When investing, a long-term mindset is one of your most powerful advantages. Buying and holding the shares of the best companies is a proven way to build lasting wealth in the stock market. This battle-tested investment strategy comes with a host of benefits — all of which can help you secure your financial freedom.
A long-term buy-and-hold approach can also help you avoid taxes. You don’t need to pay taxes on your share price gains until you sell. So, the longer you hold off on selling, the longer you can defer your tax payments. This has the added benefit of allowing your gains to compound for longer periods of time, which can help you create significantly more wealth.
The key, of course, is knowing which stocks to buy. Below, we’ve assembled a list of our five best long-term stocks to buy.Each one is a high-quality business that we’re confident is positioned to grow for years ahead.
10 Best Long-Term Stocks to Buy Now
Here are the top 10 long-term stocks to buy in 2023:
- Amazon (AMZN)
- Alphabet (GOOG)
- Mastercard (MA)
- Shopify (SHOP)
- Apple (AAPL)
- Tesla (TSLA)
- Meta Platforms, Inc (META)
- Disney (DIS)
- Zoom (ZM)
- Intuitive Surgical (ISRG)
Before we get started diving into the background on each one of these stocks, it’s important to lay out the qualities we searched for when narrowing down our list of best long-term stocks to buy.
- Competitive advantages: Warren Buffett often describes competitive advantages as a “moat.” Simply put, how entrenched is a company to preserve long-term earnings growth and maintain (or gain!) market share across the long run. An example of a high-moat product is Google. It costs billions to build a new search engine, and even then, consumers who have used Google for years have little reason to switch to a competitor.
- A history of share price appreciation: More often than not in the stock market, winners keep on winning. That is to say, while many investors look for opportunities in companies whose stock prices have been beaten down, we’re looking for the opposite. Companies with strong growth in their fundamentals (free cash flow, earnings, etc.) can sustain remarkably extended runs of performance.
- Strong growth rates: Not all winning investments need to be growth stocks. However, if you’re looking for stocks that can follow in the footsteps of multi-decade winners such as Amazon or Apple (Nasdaq: AAPL), you’ll want to see high growth rates that can compound across time.
You’ll find each of these qualities in the stocks listed below. While these qualities don’t ensure they’ll be the best stocks in years to come (remember: no stock is a “sure thing” and each investment carries risk!), we’re confident each of these companies is an excellent choice for long-term investors.
1. Amazon (Nasdaq: AMZN)
It’s hard to imagine a company with a better position to profit from powerful long-term trends than Amazon.
After all, the e-commerce titan dominates online retail in the U.S. and many other areas of the world. Its Amazon Web Services (AWS) division is the global cloud computing leader. Add in a fast-growing digital advertising business, rapidly expanding logistics and shipping operations, a slew of popular hardware devices, and intriguing growth opportunities in grocery stores and healthcare, and it’s clear that Amazon gives its shareholders many ways to profit.
Today, more people are shopping and working online than ever before. That means more profits for Amazon — and more gains for its investors.
2. Alphabet (Nasdaq: GOOG)
Alphabet is the parent company of the well-known search engine Google, as well as other related services like Google Cloud, Google Maps, Chrome, and YouTube to name a few.
After generating over $183 billion in revenue in 2020 and over $257 billion in revenue in 2021, Alphabet has grown into one of the most profitable companies globally.
3. Mastercard (NYSE: MA))
For the growing number of daily transactions occurring online, Mastercard is one of the world’s leading company’s in processing those digital payments.
While Mastercard’s market share is not as big as rival Visa, it’s a smaller company with faster revenue growth, and more room to grow. In the past 5 years, the company’s annual earnings have increased by almost 20%, and its stock has delivered an average annual price appreciation of close to 7 percentage points over the S&P 500.
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4. Shopify (NYSE: SHOP)
Shopify’s stock is another great way to profit from the migration of retail sales to online channels. It’s essentially an operating system that powers the e-commerce operations of more than 1 million businesses around the world. And there’s never been a greater demand for its online retail solutions.
You can use Shopify’s tools to turn any website into a business. In just a few clicks, you can add Buy Buttons and credit card processing functionality that allows people to quickly and easily purchase your products. You can gain access to additional services, such as shipping and fulfillment, as well as marketing support. Shopify is used by large corporations like Staples and Kraft Heinz (Nasdaq: KHC).
In this way, Shopify’s revenue grows along with that of its merchant customers. It’s a formula in which everyone wins, including shareholders.
5. Apple (Nasdaq: AAPL)
This tech stock is a solid choice for long-term investors. The company designs and produces a range of widely popular devices including the iPhone, iPad, and Macbook in addition to services like iTunes and AppleTV.
Apple consistently reports high-ranking revenue numbers and returns for investors. If you invested $5,000 in AAPL five years ago, those shares would be worth around $15,000 today. And with the company constantly innovating, it seems Apple is going to continue to grow.
6. Tesla (Nasdaq: TSLA)
If you are a fan of electric vehicles and believe in the future of electric transportation, then Tesla is a great stock to buy in 2023.
And Tesla isn’t just a car company. They’re also focused on disrupting the solar and battery industry as well.
Many, including Elon Musk, believe we’re still in the early stages of what Tesla might eventually grow to become.
7. Meta Platforms, Inc (Nasdaq: META)
Meta, previously named Facebook, is the social media giant led by creator, Mark Zuckerberg. The company also owns Instram, WhatsApp, Oculus, and more.
All together, Meta’s platforms service over 3.7 billion active users. That’s 1 out of every 3 people on the planet! With such a massive audience, Meta’s stock is likely to continue growing for its investors.
8. Disney (NYSE: DIS)
Disney is one of the rare stocks that you buy and hold for a lifetime. With its timeless collection of beloved characters and storylines, the entertainment titan has rewarded its shareholders for decades. And it’s poised to continue to do so for decades to come.
Throughout its long and storied history, Disney has shown an impressive ability to adapt to changing consumer trends. Most recently, this can be seen in the blockbuster success of Disney+. More than 86 million people subscribed to Disney’s new streaming service in its first year and has grown to a staggering 160 million+ by the end of 2022.
9. Zoom (Nasdaq: ZM)
Did some companies cancel or scale back their Zoom contracts after the pandemic? Sure.
Yet, with many companies now choosing to give employees more flexibility and Zoom becoming a necessity for workplaces across different offices, it’s also now firmly entrenched across most Fortune 500 companies.
While Zoom could continue selling off as investors move from digital stocks that boomed during Covid and into “reopening stocks,” if you’re a long-term investor content to sit on Zoom for years to come the company maintains significant upside.
10. Intuitive Surgical (Nasdaq: ISRG)
Intuitive Surgical was a pioneer in robotic surgeries, which is quickly become a massive industry. Thanks to its dominant market position, Intuitive grew sales more than four-fold last decade. Its profit growth did even better, expanding six-fold. Sales took a small hit in 2020 as many surgeries were delayed during Covid, but in the fourth quarter of 2020, the company saw sales growth of 4% from the prior year.
The bottom line with Intuitive is that their da Vinci robotic devices are not only riding a megatrend on robotic surgeries but the company also possesses a world-class business model that produced better than 30% profit margins in 2019. If you’re looking for a stable company that could grow for decades to come, Intuitive should be near the top of your list.
Should You Invest for the Long-Term?
Why is long-term investing so powerful? Well, it comes down to one word: compounding.
You can think of compound returns as a snowball rolling downhill. By earning returns on top of the returns you already earned, your wealth can grow faster than perhaps what you currently even think is possible.
(I have an example of the power of compounding at the bottom of this article and trust me, it’s mind-blowing stuff!)
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Long-Term Investing Tips
Of course, with thousands of companies trading across the stock market, these five long-term stocks to buy are just a fraction of the opportunities in front of you. If you’re getting started investing or looking to build out your portfolio, here are some important tips to think about.
First invented in 1975, index funds have revolutionized the investing arena. What’s so powerful about index funds? For one, they can be traded easily, just like stocks. Also, their expense fees can be extremely low.
You can buy index funds that can track indexes such as the S&P 500 or the Dow Jones Industrial Average, purchase index funds tracking short-term movements just like the Volatility Index (VIX), or even thematic ETFs such as ones that invest in innovative companies like Tesla (Nasdaq: TSLA) or Netflix (Nasdaq: NFLX).
The bottom line: while we’ve discussed some outstanding individual stocks for long-term investors, buying index funds that offer diversified exposure has never been easier or cheaper. If the idea of managing a portfolio of stocks is intimidating, then I encourage you to read our complete guide on index funds.
Risk is present in every stock you purchase. While Amazon may have a market capitalization of $1.6 trillion and a dominant market position, its valuation is considered stretched by many on Wall Street. A bear market could swiftly decrease the share price of even the most entrenched technology stocks.
So, you need to ask yourself what level of risk you’re comfortable with. Outside technology, stocks like Warren Buffett’s Berkshire Hathaway could provide excellent returns and a stable balance sheet that’s composed of businesses that are diversified across industries.
If you’re looking to maintain exposure to high-growth areas like cloud computing but also want to minimize your risk, a stock like Microsoft (Nasdaq: MSFT) could be of interest. The company sports a market cap that’s similar to Amazon’s (about $1.7 trillion). However, it also offers a dividend yield of about 1%. Investors have received dividend payments of $2.09 a share across its past fiscal year.
Microsoft isn’t without risk, but its P/E multiple of 35 is significantly lower than Amazon’s multiple of 95, for example.
Recently, many of the market’s top-performing stocks come from areas such as SPACs, which are special acquisition companies that allow startups to begin trading without going through a traditional IPO process. While many of these opportunities are exciting, just remember that they do carry significant risks!
Compound Interest of Long-Term Investments
Earlier I discussed the power of compounding and keeping a long-term focus on your investments. So, before wrapping up this article, let’s take just a moment to look at what happens when you keep your money invested for long periods of time.
The stock market, as measured by the S&P 500 — an index of the 500 largest companies in the United States — has historically returned about 10% per year on average.
Here’s what that would look like to someone who invested $10,000 in stocks:
- After 10 years, you’d have $25,937
- After 20 years, you’d have $67,275
- And after 30 years, you’d have $174,494
And the numbers would continue to grow from there. The bottom line? The earlier you’re able to get your money compounded, the more you’ll have in retirement or when you need it the most.
Better still, when you invest in elite businesses with strong competitive positions and outstanding growth prospects, such as the ones listed here, you can generate even higher returns — and create a fortune for yourself along the way.
Looking for more stock ideas beyond our best long-term stocks to buy? Try our top 15 stocks for beginners that feature three times the number of stocks you just discovered above!