3 No-Brainer Stocks With Long-Term Prospects to Buy With $100 Right Now

In the ever-evolving landscape of the stock market, finding undervalued stocks with strong long-term prospects can be a game-changer for investors. With the market conditions as of April 5, 2025, there are several stocks that stand out as no-brainers for long-term investment. These stocks not only offer solid financial metrics but also have qualitative factors that make them attractive for patient investors. Let's dive into three such stocks: Berkshire Hathaway, Target, and Kraft Heinz.

Berkshire Hathaway: A Diversified Powerhouse

Berkshire Hathaway, led by the legendary Warren Buffett, is a holding company with a diverse portfolio of businesses. This diversification reduces risk and provides stability, making it a reliable choice for long-term investors. Berkshire's portfolio includes insurance (GEICO), railroads (BNSF Railway), energy and utilities, and various other enterprises. Additionally, Berkshire holds significant stakes in well-established and profitable companies like Apple, Bank of America, American Express, Chevron, and Coca-Cola.



Target: A Retail Giant with Strong Fundamentals

Target, one of the largest retailers in the U.S., has faced challenges in 2024, with its shares lagging behind competitors like Costco and Walmart. However, Target retains strong fundamentals that make it an attractive long-term investment. With a forward price-to-earnings ratio of 15.70%, investors can expect a 6.4% earnings yield. Target is also a Dividend King, having increased dividends for over 50 consecutive years, demonstrating its commitment to shareholder returns.

Kraft Heinz: A Defensive Sector Play

Kraft Heinz, known for its macaroni and cheese and ketchup offerings, is trading under book value at 0.78, indicating that its stock price is lower than its net asset value. This makes it potentially undervalued by the market. Operating in a defensive sector, Kraft Heinz has a five-year monthly beta of 0.52, indicating it is half as volatile as the market. The company boasts an operating margin of 20.78% and a profit margin of 10.62%, showing robust profitability. Additionally, Kraft Heinz offers a solid dividend yield of 5%, which is sustainable with a payout ratio of 69.87%.

Current Market Conditions and Economic Indicators

The current market conditions and economic indicators significantly influence the potential growth and stability of these stocks over the next five to ten years. Despite a bull market in 2023 and 2024, value investors can still find undervalued companies on sale. This suggests that there are opportunities for long-term growth, even in a bullish market. For instance, companies like Berkshire Hathaway, Target, Kraft Heinz, British American Tobacco, and Johnson & Johnson are considered undervalued and have strong fundamentals that could support long-term growth.

However, the economic outlook, including factors like interest rates and inflation, plays a crucial role. The "Roaring 2020s" scenario, which assumed significant economic acceleration due to onshoring, government stimulus, and productivity gains from AI, is now threatened by big cuts in federal financing and new tariffs. This could fuel a second wave of inflation, requiring higher interest rates, which could negatively impact growth stocks.

Sector Performance and Market Valuations

Specific sectors may perform better or worse based on economic conditions. For instance, the tech sector saw a decline in 2024, but companies like Nvidia, Nu Holdings, and Toast are still considered undervalued growth stocks with strong long-term potential. Nvidia, for example, is expected to see earnings grow at over 64% CAGR over the next three years, making it an attractive long-term investment.

Market valuations and stock market concentration reached close to record highs in 2023-2024, driven by optimism in the AI growth opportunities. However, the new Trump 2.0 regime puts this growth scenario at risk, which could affect the stability and growth of undervalued stocks. For example, the high valuation of the entire market, and particularly that of growth stocks, tends to coincide with the length of the horizon that the markets expect the economy to grow undisrupted with little to no risk.

Mid-Cap Stocks and Earnings Growth

Mid-cap stocks are expected to outperform once the US Fed initiates cutting rates. Historically, mid-caps outperform large- and small-cap stocks over the 12 months after the first rate cut. This suggests that mid-cap undervalued stocks could see significant growth in the coming years. For instance, Shopify Inc. (NYSE:SHOP) is a mid-cap stock with strong fundamentals and a competitive advantage, making it a potential long-term winner.

Positive expected earnings growth, cooling inflation, easing policies of central banks, and firm job creation are expected to create a strong backdrop for risk assets. This could benefit undervalued stocks, as they often have strong fundamentals and the potential for long-term growth. For example, companies like Nvidia, Nu Holdings, and Toast are expected to see significant earnings growth in the coming years, making them attractive long-term investments.

Conclusion

In conclusion, the current market conditions and economic indicators suggest that undervalued stocks have the potential for growth and stability over the next five to ten years, provided that economic conditions remain favorable and interest rates do not rise significantly. However, investors should be cautious and consider the risks associated with undervalued stocks, as they may be cheap for a reason. By considering the financial metrics and qualitative factors of stocks like Berkshire Hathaway, Target, and Kraft Heinz, investors can make informed decisions about the long-term prospects of these stocks.