We recently compiled a list of the Best Future Stocks For The Long-Term. In this article, we will look at where Johnson & Johnson (NYSE:JNJ) ranks among the best future stocks for the long term.
A Soft Landing is More than Likely
The Fed plans to initiate rate cuts for the first time in over four years and investors do not know what to expect of the financial markets moving forward. On September 17, Stephen Juneau, Bank of America US economist, appeared in an interview on Yahoo Finance to discuss the impact of an unexpected growth in consumer spending on the economy.
Juneau reiterated that economic data is highly volatile and that the retail data released this morning will not impact the Fed’s rate cut decision tomorrow, and he expects the Fed to stick to a 25-basis point cut. As for consumer behavior, the economy is finally moving toward normalization and the consumer’s basket of goods reflects that. These indications, the increasing labor demand, and a stable investment outlook hint that a hard landing is highly unlikely.
The Outlook of Investing Amid Rate Cuts
On September 17, Eric Freedman, US Bank Asset Management Group CIO, appeared in an interview on Yahoo Finance to discuss the rate cut and how investors view investing. Freedman said that the rate cut depends on the Fed’s path, therefore an accurate prediction may not be possible at the moment.
Freedman talks about investment from an individual perspective, suggesting investors must move out of the front end of the yield curve. He then pointed to sectors that are currently providing value to investors, including the consumer discretionary sector, some parts of the energy sector, and tech, especially because investments in the sector are predicted to grow rapidly, well into 2025.
He then discussed what companies need to do to attract investors. Freedman emphasized the need for strong financials and suggested that companies should engage in buybacks or consider increasing dividends. The perfect combination of stocks, according to Freedman, includes companies that are returning cash and seeing strong organic growth.
The future of the economy and the financial market is quite unpredictable. However, some stocks can influence the market not just now, but also in the future. With that, let’s take a look at the best future stocks for the long term.
Our Methodology
To come up with the 10 best future stocks for the long term we looked up growth stocks in the AI, Cloud, Cybersecurity, Biotechnology, Electric Vehicle, and Renewable Energy industries. We then ranked the stocks with the highest number of hedge funds as of Q2 2024.
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).
Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 80
Johnson & Johnson (NYSE:JNJ) is a leading pharmaceutical company that ranks eighth on our list of the best future stocks in the long term. Johnson & Johnson’s (NYSE:JNJ) also has stakes in biotechnology and medical technologies.
In the second quarter of 2024, the company reported sales of $22.4 billion, up 4.3%. Johnson & Johnson (NYSE:JNJ) not only saw success with regulatory approvals for some medications but expanded its footprint in biotechnology. Previously in April, Johnson & Johnson (NYSE:JNJ) acquired Shockwave Medical, a cardiovascular medical device company, enhancing the company’s position in cardiovascular intervention and medical technology. Overall, its MedTech segment logged $8 billion in sales worldwide, up by 4.4% year-over-year.
Johnson & Johnson (NYSE:JNJ) is one of the best future stocks to buy because of its role in medical technology and its growth trajectory across all its departments over the years. The company is expected to deliver over 20 novel therapies and has over 50 product expansions in-store by 2030.
In addition to that, its segments are expected to grow at a compound annual growth rate of 5% to 7%, explaining why analysts are bullish on the company. Analysts 12-month median price target of $170 points to a 2% upside from current levels. Overall, JNJ was held by 80 hedge funds at the close of Q2 2024 and Fisher Asset Management was the largest shareholder with a position worth $1.02 billion.
Overall, JNJ ranks 8th on our list of the best future stock for the long-term. While we acknowledge the potential of JNJ as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than JNJ 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 was originally published on Insider Monkey.