6 Top Stock Picks for the Next 5 Years

Motley Fool co-founder and CEO Tom Gardner engages in an insightful discussion with Chief Investment Officer Andy Cross about promising investment opportunities in the stock market.

During this engaging podcast episode, Tom Gardner delves deeply into the critical task of distinguishing genuine artificial intelligence leaders from mere followers in the industry. He highlights his preferred market indicators that help guide investment strategies and draws valuable lessons from the historic dot-com bubble era. Furthermore, Tom generously shares his selection of six compelling stock recommendations poised for strong performance over the coming five years.

This podcast session was captured on February 8, 2026.

Spotlighting TransMedics as a Standout Investment

Tom Gardner: TransMedics has masterfully developed their innovative organ care system. The company is led by one of the most exceptional CEOs in the United States today. It has proven to be an outstanding performer in our portfolio. Our average cost basis for some of those shares sits around the 15 to 20 dollar range, while the current trading price hovers near 145 dollars per share. Looking ahead, I firmly believe there is substantial upside potential, potentially tripling in value over the next six to seven years for shareholders of TransMedics as the company continues its robust expansion efforts.

Mac Greer: That insightful commentary came from Motley Fool co-founder and CEO Tom Gardner, who highlighted TransMedics as one of his top stock choices for the next five years. As the producer for The Motley Fool, I’m Mac Greer. Recently, Motley Fool Chief Investment Officer Andy Cross had an in-depth conversation with Tom for the Stock Advisor podcast series. Their discussion covered the prevailing conditions in the stock market landscape. Tom revealed two key market indicators he relies on heavily and presented six of his most favored stock ideas moving forward. Andy initiated the conversation by inquiring about Tom’s perspective on artificial intelligence.

Distinguishing True AI Leaders from Impostors

Andy Cross: When evaluating potential investments, how do you approach the challenge of identifying authentic AI contenders versus those that are merely pretending to be leaders in the field? What criteria do you use as both an analyst and an investor studying various companies?

Tom Gardner: One essential aspect to examine is the depth of cultural transformation within the organization, coupled with thorough research into their operations. The number of holdings in your portfolio plays a role, as does your ability to recognize patterns in their decision-making processes. However, the key is to observe bold, decisive cultural shifts because the ultimate victors in this space will be companies that are inherently native to AI from their inception. This mirrors what happened during the internet revolution, where the winners were those fully embedded in the digital realm. Google, for instance, wasn’t attempting to digitize a chain of physical bookstores or transform traditional universities into online platforms. Instead, it was built entirely around the internet, without a second thought. Many people are still grappling with this concept, though it’s becoming increasingly evident as we witness profound shifts in corporate cultures. Yet, there’s a crucial realization: established companies with thousands of employees, say 2,800, could potentially be overtaken by leaner outfits with just 108 highly skilled workers.

For a longstanding technology firm to achieve such efficiency, it must drastically reduce its workforce from 2,800 to perhaps 400, all of whom are deeply immersed in AI-native practices. These employees would be advanced AI specialists, fully committed without hesitation. They wouldn’t abandon the technology after a single flawed output from a basic prompt. Instead, they’d refine their inputs persistently, treating AI as a powerful tool to mold to their needs. Investors should seek evidence of companies onboarding teams with cutting-edge technological expertise and empowering them to take charge—a challenging endeavor indeed.

We received invaluable guidance from external technology advisors at The Motley Fool, who recommended revisiting Andrew Grove’s seminal book, ‘Only the Paranoid Survive,’ during major technological disruptions. Current leaders may not retain their positions unless they awaken with an unyielding commitment to the new paradigm. Incremental changes won’t suffice against agile newcomers who operate natively with these tools. We witnessed this at publications like Time Magazine and Businessweek in the 1990s. Despite our admiration for their established brands, massive balance sheets, and market dominance over the prior 15 years, their commercial viability crumbled. Many were acquired for pennies or saw their stock prices plummet by 95 percent.

To determine true contenders, demand concrete proof of AI nativity. The most straightforward examples are startups born in this era that go public fully leveraging these technologies. Established players in denial face significant cultural hurdles. Take Duolingo, for example—some executives expressed reservations about AI integration about a year ago, sparking internal debates. Yet, those concerns were prescient. The challenge lies in balancing respect for existing employees with the urgent recognition that failure to adapt immediately risks obsolescence and job losses across the board. This is unprecedented; while the internet transition offers parallels, AI’s pace is exponentially faster, with deeper, more thrilling, terrifying implications.

Therefore, prioritize companies that are wholly committed, not merely transitioning. They should be generating all aspects of their operations through AI integration in the workplace.

Andy Cross: Founders like Toby, who hold substantial ownership stakes and openly champion this approach, serve as strong signals of such commitment, Tom.

Tom Gardner: Excellent observation, Andy. I recall a founder-CEO stating pity for public company leaders without founder status, as they navigate slow bureaucratic board processes. As the founder, visionary guide, and largest shareholder, one can decisively push for immediate, rapid changes without endless procedural hurdles.

Andy Cross: Indeed, with significant personal equity and dedicated effort backing those pivotal decisions.

Key Market Indicators Guiding Investment Strategy

Andy Cross: You maintain a prudent, measured approach to investing, yet the AI-powered indicator from Hidden Gems has shifted more positively regarding market outlook. Could you explain why, perhaps define the tool, and discuss its influence on your overall perspective?

Tom Gardner: I primarily rely on two market indicators to inform and adjust my investment posture, using them to fine-tune allocations rather than making sweeping all-in or total-exit moves. Extreme predictions occasionally succeed but generally prove neutral at best, often triggering unnecessary tax consequences. Instead, we should encourage investors globally to adopt incremental strategies, acknowledging that equity markets trend upward over extended periods, despite occasional downturns. While extremes like Japan’s market since 1989 exist, the U.S. market’s dynamism, robust regulations, and competitive nature mitigate such risks.

Anticipate periodic 40 percent declines in a healthy market. Working backward from such a scenario is prudent: if your million-dollar portfolio drops to 600,000 dollars, the psychological and lifestyle impact is severe, especially nearing retirement when income-generating years dwindle. Though the Great Depression was catastrophic, modern safeguards provide greater resilience. Using 40 percent as a benchmark, my first indicator is the Potential Growth Indicator (PGI), and the second is the AI-powered Market View tool.

PGI tracks cash flows entering and exiting the market. Abundant sidelined cash signals buying opportunities as it flows back in; conversely, fully invested markets limit upside even amid stellar earnings or innovations. Currently, it suggests moderate overvaluation, projecting 8.5 to 9 percent annual returns rather than the historical 10 to 11 percent for U.S. equities—prompting a cautious, tempered stance.

The Market View tool aggregates vast data streams beyond mere cash flows: projected cash flows for all U.S. equities, valuation multiples (current and historical), interest rates, unemployment figures, and more. Updated monthly, it forecasts 10.5 to 11 percent annual growth. Key drivers include impending margin expansions. Companies with 2,500 employees could operate with 250 via AI, either through new entrants or incumbents slashing costs dramatically based on cultural agility.

Vinod Khosla of Khosla Ventures recently noted Silicon Valley’s prior benchmark of one million dollars revenue per employee; AI elevates this to five to ten million. This implies either universal 5-10x productivity gains or 80 percent workforce reductions—or a blend thereof. Dynamics will favor tool-adopters becoming super-producers while others face performance-based exits. Resulting improvements in operating, gross, net margins, and cash flows will boost profitability and valuations.

These gains will disproportionately benefit leading S&P 500 technology firms, already dominant in market capitalization. Continued outperformance there could yield closer to 10.5 percent annually. Projections range from 8.5 to 10.5 percent—not a vast disparity, yet representing about 30 percent variability. Lower ends suggest heightened volatility, fewer blockbusters; higher ends promise excitement, big winners, especially in emerging tech, alongside a surge in IPOs. Personally, I lean moderate, favoring cautious alongside moderate picks over aggressive, while maintaining diversification.

AI’s Potential Impact Compared to the Dot-Com Era

Andy Cross: It’s astonishing to consider AI eclipsing the internet boom’s market drama, as you described. The Nasdaq plunged nearly 75 percent then, devastating businesses. Do you foresee a similar or amplified scenario with AI?

Tom Gardner: The Nasdaq’s 2001 collapse stemmed primarily from exorbitant valuations. Historical comparisons of peak growth stock multiples reveal today’s levels are far more reasonable. Moreover, today’s companies boast superior quality versus 25 years ago. Recent IPO activity has been subdued; dominance lies with cash-rich tech giants leveraging AI talent and vast data troves—data consumers arguably deserve compensation for, absent regulation.

These incumbents amplify data value, solidifying leads. Unlike dot-com era’s DrKoop.com, while some like C3 AI appear speculative—we flagged it early as avoidable, given its thematic name shifts from C3 IoT and C3 Energy—leaders are profitable with fortress balance sheets. Enthusiasm for AI persists, despite studies questioning short-term ROI; early internet investments weren’t immediately profitable either, yet executives report substantive internal transformations in product creation, marketing, and workforce development.

Change unfolds within cash-generative entities, mitigating meltdown risks. Jeremy Grantham’s dire warnings merit respect, though his extremes contrast my preference for consistent moderation, which could educate more effectively. Collapse precursors include: elevated valuations (not from unprofitable shells); mega-IPO dilutions like SpaceX at 1.8 trillion dollars diverting capital; laggards failing upgrades, exemplified by SaaS firms and Chegg’s ChatGPT-induced nosedive from 105 to one dollar per share—avoid such vulnerable niches.

Consumer discretionary faces headwinds from wage stagnation as AI streamlines staffing, curbing raises and sparking transitional unemployment. New enterprises and entrepreneurship are vital for rebalancing, potentially yielding deflationary pressures from cautious spending. Cybersecurity looms large, with geopolitical adversaries targeting U.S. financial prosperity via cyber warfare. Finally, per-industry analysis: identify AI frontrunners, favoring founder-led or high-insider-ownership firms for swift decisions. Vinod Khosla noted 90 percent of stalled internal AI initiatives suffer sabotage from threatened roles—embrace discomfort for progress.

Six Stock Recommendations Across Risk Profiles

Andy Cross: Tom, as long-term investors, let’s focus on the next five years and beyond. Could you suggest one cautious, one moderate, and one aggressive stock?

Tom Gardner: I prepared for that but expanded to two per category given abundant opportunities. For cautious picks: Deere, revolutionizing agriculture through automation, and MSCI.

Andy Cross: A nod to the past there.

Tom Gardner: Indeed, MSCI has fluctuated between 540 and 600 dollars for us, underperforming lately, yet its fundamentals shine with over 35 percent return on assets—a cash machine via an asset-light model. Deere’s ticker is DE, MSCI is MSCI.

Moderate selections: Intel, bolstered by U.S. national security-driven foundry investments after prior missteps. Modernization efforts, plus bipartisan governmental backing—from Biden and Trump eras—and a stellar CEO from Cadence Design Systems position it well. Ticker: INTC.

Second moderate: United Therapeutics (UTHR), founded by NASA scientist Martine Rothblatt to combat her daughter’s rare, often lethal pulmonary arterial hypertension. From that personal mission sprang a 20 billion dollar enterprise, now collaborating with NASA on the International Space Station to cultivate organs in microgravity—organs that collapse under Earth’s gravity. This could rival aggressive pick TransMedics in 15 years.

TransMedics (TMDX) features the organ care system addressing the tragedy that most donated organs never reach recipients due to ice preservation delays. With an elite U.S. CEO, it’s delivered stellar returns—our basis around 15-20 dollars, now at 145—with 3x potential over six to seven years via expansion.

Final aggressive: Aritzia (ATZAF), a Canadian retailer masterfully expanding profitable boutiques into the U.S. My sister tipped it off; we entered Stock Advisor near 67 dollars, now 87, with a 10 billion dollar market cap. Vertically integrated with private labels, boasting exceptional growth and financials after Canadian dominance.

Thus, my six: MSCI, Deere, Intel, United Therapeutics, TransMedics, Aritzia.

Andy Cross: Fantastic—not three, but six. Thanks for doubling up, Tom.

Tom Gardner: Andy, though you’re hosting, share a stock or two you favor?

Andy Cross: For moderate growth, Medpace (MEDP), a contract research organization linked to rebounding biotech funding. As rates ease, activity should accelerate. Founder-led, with superior financials, client ties, and leadership despite smaller scale versus peers.