After two dismal years, stocks are finally staging a big rally. The latest inflation reading for October showed that consumer prices are continuing to come down, increasing the likelihood that interest rates have now peaked and will begin moving lower in 2024. While the near-term trend looks encouraging, most investors have longer time horizons than the next six months or year. Most people saving for retirement have their sights set on 2030 or even out to 2040. For those investors, a long-term buy-and-hold strategy makes the most sense. This requires picking stocks today that will perform reliably throughout the long-term, providing consistent gains that grow a portfolio over many years. Here are three long-term stocks to buy and hold until 2040 for proven gains.
Home Depot (HD)
Home Depot (NYSE:HD) has just reported strong third-quarter financial results that beat Wall Street forecasts. The home improvement retailer announced earnings per share (EPS) of $3.81 versus $3.76 that was expected among analysts. Revenue in the period totaled $37.71 billion, topping estimates of $37.60 billion. The earnings beat came about despite Home Depot’s comparable sales falling 3.1% in Q3 from a year earlier. However, that decline wasn’t as bad as the 3.6% analysts had penciled in for the company.
Looking ahead, Home Depot provided cautious guidance and lowered its full-year outlook, saying it now expects that its sales will fall by 3% to 4% and earnings per share will come in 9% to 11% lower than in 2022. While the big box retail chain has faced headwinds that include high mortgage rates and high inflation that have led homeowners to put off big-ticket purchases and renovation projects, the long-term story on Home Depot remains intact. HD stock is flat over the last year but up 72% across five years.
Microsoft (MSFT)
Microsoft’s (NASDAQ:MSFT) stock looks to have its mojo back and is flying high in the current market rally. After trailing other mega-cap tech stocks for most of this year, MSFT stock has risen 10% so far in November and is now trading at an all-time high. For the year, Microsoft’s share price has gained 55%. The current leg up comes as excitement intensifies about the company’s role in artificial intelligence (AI), and after it successfully completed its $68 billion acquisition of video game maker Activision Blizzard.
MSFT stock is now on its longest win streak since January 2021, according to market data. However, investors needn’t worry that they’ve missed the rally. The median price target on Microsoft’s shares among 43 professional analysts is 11% higher than where the stock currently trades, suggesting more upside ahead. Beyond the hype surrounding AI and video games, Microsoft’s stock has been helped by the company’s strong Q3 print, with cloud-computing showing particularly strength.
MSFT stock remains a long-term buy and hold security.
Chipotle Mexican Grill (CMG)
Is there a better restaurant stock to own long-term than Chipotle Mexican Grill? (NYSE:CMG). CMG stock has gained 20% in the last month, is up 60% year-to-date, and has gained 360% over the past five years, outperforming nearly all other quick service restaurant chains and many tech stocks. The company continues to outperform thanks to a combination of relentless growth and quarterly earnings beats. Most recently, the company’s Q3 financial results topped Wall Street estimates on the back of higher prices.
In October, Chipotle raised its menu prices for the first time in more than a year, citing rising food inflation for the increase. The company had halted its price hikes earlier this year as consumers pulled back their spending on discretionary food items. However, company executives say that Chipotle has pricing power, or the ability to raise prices without losing customers. The price increases are an example of how Chipotle thrives in any environment.
The company also puts a premium on growth, opening 62 new restaurant locations during Q3 of this year. In 2024, Chipotle plans to open 285 to 315 new restaurants. For buy-and-hold investors in search of long-term growth, CMG stock should be viewed as a top pick.
On the date of publication, Joel Baglole held a long position in MSFT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.