Best Long-Term Stocks in December 2024 – Based on 5yr CAGR

Long-term stock investments involve holding onto stocks for several years, allowing investors to ride out market ups and downs while benefiting from steady growth over time. This approach takes advantage of compounding, where the value of investments grows faster as time passes. It’s one of the strategies used for reaching major financial goals, such as retirement or buying a house. By staying invested for a long time, investors can see their wealth grow steadily, as they can avoid reacting to short-term market fluctuations. In this article, check the best long term stocks in December 2024 in India, based on 5-yr CAGR and also learn the pros and cons of investing in them, who should invest and factors to consider before investing in them.

Best Long-Term Stocks in December 2024 – Based on 5yr CAGR

Note: The best long-term stocks in India listed here are as of December 2, 2024. The stocks are selected from the Nifty 500 stock universe, with positive Return on Equity (ROE) and Return on Capital Employed (ROCE), and sorted as per their 5-year CAGR.

Overview of the 5 Best Long-Term Stocks in India

1. Lloyds Metals And Energy Ltd

Lloyds Metals & Energy is engaged in the manufacturing of sponge iron, power generation and mining activities. In FY 2024, the company’s total income was ₹65,746 million, compared to ₹34,668 million in FY 2023, with 90% growth YoY. The profit for the year ended March 31, 2024, was ₹12,439 million, up from a loss of ₹2,885 million in FY 2023.

Key metrics:

• ROCE: 58.69%
• ROE: 57.28%

2. PTC Industries Ltd

PTC Industries is engaged in the manufacturing of metal components for critical and supercritical applications for industries like oil & gas, Liquefied Natural Gas (LNG), defence, ships & marine etc. In FY 2024, the company’s total income was ₹27,025.84 lakh, compared to ₹22,673.48 lakh in FY 2023. The profit for the year ended March 31, 2024, was ₹4,221.58 lakh, up from ₹2,581.51 lakh in FY 2023.

Key metrics:

• ROCE: 9.22%
• ROE: 8.87%

3. CG Power and Industrial Solutions Ltd

CG Power & Industrial Solutions operates via 2 main business segments: Industrial Systems and Power Systems. The company manufactures traction motors, propulsion systems, and signalling relays for Indian Railways, along with a wide range of induction motors, drives, transformers, switchgear, and other products for the industrial and power sectors. The company has also ventured into the consumer appliances market, offering products like fans, pumps, and water heaters. In FY 2024, the company’s total income was ₹8,152 crore, compared to ₹7,040 crore in FY 2023. The profit for the year ended March 31, 2024, was ₹1,427.61 crore, up from ₹962.97 crore in FY 2023.

Key metrics:

• ROCE: 55.12%
• ROE: 59.33%

4. HBL Power Systems Ltd

HBL Power System Ltd is involved in the manufacturing and services of different types of batteries, e-mobility, and other products. In FY 2024, the company’s total income was ₹2,251.26 crore, compared to ₹1,386.36 crore in FY 2023. The profit for the year ended March 31, 2024, was ₹280.89 crore, up from ₹98.65 crore in FY 2023.

Key metrics:

• ROCE: 30.98%
• ROE: 25.87%

5. Rattanindia Enterprises Ltd

RattanIndia Enterprises Limited belongs to the Rattanindia Group. The company contains tech-focused new-age businesses, including e-commerce, electric vehicles, and drones. In FY 2024, the company’s revenue from operations was ₹56,096.35 million, compared to ₹41,237.90 million in FY 2023. The profit for the year ended March 31, 2024, was ₹4,244.54 million, up from a loss of ₹2,861.43 crore in FY 2023.

Key metrics:

• ROCE: 63.45%
• ROE: 67.54%

Pros of Long-Term Stock Investments

• Compounding Growth: Over time, long-term investments benefit from compounding, where your returns generate additional earnings.
• Lower Volatility: Stocks tend to experience short-term fluctuations, but holding investments for the long term can help smooth out these ups and downs, as the market typically grows over time.
• Wealth Accumulation: Consistent, long-term investments allow for capital appreciation. Over time, even small investments can accumulate into substantial wealth, especially when the company grows and its stock price rises.

Risks of Long-Term Stock Investments

• Market Fluctuations: While the market generally grows over time, it can still experience periods of economic downturns, which can negatively affect stock prices. The value of investments might decrease temporarily or even long-term.
• Company-Specific Risks: The success of a stock is tied to the performance of the company. If the company faces financial difficulties, management issues, or industry disruptions, its stock price may decline.
• Liquidity Risk: Long-term stocks might not always be easily sold at the desired price. If the market or company performs poorly, it could be harder to find buyers.
• Changing Market Conditions: Over a long period, economic conditions, regulations, and market trends can change, and companies may not be able to adapt quickly, which could affect their performance and stock price.

Who Should Invest in Long Term Stocks in India?

Long-term stock investments can be for individuals who are looking to build wealth gradually and can endure short-term market fluctuations. For investors planning for significant milestones like retirement, buying a house, etc., long-term stocks offer the potential to accumulate substantial wealth, outpacing inflation and traditional savings methods.

Investors who are focused on wealth creation, rather than seeking quick profits, should consider these types of investments. By committing to long-term holdings, investors can take advantage of the power of compounding, allowing their money to grow and compound exponentially over time.

How to Select the Best Stock for Long Term Investment?

Selecting the right stock for long-term investment requires careful analysis. Here are some key factors to consider:

1. Strong Financial Health: Look for companies with solid financials, such as steady revenue growth, low debt, and strong cash flow. A healthy balance sheet indicates a company’s ability to weather downturns and invest in future growth.
2. Consistent Track Record of Growth: Research companies that have a consistent history of growth, both in terms of revenue and earnings. Companies with a stable and proven growth track record are more likely to perform well in the long run.
3. Industry Leadership: Invest in companies that are leaders in their industry. Such companies often have competitive advantages, such as strong brands, large market shares, and innovative products or services.
4. Management Quality: Strong, visionary leadership is critical for a company’s long-term success. Look for companies with experienced management teams that have a proven track record of making sound business decisions and navigating challenges.
5. Growth Potential: Consider the company’s long-term growth prospects. Is the company entering emerging markets or expanding its product offerings? A company with clear growth strategies and opportunities in place is more likely to thrive in the long run.

Conclusion

Apart from the stocks listed here, there are several other long-term stocks in India. Understand the company’s business, financial performance and their future outlook before investing. Talk to a financial advisor before making a decision.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.