We recently compiled a list of 10 Safe Stocks To Invest In For The Long Term in 2024. In this article, we will look at where Costco Wholesale Corporation (NASDAQ:COST) ranks among 10 Safe Stocks To Invest In For The Long Term in 2024.
The Sectors with Promising Growth
The recent market action can be attributed to the Fed’s decision. To discuss the future of the equity market, Drew Pettit, Citi US equity strategist, appeared in an interview on Yahoo Finance on September 26, 2024.
According to Pettit, the market is yet to hit an all-time high if you look beneath the surface. He suggests that the Fed’s decision and if the potential softness in the labor data comes through, investors may regain confidence positioning the market for recovery. He adds that in the past quarter, cyclical and secular stocks have been performing well, but are yet to hit the market peak.
Speaking of growth sectors, some sectors have outperformed others, growing exponentially. Pettit adds that stocks with mature business models have yielded greater returns from minuscule upsides in sales. As for the tech sector, he believes that stocks will remain resilient and will be able to handle some deceleration. He advises investors to remain cautious of tech stocks moving forward and focus on overlooked areas of the market such as consumer goods, financials, and cyclicals.
Investors Must Focus More on Fundamentals
The market saw a great run-up after the easing cycle. However, the question of a soft landing still stands. On September 30, Liz Young Thomas, SoFi head of investment strategy, appeared in an interview on CNBC to discuss the latest market trends and opportunities for investors.
Thomas believes that the maximum gains have already been achieved up until the easing cycle, however, growth may continue till the end of 2024. She stresses that the next 30 to 60 days are extremely crucial for the market and will help investors understand the motive behind the rate cuts, and whether the cuts were needed in the first place.
While growth in the tech sector has been slowing down, other sectors have reportedly grown and more than 80% of the S&P 500 has been trading above the 200-day moving average. She adds that the tech sector has started to strengthen and the optimism surrounding the Chinese economy may combine to yield positive results for the market.
Thomas reiterates that while multiples are rich, to ensure a soft landing, the market must move to trade based on fundamentals rather than on multiples. She explains that this simply means that multiples are unlikely to expand from here, but earnings may get more steady. Sectors such as industrials have been growing and expanding while financials have been slower. Thomas advises investors to focus on stocks that have strong fundamentals and steady earnings growth.
Our Methodology
To come up with the safest stocks to invest in for the long term in 2024 we consulted multiple reports and also screened for reliable growers using the Finviz stock screener. We compiled an initial list of 30 stocks. We then referred to the 10% year revenue growth rate for each of the stocks along with their history of dividend payouts. Companies with the highest growth rates and a history of dividend growth were included in the list. The 10 safe stocks to invest in for the long term in 2024 are in ascending order of their 10-year revenue growth rate.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Costco Wholesale Corporation (NASDAQ:COST)
10 Year Revenue Growth: 8.49%
Number of Hedge Fund Holders: 71
Costco Wholesale Corporation (NASDAQ:COST) ranks fifth on our list of the safest stocks to invest in for the long term. The company is a wholesale corporation with over 891 warehouses across the globe, of which 614 are based in the United States of America.
Historically, the company has always been the epitome of solid growth. Costco Wholesale Corporation (NASDAQ:COST) is one of the few companies that managed to reach $3 billion in sales within the first six years of operation. By 1993, the company was generating $16 billion in annual sales. In 2023, Costco Wholesale Corporation (NASDAQ:COST) ended the year with a revenue of over $242 billion.
Costco Wholesale Corporation (NASDAQ:COST) reported $78.2 billion in sales, an increase of 1% year-over-year, during the fiscal fourth quarter of 2024. For the full fiscal year 2024, the company logged $249.6 billion in sales, up by 5% year-over-year.
The company’s reliable growth trajectory is what investors like about the stock. Before the end of 2024, the company plans to open another 12 locations, bringing the total to 30 for this year alone. The company spent over $1.06 billion on capital expenditures during the fiscal third quarter of 2024, bringing the full-year total to $4.3 billion.
Analysts are bullish on COST and their 12-month median price target of $950 points to an 8% upside from current levels. By the end of the second quarter, 71 hedge funds held shares in Costco Wholesale Corporation (NASDAQ:COST) with total stakes amounting to $5.96 billion. The largest shareholder was Fisher Asset Management with a position worth $2.51 billion, as of June 30.
ClearBridge Investments’ ClearBridge Sustainability Leaders Strategy stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its Q2 2024 investor letter:
“Consumer staples holdings were also standouts in the quarter, such as Costco Wholesale Corporation (NASDAQ:COST), which continues to execute well and delivered better than expected earnings, helped by strong traffic driving better expense leverage. Customers also looked to be shifting toward more discretionary purchases.”
Overall COST ranks 5th on our list of safe stocks to invest in for the long term in 2024. While we acknowledge the potential of COST, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published on Insider Monkey.
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