What are the best long term investments

Screening Filters

1. Market Capitalization ≥ $20,000,000,000 (Large Caps)

   • Purpose: Focus on large, established U.S. companies.
   • Rationale:
     • For “best long-term investments,” investors typically look for businesses with proven scale, durable competitive advantages, and resilience across cycles.
     • A $20B+ market cap tilts the list toward mature, relatively stable firms that are less likely to be wiped out by competition or downturns compared with very small companies.
     • This helps align with a long-term, capital-preservation-oriented approach rather than speculative bets.

2. is_index_component: GSPC (S&P 500 constituents only)

   • Purpose: Limit the universe to major, well-followed U.S. companies.
   • Rationale:
     • The S&P 500 is a widely recognized benchmark of leading U.S. businesses. Inclusion requires meeting standards for size, liquidity, and profitability.
     • Focusing on S&P 500 members helps avoid obscure or thinly traded names and concentrates on companies that have passed a baseline quality and stability screen—important for long‑term investing.

3. Return on Equity (ROE) ≥ 12%

   • Purpose: Select companies that generate strong profitability relative to shareholder equity.
   • Rationale:
     • ROE measures how efficiently a company uses shareholders’ capital to generate profits.
     • A 12%+ threshold filters for businesses that have historically created value at an above-average rate, which is attractive for compounding over long periods.
     • This aligns with the idea of “quality” stocks: not just big, but also consistently profitable.

4. Debt-to-Equity (D/E) ≤ 1

   • Purpose: Favor companies with moderate or lower financial leverage.
   • Rationale:
     • High debt can amplify returns in good times but creates significant risk in recessions, rising-rate environments, or industry downturns.
     • Capping D/E at 1 helps avoid companies overly dependent on borrowing to fund operations or growth.
     • For long-term investors, balance sheet strength is crucial—companies with manageable debt loads are more likely to survive and reinvest through tough cycles.

5. Revenue 5-Year CAGR ≥ 7%

   • Purpose: Ensure the company has demonstrated solid, sustained top-line growth.
   • Rationale:
     • A 5-year compound annual growth rate (CAGR) in revenue of at least 7% indicates a business that is expanding faster than inflation and many mature peers.
     • Long-term returns are heavily influenced by a company’s ability to grow sales and reinvest at good returns; this filter distinguishes growing franchises from stagnating ones.
     • It balances stability (large cap, S&P 500) with meaningful growth potential.

Why Results Match Your Question (“Best Long-Term Investments in the US Stock Market”)

• Quality & Durability: Large-cap S&P 500 companies with high ROE and controlled leverage tend to have durable business models and better odds of surviving and compounding over many years.
• Balance of Safety and Growth:
  • Safety: Large size, index inclusion, and lower leverage reduce some business and financial risk.
  • Growth: A 7%+ 5-year revenue CAGR ensures you’re not just getting slow, ex-growth “value traps.”
• Focus on Compounding: High ROE + sustained revenue growth is a strong combination for long-term compounding of earnings and (potentially) share price.
• Practical Investability: S&P 500 constituents are liquid, widely analyzed, and accessible via most brokers and funds, making them realistic long-term holdings.

Do note: these filters intentionally exclude some areas (very small caps, highly leveraged sectors, slower-growth defensives), so they’re aimed at a specific style of long-term investing: large, reasonably high-quality U.S. growth/quality names rather than the entire universe of possible long-term winners.