1 Stock to Buy in 2024 and Hold for the Next 5 Years

Core Viewpoint - Investors are finding it challenging to locate bargains in the stock market, but Tencent Holdings Limited presents an attractive investment opportunity with a strong long-term outlook [1] Company Performance - Tencent has been profitable every year since its IPO in 2004, with net profit increasing from 447 million yuan in 2004 to 188.7 billion yuan in 2022, representing a more than 400-fold increase [2] - The company's flagship app, WeChat, has over 1.3 billion users and generates revenue through various services including advertising, entertainment, and e-commerce [2] - Tencent's gaming business is a significant revenue source, owning major companies like Riot Games, Supercell, and a stake in Epic Games, ensuring a steady income stream [3] Investment Strategy - Tencent has a strong track record in capital allocation, successfully investing in companies like JD.com, Pinduoduo, and Sea Limited, as well as acquiring minority stakes in firms like Tesla and Snap [3] Market Challenges - Chinese companies, including Tencent, have faced challenges such as U.S.-China tensions, government crackdowns, and pandemic-related issues, leading to a 1% revenue decline and a 17% drop in net profit in 2022 [6] - Despite these challenges, Tencent's revenue and operating profit improved by 11% and 35%, respectively, in the first nine months of 2023 [6] Regulatory Environment - Proposed new regulations by the Chinese government to control online gaming spending may impact Tencent's gaming income, contributing to bearish sentiment among investors [7] Valuation - Tencent's stock is currently trading at a price-to-earnings (P/E) ratio of 13.4, which is half of its five-year average, indicating an attractive valuation for long-term investors [7]