It was a chaotic end to the trading week on Friday, as investors considered the latest round of troubling headlines. With geopolitical tensions flaring in the Middle East, trade rhetoric ramping up again between the U.S. and China, and hawkish comments from Fed Chair Jerome Powell all hitting the market, the 10-year yield soared over 5% for the first time since 2007, while “safe haven” gold futures (GCZ23) spiked above $2,000 an ounce on rising risk aversion.
While it may seem counterintuitive, buying top-quality stocks on market pullbacks is often one of the best strategies for investors with a long-term mindset. By seeking out companies with strong fundamentals, dominant market positions, and proven track records of navigating through various business cycles, investors can take advantage of the opportunity to snap up these blue chips at a relative discount.
In this piece, we'll highlight three top “forever” stocks with impressive histories of success, top analyst ratings, and solid dividends to help shore up your portfolio - now and indefinitely.
Apple
This Cupertino, Calif.-based tech behemoth hardly needs any introduction. Having revolutionized the tech industry with its innovative products - headlined by the iPhone - Apple (AAPL) has been a ubiquitous brand for decades, and is still going strong.
Along with its hardware, Apple's subscription-based services - like Apple Music, Apple TV, and Apple Arcade - have also gained huge popularity over the years. The most valuable publicly listed company in the world, Apple's market cap currently stands at a gigantic $2.74 trillion.
Apple stock, which offers a dividend yield of 0.54%, is up 33% on a YTD basis.
Although a slowdown in iPhone sales troubled investors last quarter, Apple's EPS still managed to beat expectations. The company reported earnings of $1.26, up 5% from the prior year, and better than the consensus estimate of $1.20. Net sales of $81.8 billion were down 14% from the prior year, but edged past the consensus forecast. Notably, the company's EPS has surpassed expectations in four out of the past five quarters.
Further, Apple continues to make strides in the buzzy generative artificial intelligence (AI) space, albeit in a lowkey manner. With 2 billion active devices worldwide, the iPhone presents a ready market for Apple's impending AI tools. Apple is apparently spending millions of dollars daily to develop a conversational AI model along the lines of Open AI's ChatGPT, and a Bloomberg report says the so-called Apple GPT is more powerful than OpenAI's GPT 3.5 model.
Analysts have a “Moderate Buy” rating on the stock with a mean target price of $206.03. This indicates an upside potential of roughly 18% from current levels. Out of 29 analysts covering the stock, 17 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating, and 9 have a “Hold” rating.
Microsoft
We continue our list with another tech titan, the software giant Microsoft (MSFT). Microsoft, most popular for its Windows operating system for computers, has expanded its range of offerings over the years with productivity applications, business software, and video games. The company is also a major player in the enterprise cloud computing market with its Azure platform.
With a massive market cap of $2.46 trillion, Microsoft continues to dominate with its legacy product suite - and remains at the forefront of the tech revolution through its major investments in the exciting field of AI, as well.
Microsoft's share price has zoomed 37.1% so far in 2023. The stock also offers a dividend yield of 0.82%, and Microsoft recently raised its dividend by 10%.
In its fiscal Q4, Microsoft reported revenues of $56.2 billion - up 8% from the previous year on robust cloud revenues of $30.3 billion (up 21% YoY). EPS came in at $2.69, up 20.6% from the year-ago period. Just like Apple, Microsoft has topped analysts' EPS estimates in four out of the past five quarters, with its next quarterly release set for Oct. 24.
Microsoft's AI credentials are significant. Following its multi-billion dollar investment in ChatGPT maker OpenAI, Microsoft has been steadily integrating AI into its suite of Office 365 products. This is expected to increase business productivity substantially for the existing user base of 345 million. Plus, its search engine Bing's integration with OpenAI's ChatGPT could result in it becoming a serious challenger to Google in the search engine market in the upcoming years.
Analysts are unsurprisingly upbeat about MSFT, assigning it a “Strong Buy” rating with a mean target price of $384.71. This indicates an upside potential of roughly 17% from current levels. Out of 35 analysts covering the stock, 29 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating, and 3 have a “Hold” rating.
Visa
We wrap up our list with payments giant Visa (V). Founded in 1958, Visa is a global payments technology company that connects consumers, businesses, financial institutions, and governments in over 200 countries and territories. It processes over 200 billion transactions annually and has a global network of over 80 million merchants. Its market cap currently stands at $435.31 billion.
Visa's share price is up nearly 13% on a YTD basis, and it offers a dividend yield of 0.77%.
Visa's fiscal Q3 revenues of $8.12 billion were up 12% from the prior year. Meanwhile, its EPS of $2.16 rose by 9% from the previous year, and managed to surpass the consensus estimate of $2.12. The company also reported 9% and 10% improvement in payment volume and processed transactions, respectively, for Q3 2023.
In fact, Visa's EPS has beaten expectations in each of the past five quarters, with the credit card issuer set to release its next quarterly results on Oct. 24.
Visa is a true market leader in the payments space, with a 61% share in issuing debit and credit cards in the U.S. Although a projected rise in credit card delinquencies due to rising debt has the potential to become a concern for the company, its strong liquidity position ($15.6 billion cash reserves) along with its industry-high gross margins leave Visa well-positioned to navigate the environment.
Meanwhile, Visa also recently launched a $100 million AI initiative that will invest in companies focused on developing generative AI technologies and applications to make the processing of payments easier for users.
Analysts have an overall rating of “Strong Buy” for Visa, with a mean target price of $260.85. This denotes an upside potential of roughly 11.8% from current levels. Out of 24 analysts covering the stock, 17 have a “Strong Buy” rating, 4 have a “Moderate Buy” rating, and 3 have a “Hold” rating.
