Three Top Stocks for Long-Term Investment in 2023
What defines a standout stock? In my perspective, it is a company with a consistent history of earnings growth and a resilient business model. These companies not only present promising long-term prospects but also enable you to invest with a holding strategy spanning at least a decade. Owning a selection of these companies can be vital to enhancing your portfolio’s performance over time. Their robust business models tend to weather economic downturns effectively.
These high-potential companies span various industries, providing an opportunity to diversify your investments while investing in quality. Let’s explore three of my current favorites. One is a leader in consumer goods and technology, particularly in artificial intelligence (AI). The second is a pharmaceutical giant known for a highly sought-after medication. Finally, the third is a dominant player in premium payment cards, experiencing record revenue.
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Each of these stocks has achieved triple-digit growth over the past five years and shows potential for further increases. Let’s take a closer look at these top stock picks for long-term investment.
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1. Amazon
Amazon (NASDAQ: AMZN) stands at the forefront of two dynamic markets: e-commerce and cloud computing. With over 200 million subscribers to its Prime service, Amazon generates significant quarterly revenues as these customers purchase essentials and various goods from its platform. The company has invested heavily in AI and improved its fulfillment efficiency, helping to lower operational costs—a promising indicator for future profits.
Amazon Web Services (AWS), its cloud division, is the significant driver of the company’s profits. AWS has also strategically invested in AI, which is starting to show returns. For example, last year, AWS had an annual revenue run rate of $115 billion, indicating an optimistic outlook for growth as the AI infrastructure development continues and businesses begin leveraging AI to boost their operations.
With a current price corresponding to about 32 times its forward earnings, significantly lower from its previous 45 times, Amazon’s earnings growth and share performance appear promising for the coming decade, making it an attractive addition to your portfolio.
2. Eli Lilly
Eli Lilly (NYSE: LLY) boasts a diverse range of pharmaceuticals, addressing needs across fields like neuroscience, diabetes, and immunology. Recently, two weight-loss products have attracted significant attention: tirzepatide, marketed as Zepbound for weight loss and Mounjaro for type 2 diabetes management. The demand for these medications has been so high that they briefly appeared on the U.S. Food and Drug Administration’s drug shortage list.
To address this, the company has expanded its production capabilities and introduced more efficient versions of the drug, enhancing profitability. In the last quarter, Zepbound and Mounjaro generated impressive revenues of $1.9 billion and $3.5 billion, respectively. Growing supply capacity and approvals for new uses, such as obesity-related complications, bolster Eli Lilly’s bright revenue prospects.
Analysts predict the weight-loss medication market could expand over 15 times to exceed $100 billion by the decade’s end. Consequently, Eli Lilly’s earnings and stock performance are positioned for significant growth.
Image source: Getty Images.
3. American Express
American Express (NYSE: AXP) is commemorating its 175th anniversary this month. Originally established as a freight forwarding service, it has evolved into a prominent entity in travel services and premium payment cards. Despite its long legacy, American Express continues to report robust growth.
In the past year, the company recorded over $65 billion in revenue, a 25% increase in earnings per share, and unprecedented spending levels among card members. Importantly, American Express continues attracting younger consumers, signaling encouraging growth potential. In the third quarter of the previous year, Millennial and Gen-Z customers comprised the fastest-growing demographic, making up 80% of the new accounts for its recently launched U.S. Consumer Gold Card.
Additionally, American Express provides passive income opportunities. Over a decade, this income accumulation could be substantial or allow for increased investment through dividend reinvestment. The company has recently increased its quarterly dividend by 17% to 82 cents per share, translating into a 1.1% dividend yield. This stock presents an excellent option for both growth and reliable income.
Should you invest $1,000 in Amazon right now?
Before proceeding with a stock purchase in Amazon, consider:
The Motley Fool Stock Advisor analyst team has highlighted their selection of the 10 best stocks to buy now—Amazon is notably absent from this list. The stocks chosen are anticipated to yield substantial returns in coming years.
For instance, if you had invested $1,000 in Nvidia on April 15, 2005, based on their recommendation, your investment would be worth $710,848 today.
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American Express is an advertising partner of Motley Fool Money. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. Adria Cimino holds positions in Amazon and American Express. The Motley Fool has positions in and recommends Amazon. The Motley Fool maintains a disclosure policy.
The views expressed here are those of the author and do not necessarily represent the opinions of Nasdaq, Inc.
