Investing in the stock market comes with a degree of risk. Yet, we all know that stocks is a wealth-building vehicle.
And, despite the risk, there is also a good feeling knowing that you own a piece of a company.
The problem is, however, there are tens of thousands of stocks from which you can select.
This can make choosing the best stocks to buy now difficult. That is why we are here.
We have done the research on the top stocks to buy. If you’re looking to build wealth in investing in stocks, keep reading.
So, what are the best stocks to buy right now in 2022?
Apple Inc (AAPL), Amazon.com Inc (AMZN), Alphabet Inc. (GOOG), Microsoft Corporation (MSFT), General Motors Company (GM), Facebook (FB), PayPal Holdings, Inc. (PYPL), Johnson &Johnson (JNJ), Coca-Cola Co (KO), Netflix Inc (NFLX) make the top list.
If you need help picking the best stocks to invest in, consider working with a local financial advisor.
The best stocks to buy does not necessarily mean they are the most expensive stocks.
In other words, the price of a stock does not always correspond to the value of the stock. Generally, smart investors analyze a stock value using fundamentals.
How You Determine What Are the Best Stocks to Buy
Regular investors (i.e., those who are not professional investors) lose money some way or the other when investing in individual stocks.
That is because they don’t have the time to research large number of stocks. So they end up racking some losses. That is the bad news.
The good news is that there are ways to determine if a stock is indeed a good stock to buy.
Some of the key factors to consider when picking a top and quality stock include price-to-earning (P/E) ratio, dividends, free cash flow, and whether the stock is a growth stock, etc.
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Price-to-earnings (P/E) ratio
In evaluating stocks, investors look at a metric called the “P/E ratio.” The P/E ratio is one of the most valuable metrics when picking stocks.
The P/E ratio measures a company’s current share price relative to its per-share earnings.
To calculate a P/E ratio, take a company’s stock and divide it by the company’s net earnings.
A low P/E can mean that a company’s stock is undervalued. A high P/E ratio can indicate that a company’s stock is overvalued.
For example, if a company has a P/E ratio of 18, this means investors are willing to pay $18 for every $1 per earnings.
This can mean that the stock is expensive, but that does not mean the stock is not attractive. It may mean that the company is a growth stock and therefore it’s growing fast.
But generally, the lower the P/E ratio, the better because it means you’re getting more bang for your buck.
Investors who practice “value investing,” like the great Warren Buffett, consider stocks with low P/E ratios, because they get good value stocks for their dollar.
When companies make profits, they usually reinvest those profits right back into the business.
Or, they pay out some of their profits to their shareholders in the form of dividends.
A company that pays dividends is a good sign. But when they are consistent in paying dividends is even better. When picking stocks, look at the company’s dividend history.
Free Cash flow
Another metric value investors use in evaluating the best stocks to buy is free cash flow (FCF). FCF, according to Investopedia.com, is the cash left after a company pays its expenses and capital expenditures.
Free cash flow shows how efficient the company is at generating cash. When a company’s free cash flow is on the rise, it usually means that earnings and the value of the shares will soon be rising.
So, when looking at the best stocks to buy, pay attention how much free cash flow the company has.
Another metric investors use to determine what stocks to buy is to consider whether a particular stock is a growth stock.
Growth stocks are shares of companies with earning and sales expected to grow significantly fast. Examples of growth stocks by earning per share include Facebook Inc (FB), Netflix (NFLX) and Amazon Inc. (AMZN).
So, stock price alone does not tell whether the stock is undervalued or overvalued. The P/E ratio, dividends, and a company’s free cash flow, etc are important metrics in assessing a stock value.
Considering The Motley Fool’s Stock Picks
Picking and choosing the best stocks to buy requires you spending countless of hours research. In fact, you can literally spends hundreds of hours evaluating one company alone.
But who has this kind of time?
So, unless you’re financially savvy and does not mind spending all of your time researching your own stocks, you need to focus on where you can get the best bang for your time.
So looking at the best research resources is crucial. The Motley Fool Stock Advisory is a useful resource that allows you to hit the ground running when you’re trying to pick the best stocks to buy. It’s a stock picking service.
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Best Stocks to Buy Now:
- Apple Inc (AAPL)
- Amazon.com (AMZN)
- Alphabet Inc (GOOG)
- Microsoft Corporation (MSFT)
- General Motors Company (GM)
- Facebook (FB)
- PayPal Holdings Inc (PYPL)
- Johnson & Johnson (JNJ)
- Coca-Cola Co (KO)
- Netflix Inc (NFLX)
Now let’s take a look at Apple Inc stock, Amazon.com Inc stock, Alphabet Inc. stock, Microsoft Corporation stock, General Motors Company stock, Facebook stock, PayPal Holdings, Inc. stock, Johnson &Johnson stock, Coca-Cola Co stock, Netflix Inc stock in more details.
These stocks are in the technology, consumer, health, and the energy sectors. These sectors include companies with the largest market capitalizations in the world.
They are some of the top stocks and best performing stocks. Before buying any individual names on this list, be sure to do your due diligence and consult with a financial advisor.
Apple Inc (AAPL) – 1st of the best stocks to buy
Apple is in the electronic technology sector. It’s a tech giant and of the largest companies in the world.
It was founded by Steve Jobs– who recently died, and Ronald Wayne and Stephen Wozniak. The company is headquartered in Cupertino, California. The company has approximately 147,000 employees.
Apple designs, manufactures, and sales personal computers, tablets, smartphones, watches and other accessories.
Apple operates in countries all over the world, including China, India, Japan, the Middle East, etc. Some of Apple’s products include IPhone, Mac, Ipad, Airpods, Apple TV, Apple Watch, Beats products, etc.
Apple is not only a top stock to buy, but it is also the best stock to buy and hold in your portfolio for long-term investment.
In fact, Apple Inc, AAPL is one of the growth stocks in Warren Buffett’s investments portfolio.
The company is very profitable and you should have some of its stocks in your portfolio.
For the quarter that ended in June 2021, it reported a net income of $21.7 billion, which is a 93.2% year-over-year (YOY) increase. It also reported a $81.4 billion quarterly revenue, which is a 36.4% YOY increase.
For that reason, you should have AAPL on your list of best stocks to buy.
- Market capitalization: 2.429 trillion
- Price to Earning (P/E) Ratio: 28.76
- Dividend yield: 0.60%
- Earning Per Share (EPS): 5.16
Amazon.com (AMZN) – 2nd of the best stocks to buy
Another top stock to buy is Amazon.com (AMZN), which is considered a growth stock.
Amazon.com, Inc is a leader in online/internet retail. It has approximately 1, 298,000 employees. The company was founded by the billionaire Jeff Bezos as an online bookstore trading around $10 a share.
Now Amazon sells basically everything, trading at $3,425.52 and has made Jeff Bezos the wealthiest person in the world as of September 2021.
Jeff Bezos started Amazon.com in a garage in Seattle as an online bookstore. He started out selling books and has since selling everything you can think of.
Amazon also manufactures and sells electronic devices. Among its subsidiaries is Whole Foods Market which provides healthy and organic foods across its stores.
Amazon.com is the largest online retailer in the world. Because AMZN is a growth stock, it is expected to grow at a significantly faster rate than the rest of the market.
In 2020, the AMZN stock hit an all time high. That was due to the high demand for online shopping as the Covid-19 forced shoppers to stay home.
- Market capitalization: 1.735 trillion
- Price to Earning (P/E) Ratio: 59.53
- Dividend yield: 0.00%
- Earning Per Share (EPS): 58.51
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Alphabet, Inc (GOOG) – 3rd of the best stocks to buy
Alphabet Inc (GOOG), best known as Google hit an all time record of $2,670.09 in mid-2021.
The stock is currently trading at $2,852.66 (as of September 24,2021), making it not only one of the best stocks to buy but also one of the most expensive stocks right now.
Google is the world’s most popular and largest search engine. Forbes ranked it as second on the list of most valuable brands with a brand value of $207.5 billion.
Two Ph.D students, Larry Page and Sergey Brin founded Google as a search engine in 1998. The company was named Google Inc, but in 2015 it was renamed Alphabet Inc.
Alphabet Inc is a technology holding company. Among its subsidiaries are Google (its largest) and several of Google former subsidiaries including Fitbit, Access, Calico, CapitalG, Sidewalk Labs, etc..
Most of Alphabet’s revenues comes from advertising from the search engine, YouTube, Google Play, Google Cloud, Chrome browser, etc. Its sales revenue in Q4 of 2020 was $56.9 billion.
- Market capitalization: 1.899 trillion
- Price to Earning (P/E) Ratio: 30.75
- Dividend yield: 0.00%
- Earning Per Share (EPS): 93.42
Microsoft Corporation (MSFT) – 4th of the best stocks to buy
Microsoft Corporation is in the technology services sector. It develops, licenses and supports software products and services.
Among its products are operating systems, cross-device productivity applications, server applications, management tools, software development tools, etc.
Microsoft also designs, manufactures and sells personal computers, tablets, phones and other devices.
The company also provides an array of services including solution support and consulting services, cloud-based solutions, etc.
- Market capitalization: 2.25 trillion
- Price to Earning (P/E) Ratio: 37.19
- Dividend yield: 0.83%
- Earning Per Share (EPS): 8.12
General Motors Company (GM) – 5th of the best stocks to buy
The General Motors Company is automotive company based in Detroit, Michigan.
GM is one of the largest automobile brands in the United States. Its biggest rival is Ford Motor Company. General Motors held the largest share of the auto market in the United States in 2020.
It was founded in 1908 by William Durant. The company designs, manufactures, markets, and sells cars, trucks and automotive parts. General Motors also offers automotive financial services.
The company currently has 155,000 employees.
GM, along with other auto companies, has been moving into green energy, producing electric vehicles.
GM is expected to release a range of electric vehicles by 2025. This will likely to be highly beneficial to the company’s stock price. GM should be on your list of the best companies to invest in.
- Market capitalization: 77.29 billion
- Price to Earning (P/E) Ratio: 6.04
- Dividend yield: 0.00%
- Earning Per Share (EPS): 8.73
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Facebook (FB) – 6th of the best stocks to buy
Facebook is a social medial giant based in Menlo Park, California. It was founded in 2004 by Mark Zuckerberg and 4 other college roommates while they were students at Harvard College.
The company has approximately 63,000 employees with a revenue of $85.96 billion in 2020.
Among its subsidiaries are Instagram, WhatsApp, PrivateCore, Oculus VR, etc.
It is considered one of the world’s most valuable companies and one of the Big five companies in US information technology along side Google, Apple, Microsoft and Amazon.
Facebook (FB) is placed 6th on our list of 10 stocks to buy. Facebook gets a lot of its revenues from advertising. More than 10 million business use the platform to reach relevant customers.
With the number of people using the platform rising to Ads impression growing at a fast pace, Facebook is very much profitable.
- Market capitalization: 996.898 billion
- Price to Earning (P/E) Ratio: 26.26
- Dividend yield: N/A
- Earning Per Share (EPS): 13.47
PayPal Holdings Inc (PYPL) – 7th of the best stocks to buy
PayPal was founded in 1998 and it is headquartered in San Jose, California.
The company has approximately 26,500 employees. Paypal Holdings engages in the development of technology platform for digital payments.
Its products include PayPal, PayPal Credit, Venmo, Braintree, etc. PayPal allows consumers to use the platform to purchase and pay for goods as well transfer and withdraw funds.
Since the pandemic, PayPal stock has risen by more than 120%. Because the pandemic has forced many people to stay inside, many people have chosen to make online purchases and digital payments.
PayPal Holdings, Inc (PYPL) has shown an interest in cryptocurrency as of late. The company has allowed its users to trade cryptocurrencies such as bitcoin, ethereum, litecoin on its platform. This expansion will like be beneficial to its stock price.
- Market capitalization: 321.242 billion
- Price to Earning (P/E) Ratio: 67.93
- Dividend yield: 0.00%
- Earning Per Share (EPS): 4.15
Johnson & Johnson (JNJ) – 8th of the best stocks to buy
Johnson & Johnson is in the health/pharmaceuticals industry.
It is a holding company engaging in the research and development, manufacture and sale of a range of products in the healthcare field. It’s headquartered in New Brunswick, New Jersey.
Johnson & Johnson is one of the largest and the world’s most valuable companies.
Its facilities are located all over the world including the United States, Brazil, China, Canada, India, Japan, the Netherlands, etc. The company has 134,500 employees.
The company has been very popular lately and has seen an increase in share price due to its vaccine for the Covid-19 virus.
More specifically, in April 2021, the company reported that its Covid-19 vaccine achieved $100 million sales in the first quarter.
There will likely be a high demand for vaccines, whether for Covid19 or other virus, from Johnson and Johnson. That will certainly drive its share price even higher.
- Market capitalization: 429.542 billion
- Price to Earning (P/E) Ratio: 24.71
- Dividend yield: 2.58
- Earning Per Share (EPS): 6.75
Coca-Cola Co (KO) – 9th of the best stocks to buy
Coca-Cola (KO) is a beverage company. It owns or licenses and markets non-alcoholic beverage brands such as waters, flavored waters, juices ready to drink coffees and teas, energy drinks and sports drinks.
The company owns and markets sparkling drinks such as Coca-Cola, Diet Coke, Fanta and Sprite.
Although the pandemic hit the company real hard. It will bounce back. It is the 9th best stock to buy on our list.
In fact, it has been Warren Buffett’s oldest stock position at Berkshire Hathaway. Berkshire owns 9.3% of all Coca-Cola shares.
Warren Buffett invested in Coca-Cola by first buying over 23 million shares from 1988 to 1989. By 1994, Buffett quadrupled his position by buying over 100 million shares.
By 2020, Buffett’s investment in Coca-Cola was worth $21.5 billion, a return of 1550%.
- Market capitalization: 231.414 billion
- Price to Earning (P/E) Ratio: 28.65
- Dividend yield: 1.68
- Earning Per Share (EPS): 1.87
Netflix (NFLX) – 10th of the best stocks to buy
Last and not list the 10th of the best stocks to buy is Netflix. The company was founded in 1997. It is headquartered in Los Gatos, California.
Netflix provides entertainment services. It provides TV series, documentaries, an feature films across genres and languages.
The company has approximately 204 millions paid members in 190 countries.
Due to the Covid-19 pandemic, there was a surge in new subscriptions which resulted in Netflix shares hitting all-time highs.
While Netflix has competition the streaming business, like Amazon Prime and Disney, it has been one of the best performing stocks over the past 10 years.
- Market capitalization: 262.3 billion
- Price to Earning (P/E) Ratio: 61.42
- Dividend yield: 0.00%
- Earning Per Share (EPS): 9.92
The Best Stocks to Buy Recap:
The bottom line is that the best stocks to buy are not necessarily the most expensive or high priced stocks. But the stocks on this list have been the best performing stocks for a long time.
They are good stocks for growth and income, and to buy and hold for long term investments.
These stocks include Apple Inc (AAPL), Amazon.com Inc (AMZN), Alphabet Inc. (GOOG), Microsoft Corporation (MSFT), General Motors Company (GM), Facebook (FB), PayPal Holdings, Inc. (PYPL), Johnson &Johnson (JNJ), Coca-Cola Co (KO), Netflix Inc (NFLX).
If these stocks are too expensive for you and need to find cheaper stocks, you will need to do your own research and due diligence.
If so, remember to use the metrics mentioned above to evaluate your stocks. The most important metrics are the P/E ratio, free cash flow. So, find a stock with a low P/E ratio and a lot of cash on its balance sheet.
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Disclaimer: The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. Additionally, all comments, analyses contained in our content are rendered as of the date of the posting and may change without notice.