dividend growth rates lend a stock adequate intrinsic value to merit an investment. Additionally, the earnings per share (EPS) part of every quarterly and annual earnings release allows them to see how much money a company is paying to investors out of its total earnings. One common metric is a dividend payout ratio which divides the dividends by the EPS and also lets analysts calculate the retention ratio.
When it comes to dividends, they also enable additional returns through share price appreciation. Some investors who do not rely on dividend earnings to meet living expenses or other payouts reinvest the money into the shares. This allows them to earn dividends on dividends and share price appreciation of the new stock bought. This strategy is called compounding, and none other than Warren Buffett is one of its biggest adherents.
Speaking at Berkshire Hathaway's 2019 Annual Conference, the Oracle of Omaha talked quite a bit about compounding:
It is the primary motivation, but it's been that for a very, very ,very long time. No matter what was going right in my life, the things that were going badly at Berkshire, I would not feel them you know. I don't need to be spending my time working on something that makes me feel bad about the results of it when we get through. And it's something that's doable, I mean the culture is stronger now than it was 10 years ago and it was stronger then than 10 years previously, it moves slowly, but it goes in the right direction. And when we get chances to deploy the capital, we've always tried to make any entity, whether it was the partnership originally or the Berkshire now, or blue chips [inaudible] that are even diversified [inaudible]. We wanted them all to be compounding, in effect be compounding machines that's why people gave this capital to us and why we put our own capital in. And if failed at that we really felt like we failed. It didn't make any difference how much money we made from fees or anything like that. We knew what our yardstick was.
So that will continue. I think Berkshire is, better, situated, then it's ever been except for the fact that size is a drag on performance. I probably wrote that 40 years, I wrote it actually when I closed the partnership to new money when we had like $40 million in it. I said that really the new, the additional capital would drag down returns from a $40 million base so you can imagine how I feel with $368 billion base of capital in Berkshire now. But, this culture is special, it can work, it won't be the highest compounder by a long shot against many other businesses. I think it'll be one of the safest ways to make decent money over time butt will depend on the people that follow us.
So, with 2023 heading to a close, we decided to take a look at some promising long term stocks according to analysts. Among these, the top three are Evolus, Inc. (NASDAQ:EOLS), Relay Therapeutics, Inc. (NASDAQ:RLAY), and Valneva SE (NASDAQ:VALN).
16 Most Promising Long-Term Stocks According to Analysts
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Our Methodology
To make our list of the most promising long term stocks according to analysts, we made a list of 40 stocks with market capitalization greater than $300 million and average share ratings of Buy or better, and ranked them according to their average analyst share price target percentage upside. Out of these, the top stocks were the most promising long term stocks according to analysts.
For these stocks we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
16 Most Promising Long-Term Stocks According to Analysts
Average Analyst Share Price Target Percentage Upside: 63.38%
Average Share Price Target: $18.2
Xperi Inc. (NYSE:XPER) is an American software company that offers technology to enable cable distributors to manage their programming. Its shares are rated Buy on average and analysts have set an average share price target of $18.20.
During Q3 2023, 14 out of the 910 hedge funds part of Insider Monkey's database had bought and owned Xperi Inc. (NYSE:XPER) 's shares. Along with Relay Therapeutics, Inc. (NASDAQ:RLAY), Evolus, Inc. (NASDAQ:EOLS), and Valneva SE (NASDAQ:VALN), it's a promising long term stock according to analysts.
Average Analyst Share Price Target Percentage Upside: 63.95%
Average Share Price Target: $17.33
Tango Therapeutics, Inc. (NASDAQ:TNGX) is a biotechnology company that develops cancer treatments. The firm has been doing well on the financial front as of late since it has beaten analyst EPS estimates in all four of its latest quarters.
By the end of this year's third quarter, 19 out of the 910 hedge funds covered by Insider Monkey's research were the firm's shareholders.
Average Analyst Share Price Target Percentage Upside: 64.08%
Average Share Price Target: $22.22
Tyra Biosciences, Inc. (NASDAQ:TYRA) is a biotechnology company developing gene based treatments for cancer and other ailments. December 2023 was a crucial month for the firm as it announced the results of the first dosing test of its cancer drug.
Insider Monkey scoured through 910 hedge funds for their September quarter of 2023 shareholdings to discover eight Tyra Biosciences, Inc. (NASDAQ:TYRA) stakeholders. Peter Kolchinsky's RA Capital Management was the firm's biggest shareholder among these as it owned a $99 million stake.
Average Analyst Share Price Target Percentage Upside: 65.47%
Average Share Price Target: $20.8
KalVista Pharmaceuticals, Inc. (NASDAQ:KALV) is a biotechnology company developing treatments for complications resulting from diabetes. It's one of the strongest rated stocks on our list since the shares are rated Strong Buy on average.
By the end of this year's third quarter, 24 out of the 910 hedge funds covered by Insider Monkey's research had bought the firm's shares. KalVista Pharmaceuticals, Inc. (NASDAQ:KALV)'s largest hedge fund investor is Kevin C. Tang's Tang Capital Management through its $33 million investment.
Average Analyst Share Price Target Percentage Upside: 68.94%
Average Share Price Target: $18.06
MAG Silver Corp. (NYSE:MAG) is a silver property manager and developer headquartered in Vancouver, Canada. The firm has missed analyst EPS estimates in three of its four latest quarters.
Insider Monkey scoured through 910 hedge fund portfolios for their September quarter of 2023 shareholdings to find 11 MAG Silver Corp. (NYSE:MAG) shareholders. Jean-Marie Eveillard's First Eagle Investment Management was the biggest investor among these due to its $59.3 million stake.
Average Analyst Share Price Target Percentage Upside: 71.72%
Average Share Price Target: $20.83
Liquidia Corporation (NASDAQ:LQDA) is a biotechnology company developing treatments for people with high blood pressure. It scored a major win in December 2023 when a court held an earlier decision to free Liquidia Corporation (NASDAQ:LQDA) from any restrictions to technology covered by a patent owned by another company.
During this year's third quarter, 17 out of the 910 hedge funds surveyed by Insider Monkey had bought a stake in the firm. Liquidia Corporation (NASDAQ:LQDA)'s largest shareholder is Derrick Tang's Kynam Capital as it owns $12.6 million worth of shares.
Average Analyst Share Price Target Percentage Upside: 74.51%
Average Share Price Target: $22.25
Alta Equipment Group Inc. (NYSE:ALTG) rents and sells construction, industrial, and other equipment. The shares are rated Buy on average and analysts have set an average share price target of $22.25.
As of Q3 2023 end, 16 out of the 910 hedge funds profiled by Insider Monkey were Alta Equipment Group Inc. (NYSE:ALTG)'s shareholders.
Average Analyst Share Price Target Percentage Upside: 76.50%
Average Share Price Target: $19.38
SSR Mining Inc. (NASDAQ:SSRM) is an American gold mining company headquartered in Denver, Colorado. The firm closed 2023 by divesting its stake in a subsidiary and completing the sale to a bank.
During this year's September quarter, 14 out of the 910 hedge funds profiled by Insider Monkey had held a stake in SSR Mining Inc. (NASDAQ:SSRM).
Average Analyst Share Price Target Percentage Upside: 76.60%
Average Share Price Target: $19.32
Immatics N.V. (NASDAQ:IMTX) is a German biotechnology company developing cancer treatments. Its shares are rated Strong Buy on average and the average analyst share price target is $19.32.
As of Q3 2023 end, 33 out of the 910 hedge funds covered by Insider Monkey's research were the firm's shareholders. Julian Baker and Felix Baker's Baker Bros. Advisors was the biggest Immatics N.V. (NASDAQ:IMTX) investor due to its $65.3 million stake.
Average Analyst Share Price Target Percentage Upside: 77.62%
Average Share Price Target: $19.13
Zynex, Inc. (NASDAQ:ZYXI) is a healthcare company that makes and sells nerve stimulation and other associated devices. Nearly 80% of its stock is held by either insiders or institutional investors, indicating that perhaps they have a strong conviction to remain majority shareholders.
For their third quarter of 2023 shareholdings, 13 out of the 910 hedge funds covered by Insider Monkey had bought Zynex, Inc. (NASDAQ:ZYXI)'s shares. The firm's largest shareholder among these is Israel Englander's Millennium Management as it owns 949,312 shares that are worth $7.5 million.
Average Analyst Share Price Target Percentage Upside: 82.11%
Average Share Price Target: $22.29
Altimmune, Inc. (NASDAQ:ALT) is a biotechnology company with drugs in second phase trials for diseases such as hepatitis. The shares are rated Strong Buy on average and the average analyst share price target is $22.29.
After digging through 910 hedge funds for their Q3 2023 investments, Insider Monkey found that 17 had invested in Altimmune, Inc. (NASDAQ:ALT). The firm joins Evolus, Inc. (NASDAQ:EOLS), Relay Therapeutics, Inc. (NASDAQ:RLAY), and Valneva SE (NASDAQ:VALN) in our list of promising long term stocks.
