Best Stocks to Buy Now: How to Find Strong Long-Term Stocks
The qualities that great long-term stocks share, how to check valuation, where the market stands in 2026 and how to build a stock portfolio without taking reckless risks.
Key takeaways
- The best long-term stocks usually combine durable competitive advantages, growing profits, strong balance sheets and a reasonable price.
- In late September 2026, the S&P 500 traded near record highs at about 19 times expected earnings, close to its 10-year average.
- Picking winners is hard: around nine in ten professional large-cap funds trail the S&P 500 over 15 to 20 years.
- A practical approach is a core of index funds plus a limited share of individual stocks you have researched.
"What are the best stocks to buy right now?" is one of the most common questions in investing, and lists of hot picks are everywhere. The problem is that today's favorites often become tomorrow's disappointments. Instead of another list, this guide gives you a framework that professional investors use to evaluate companies, so you can judge any stock idea yourself.
Please note
This guide is general education, not a recommendation to buy or sell any security. Companies named are examples to illustrate concepts. Do your own research or consult a licensed advisor before investing.
Where the stock market stands in 2026
- Index level: the S&P 500 closed September 2026 at 7,651.54, up about 12.7% for the year including dividends.
- Valuation: about 19 times expected earnings for the next 12 months, according to FactSet, roughly in line with the 10-year average.
- Leadership: technology and AI-related companies led the market. In September 2026, technology was the only S&P 500 sector with a gain, while rate-sensitive sectors such as utilities, consumer staples and real estate fell 5% to 7%.
- Interest rates: the 10-year Treasury yield rose to about 5.3%, its highest level since 2002, after the Fed raised rates in September.
- Concentration: the ten largest companies account for close to 40% of the S&P 500, and Nvidia alone for more than 8%.
That backdrop matters: high bond yields make stocks relatively less attractive and increase the pressure on companies to deliver strong earnings growth.
What makes a great long-term stock?
1. A durable competitive advantage
Great companies have a "moat" that protects their profits from competitors: strong brands, network effects, high switching costs, cost advantages, patents or unique technology. Ask yourself whether the company will still be relevant and profitable in ten years.
2. Consistent revenue and earnings growth
Look for a track record of growing sales and profits over several years, not just one strong quarter. Growth that comes from the core business is more valuable than growth bought through acquisitions.
3. High profitability
Profit margins and return on invested capital (ROIC) show how efficiently a company turns money into profit. Companies that earn high returns on capital and can reinvest at those rates compound value over time.
4. A strong balance sheet
Moderate debt, healthy cash flow and enough liquidity help a company survive recessions and higher interest rates, a key test in 2026.
5. Capable, shareholder-friendly management
Watch how management allocates capital: reinvestment, acquisitions, dividends and share buybacks. Clear communication and insider ownership can be positive signs.
6. A reasonable valuation
Even a wonderful business can be a poor investment if you pay too much. Valuation is where many investors go wrong during booms.
Valuation basics: are you paying too much?
| Metric | What it tells you | Watch out for |
|---|---|---|
| Price-to-earnings (P/E) | How much you pay for each dollar of profit | Very high ratios require years of strong growth |
| PEG ratio | P/E relative to expected growth | Growth forecasts are often too optimistic |
| Price-to-sales (P/S) | Useful for young companies without profits | Extreme levels have rarely lasted |
| Free cash flow yield | Cash the business generates relative to its value | One-off items that inflate cash flow |
| Dividend yield | Cash paid to shareholders | Very high yields can signal a coming cut |
Compare a company's valuation with its own history, its competitors and the market as a whole. For the S&P 500, about 19 times forward earnings was roughly average in 2026; some fast-growing AI and software stocks traded at many times that.
Types of stocks for a long-term portfolio
- Quality growth stocks: companies growing faster than the economy with strong profitability, such as many large technology leaders. See best AI stocks.
- Dividend growth stocks: established businesses that raise their payouts every year. See dividend investing.
- Value stocks: companies trading at low valuations, sometimes for good reasons, sometimes because the market is too pessimistic.
- Defensive stocks: consumer staples, healthcare and utilities, which tend to hold up better in recessions but are sensitive to interest rates.
- International stocks: companies outside the US, often at lower valuations, adding diversification.
The case for index funds as your core
Stock picking is hard, even for professionals. According to S&P Dow Jones Indices' SPIVA reports, roughly nine out of ten actively managed US large-cap funds underperformed the S&P 500 over 15 to 20 years. Market returns are also driven by a small number of exceptional winners; missing them is easy when you own only a handful of stocks.
That is why many investors use a core-and-satellite approach:
- Core (80% to 95%): broad, low-cost index funds. See how to invest in the S&P 500.
- Satellite (5% to 20%): individual stocks you understand and believe in.
If your stock picks do well, they boost your returns. If they disappoint, your core keeps your plan on track.
A step-by-step checklist before you buy a stock
- Can I explain in two sentences how this company makes money?
- What protects it from competitors, and could that change?
- Have revenue, earnings and free cash flow grown over the past five years?
- Is debt manageable at today's higher interest rates?
- How does the valuation compare with peers and its own history?
- What could go wrong, and how much could I lose?
- How large should this position be? Many investors cap any single stock at 5% of their portfolio.
- Would I be comfortable holding it for five years if the price fell 40%?
How many stocks should you own?
A portfolio of 20 to 30 stocks across different industries diversifies away much of the company-specific risk. Fewer stocks means higher potential rewards and much higher risk. If you do not have the time to follow that many companies, index funds or ETFs are a better solution.
Mistakes to avoid
- Buying tips from social media or stocks that have already soared without understanding why.
- Ignoring valuation because "it's a great company".
- Overconcentration in one stock, one sector or your employer.
- Trading too often, which increases costs and taxes and usually reduces returns.
- Penny stocks and meme stocks, which are prone to manipulation and extreme volatility.
- Selling winners too early and holding losers too long out of emotion.
Frequently asked questions
What are the best stocks to buy right now?
There is no list that is right for everyone. The best stocks for you are high-quality companies at reasonable valuations that fit your goals, held as part of a diversified portfolio. Many investors start with broad index funds and add individual stocks over time.
What are the best stocks for long-term investment?
Historically, companies with durable competitive advantages, high returns on capital and consistent growth have made the best long-term investments, as long as investors did not overpay.
How much money do I need to start buying stocks?
With fractional shares, many brokers let you buy part of a share for as little as $1. Building a diversified portfolio of individual stocks takes more money; a fund is easier at small amounts.
Is it better to buy individual stocks or ETFs?
ETFs offer instant diversification at low cost. Individual stocks offer more control and potential upside but require research and carry more risk. Many investors combine both. See stocks vs ETFs.
Should I wait for a market crash to buy stocks?
Timing the market is very difficult. Investing regularly over time reduces the risk of buying at a peak without the risk of waiting on the sidelines for years.
