Many high-quality S&P 500 shares are effectively off their highs proper now. So there are a variety of alternatives for long-term buyers like myself.

Right here, I’m going to spotlight two S&P shares I imagine are value contemplating in the intervening time. I feel that in two years, these two shares are prone to be buying and selling at a lot increased ranges than they’re right now.

Double-digit features?

Let’s begin with ‘Magnificent 7’ inventory Microsoft (NASDAQ: MSFT). It’s presently buying and selling for round $381, about 19% under its all-time excessive of $468.

Whereas this firm is among the largest on this planet, it nonetheless has loads of development potential. It’s one of many world’s most dominant gamers in cloud computing, and this business is forecast to develop by greater than 10% a yr over the subsequent decade.

Microsoft can be a number one participant in synthetic intelligence (AI), video gaming, and enterprise productiveness software program. And these industries have a variety of development potential too, particularly in AI.

For the yr ending 30 June (FY26), analysts anticipate earnings per share (EPS) to be round $14.90, up 14% yr on yr. Let’s say that the corporate can develop its earnings at 10% a yr over the next two years.

That may take EPS to round $18 by FY28. Stick an earnings a number of of 27 on this (roughly the price-to-earnings ratio proper now) and we’ve a price goal of $486.

That equates to a achieve of about 28% from right here. If the inventory was to get there within the subsequent two years, it could translate to a return of about 13% a yr (14% when dividends are included) – not dangerous for a large-cap inventory.

After all, my forecasts right here might be manner off the mark. If the worldwide economic system weakens considerably within the subsequent two years, cloud spending may drop sharply and Microsoft’s earnings development may stall.

I’m optimistic concerning the long-term development story although. I simply purchased some extra Microsoft shares for my very own portfolio.

Monumental potential

One other S&P 500 inventory I imagine has potential to carry out effectively over the subsequent two years is Palo Alto Networks (NASDAQ: PANW). It’s the biggest participant within the cybersecurity business.

The cybersecurity market seems set for enormous development within the years forward, and this firm is effectively positioned to profit. Just lately, it has been pivoting to a ‘platformisation’ mannequin the place it will probably supply complete safety to its clients through a number of completely different platforms (as a substitute of offering particular person options).

This pivot has slowed development within the quick time period. However in the long term, it ought to assist it. At the moment, analysts anticipate income and earnings development of 15% and 14% respectively for the yr ending 31 July. If the corporate can proceed to develop at that tempo (and it could not as cybersecurity is a aggressive business and the corporate is up in opposition to the likes of CrowdStrike and Fortinet), its share price may rise considerably.

It’s value noting that the typical analyst price goal for Palo Alto Networks is presently $211. That’s about 26% above the present share price.

That’s the 12-month price goal nevertheless. If world markets get well over the subsequent two years, and the corporate sees sturdy income and earnings development, the share price might be even increased in 2027.