Susan Dziubinski: I’m Susan Dziubinski, co-host of The Morning Filter podcast. The holidays are upon us. Why not spread some holiday cheer by gifting a stock to a close family member or friend? Or how about giving them some money they can invest themselves, along with a good stock tip or two from Morningstar?
Today, we’re talking about three stocks we think would make good holiday gifts as long-term investments. All of these stocks are from companies with wide economic moats. We expect companies with wide moats to remain competitive for 20 years or more. These companies also own brands that we’re all familiar with and love. They’re companies we connect with and, as a result, we may be more likely to invest in them for the long term. And lastly, these stocks are all trading below what Morningstar thinks they’re worth.
3 Top Stocks to Watch This Holiday Season
The first top stock to buy this holiday season is Pepsi. Pepsi is a global leader in snacks and beverages. And we think the company has carved out a wide economic moat with its portfolio of brands that includes Pepsi, Mountain Dew, Gatorade, Lays, Cheetos, and Doritos, among others. Growth has stalled during the past couple of years due to sluggish performance in its snacks business, but we think the stock is a good long-term buy, as a new emphasis on health-focused product innovation and cost-cutting should bear fruit in the coming decade. We think Pepsi’s stock is worth $166 per share.
Read Morningstar’s full report on Pepsi.
The second good holiday stock to buy for the long term is Nike. The largest athletic footwear and apparel brand in the world has carved out a wide economic moat. Granted, the company has faced its share of problems lately, including a lack of product innovation, soft demand for its sportswear, and increased competition. But we think the company’s “win-now” plan is solid, with its renewed focus on key partners, products, and connections to international athletics. And we think the market is underestimating Nike’s potential to build operating margins through product releases, new marketing, and price hikes. We think Nike’s stock is worth $104.
Read Morningstar’s full report on Nike.
The final good stock to buy for the holidays is Alphabet GOOGL. Alphabet’s famous brands include Google Search and YouTube. We view Alphabet today as a conglomerate of successful businesses that range from advertising to cloud computing to self-driving cars. Antitrust concerns around the search business have made headlines, but we’re confident that the company will remain at the forefront of many businesses over the long term, including search, AI, video, and cloud computing. We think Alphabet’s stock is worth $340.
Read Morningstar’s full report on Alphabet.
For more stock ideas, tune in to The Morning Filter, wherever you get your podcasts. And visit Morningstar.com, too.
Morningstar senior analyst David Swartz and analysts Malik Ahmed Khan and Dan Su provided the research behind this segment.
Watch 3 More Good Stocks to Invest in After Earnings for more from Susan Dziubinski.
