3 Qualities Guiding You to the Best Stocks to Buy

There are tons of ways to go about investing. Some people love the thrill of day trading, while others prefer using options. This article isn't for those folks; it's for us everyday investors who don't have all day to research tiny market inefficiencies, but want to know how to find the best stocks to buy. 

That can be a herculean task when there are literally thousands of different publicly traded companies to invest in. Sifting through all the information can leave you feeling like one of these analysts.

Source: Wikipedia Commons.

But recently, I was doing my monthly portfolio check-in and it hit me: My five most successful investments all share three qualities that set them apart from the competition and have made them long-term wealth-makers.

You don't need to invest in these companies per se to achieve investing success, but they are:

Some folks would justifiably warn me that it's not smart to have almost 50% of my retirement money in just five companies. Though I never intended for these five to be the largest holdings -- they grew into those positions -- that's good advice. As I'll describe below, however, as long as each of these companies has the three qualities making them the best stocks to buy (and hold), there's no reason to sell them.

1. Having a vision beyond making money
Every publicly traded company wants to make money; that goes without saying. But for far too many companies, the vision stops there. Sure, you could look up the company's mission statement and it might feed you the usual buzz words, but once in a while you come across a company that really has a purpose that transcends economics.

Though it might sound like a pretty soft quality to focus on, a real purpose is crucial to building a lasting, legendary company -- and it's those companies that you want to get invested with. Both employees and customers are far more likely to go the extra mile when it's clear that they are taking part in something bigger than just padding an executive's wallet.

Here are the over-arching purposes behind four of the five companies I'm talking about. Some of them may surprise you, as they don't have much to do with a core product. But ponder them for a second and you'll realize that they each accomplish these goals in their own unique way.

I admire Google for backing out of China when the government was requesting more oversight than executives were comfortable with. But Baidu -- China's largest search engine -- can't change where it's located, and I won't hold it against the company. As it is, Baidu is allowing 1 billion Chinese citizens access to information they never could have gotten a decade ago.

2. Willing to forgo short-term profits to accomplish long-term vision
All too often, Wall Street myopically focuses on what a company can do over the next 12 months. That's certainly something to consider, but when executives give in to this tunnel vision, they lose sight of what they're really trying to build.

Becoming one of your generation's greatest companies doesn't happen by kowtowing to folks who have no vested interest in your long-term goals.

All five of the companies above have shown steely resolve to invest in their future rather than maximize profits in the short term. Both Google and Baidu have been spending billions investing in mobile. During the Great Recession, Starbucks closed hundreds of locations because their existence no longer supported the company's vision. And Amazon -- probably the most famous long-term-oriented company -- is a $165 billion company that's only produced $132 million in profit over the last year because it is investing in its operations so heavily.

3. Founder-led
It's not easy to accomplish the first two qualities above, but I think it is far more common when the founder is at the helm. A company is far more than just a company when it is the result of your own unique ideas, blood, sweat, and tears.

For many founders, their company is simply an extension of themselves. Founders want to make sure their companies will remain healthy for decades to come.

Take a look below at each company, its founder, and how long they have been around.

Note: Technically, Schultz bought Starbucks from the original owners in 1987, but with locations only on Seattle's waterfront. Starbucks, as we know it today, is a vision founded by Schultz.

Interestingly, both Google and Starbucks have had periods of time where their founders were not at the helm of their company. Howard Schultz took an 8-year hiatus from 2000 to 2008 while owning the Seattle Supersonics, and Larry Page yielded his spot to Eric Schmidt from 2001 to 2011.

Without Schultz, Starbucks stock  averaged 8% annualized growth; with him, it has averaged an astounding 39%. Calculating the metric for Google and Page isn't as easy, as Page never left the company and was intimately involved in decision making throughout.