There are literally thousands of publicly traded companies you can invest in, not to mention the many exchange-traded funds (ETFs) and mutual funds you can buy, so it's not surprising many investors don't know where to begin. And, with the recent market downturn, especially when it comes to growth stocks, there are plenty of stocks trading for significantly less than they were just six months or a year ago.
But what are the best stocks to buy in 2022? Although I don't have a crystal ball that tells me what stocks will deliver the best returns, I've tried to do the next best thing. In this article, I'll discuss 10 stocks that I think could be great buys in 2022 for long-term investors looking to put their money to work.
Before we get to the stocks, let's acknowledge three caveats:
- Choosing the best stocks to buy today heavily depends on your personal financial situation. To get a feel for where you stand, read our guide on how to invest in stocks. It walks you through topics such as establishing an emergency fund, allocating assets, and when it makes sense to buy stocks.
- I like these stocks as long-term investments. I have absolutely no idea what they'll do over the next few weeks or months. In fact, if inflation stays elevated longer than expected or the U.S. falls into a recession, it's entirely possible that most or all of these could decline in the near term.
- Although I ensured some variety, the list below isn't meant to be a fully diversified portfolio. Instead, they're my highest-conviction long term stocks to invest in for 2022 and beyond. The best one-step way to diversify your holdings is to build the core of your portfolio around something like the Vanguard Total World Stock Index Fund ETF (NYSEMKT:VT).
Let's get to my list of the 10 best stocks to buy now and hold for the long term, from smallest market cap to largest, followed by the summary buy thesis for each one.
The top 10 stocks for 2022
- Etsy (NASDAQ:ETSY), $12 billion
- Pinterest (NYSE:PINS), $15 billion
- Block (NYSE:SQ), $32 billion
- Shopify (NYSE:SHOP), $36 billion
- Realty Income (NYSE:O), $38 billion
- MercadoLibre (NASDAQ:MELI), $40 billion
- Intuitive Surgical (NASDAQ:ISRG), $67 billion
- Walt Disney (NYSE:DIS), $179 billion
- Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), $587 billion
- Amazon (NASDAQ:AMZN), $1.17 trillion
(Market caps as of September 27, 2022, rounded to the nearest billion.)
Elevator pitches for each stock
Now that you've seen my top 10 best stocks to buy now, you may be wondering why I picked each company. Here's a quick rundown of why I'm such a fan of each of them as long-term stocks to invest in.
Before the COVID-19 pandemic, Etsy was growing nicely by connecting crafty makers with customers looking for something a bit more out of the ordinary than mainstream e-commerce fare. During the pandemic, e-commerce got a huge boost. But Etsy absolutely skyrocketed, growing at more than twice the rate of overall e-commerce.
It certainly helped that Etsy was a natural fit when people wanted unique face masks, but its growth has been impressive across all product categories. In the second quarter of 2022, Etsy's marketplace sales volume was up 141% over comparable pre-pandemic levels.
As you may notice throughout this list, powerful platforms get my attention. Make no mistake: Etsy is one of them. Few e-commerce companies go head-to-head with Amazon and survive. Etsy not only survived when Amazon rolled out its own handmade items platform; it won. But this could still be the early days of an excellent long-term growth story.
Because of its platform and brand strength, Etsy's market opportunity is in the hundreds of billions of dollars, and it has just started to scratch the surface. And, with the stock falling significantly in the recent growth stock downturn, now could be a great time for patient long-term investors to take a closer look.
Pinterest is an oasis of positivity in a social media landscape that's grown increasingly depressing and divisive. That partially flows from what Pinterest is about, which is ideas.
People go to Pinterest to focus on things, not on other people. Whether it's building a dream deck, baking a kid's birthday cake, or updating your wardrobe, Pinterest gives people visual inspiration for the things they want to get done.
Pinterest has been beaten down in the 2022 market decline, mainly because its user base contracted a bit as pandemic restrictions were lifted around the world. However, according to the company's most recent results, it appears that the user base has stabilized for the time being. Plus, Pinterest has just a small fraction of the user base of Facebook, so there's still lots of long-term user growth potential.
The most exciting thing from a long-term investor's perspective is that Pinterest has a massive opportunity when it comes to monetization of its users, especially as the company pivots away from its traditional ad-focused model and tries to find ways to incorporate e-commerce into its platform.
The pivot certainly makes sense. Pinterest is a place where people go to find things they might want to buy, and it recently hired e-commerce veteran Bill Ready as its new CEO to help accelerate its pivot. It could take a while for the company to truly realize its e-commerce potential, but long-term investors could be handsomely rewarded.
It's really easy to envision how seamless advertising, lead generation, and product placement could be when people are already there for suggestions. The monetization potential is especially massive internationally, which accounts for 80% of its user base but just a tiny fraction of its revenue.
Block, formerly known as Square, has evolved from a niche payment processing hardware company to a massive financial ecosystem for merchants and individuals. On the merchant side, Block processed about $188 billion in payment volume over the past four quarters, and it also offers a suite of adjacent services for businesses.
On the individual side, Block has the Cash App, with 47 million users, as well as capabilities that include person-to-person money transfers, direct deposits and debit cards, the ability to buy and sell stocks and Bitcoin (CRYPTO:BTC), and much more.
Block also recently acquired music app Tidal, plus the Afterpay buy-now, pay-later platform. As its ecosystem evolves, the business should only get stronger. The long-term trend towards cashless payment adoption still has a long way to go, and with many potential growth verticals it could pursue, Block earns a spot on my top 10 best stocks to buy now.
Shopify operates a platform designed to allow businesses of all sizes to sell their products online, with a particular focus on empowering smaller businesses and growing alongside them by establishing long-term relationships. Shopify offers a subscription plan starting at $29 per month for businesses, and it also offers many adjacent services that help businesses operate smoothly, such as payment processing solutions and logistics.
Shopify's "one-stop shop" approach to enabling e-commerce has turned it into a powerhouse. It now has more e-commerce sales flowing through its ecosystem than any other company besides Amazon. However, Shopify could be just getting started. The platform has generated just over $5 billion in revenue over the past four quarters, but this is just a fraction of its estimated $153 billion (and growing) market opportunity as more retailers shift their focus to online sales.
E-commerce is still in the relatively early stages, making up less than 15% of retail sales in the U.S. And Shopify has the number two share, giving it a large lead over many of the world's largest retailers. With shares down sharply in the recent market downturn due to recession fears and signs of a slowdown in consumer spending, Shopify looks like a clear choice for the best stocks to buy in 2022.
5. Realty Income
There's a solid case to be made that when it comes to value, growth, and income, it's tough to find a more well-rounded stock for long-term investors than Realty Income.
If you aren't familiar, Realty Income is a real estate investment trust, or REIT, and primarily invests in freestanding, single-tenant retail properties. Walgreens (NASDAQ:WBA), Dollar General (NYSE:DG), and FedEx (NYSE:FDX) are just a few examples of the top tenants. Realty Income owns more than 11,000 properties in the U.S. and Europe, most of which are rather recession-resistant and less vulnerable to e-commerce disruption than many other retail businesses. Plus, Realty Income's triple-net lease structure helps create a steady, predictable income stream.
The proof is in the performance. Since its 1994 NYSE listing, Realty Income has produced 15.1% annualized total returns, handily outperforming the S&P 500. It has paid over 600 consecutive monthly dividends (current annual yield is about 5%) and has increased its payout a staggering 116 times, with no dividend cuts along the way.
One of my favorite long-term stock investments in the market, MercadoLibre is often referred to as the Amazon of Latin America, and for good reason. The company operates an e-commerce marketplace that has a dominant presence in some of the most populous nations in the region, including Brazil and Argentina.
However, there's a lot more to MercadoLibre. It operates a fast-growing payments platform called Mercado Pago, a logistics service known as Mercado Envios, a business lending platform, and more. The marketplace saw $8.6 billion in merchandise volume in the second quarter of 2022, and Mercado Pago processed more than $120 billion in annualized volume, with about two-thirds coming from outside the company's e-commerce platform. Both are growing rapidly. And don't overlook Mercado Credito, the company's young but fast-growing lending business. Mercado Credito has more than tripled in size over the past year alone, and has $2.7 billion of outstanding loan balances.
The best part is that all of these businesses are in the relatively early stages. MercadoLibre's merchandise volume is roughly 6% of Amazon's, and its Mercado Pago payment volume is less than 10% of what PayPal (NASDAQ:PYPL) processes. So, there's a ton of runway ahead.
MercadoLibre isn't just the Amazon of Latin America -- it's the Amazon, PayPal, Square, Shopify, and more, all rolled into one, and it's at a much earlier stage of growth. As the e-commerce and fintech landscape in Latin America evolves over the coming years, MercadoLibre could be a major long-term beneficiary.
7. Intuitive Surgical
Robot-assisted surgery beats the shaky hands of humans. That general thesis hasn't changed much from when I first noticed Intuitive Surgical stock in 2005. The da Vinci surgical system is the clear market leader, and the "razors and blades" model helps it generate a recurring stream of revenue as its systems are used to perform procedures.
Intuitive Surgical is dominant in its space, and it has lots of room to grow as its surgical systems increase in adoption and the number of its supported procedures increases over time. This is particularly true in many international markets, where the implementation of robot-assisted surgery could be a long-tailed growth catalyst for this excellent business for decades to come.
The House of Mouse is the all-weather tires of a portfolio. The pandemic hurt its theme park and movie businesses but helped the Disney+ streaming service, which has grown into a powerhouse years earlier than Disney expected. In fact, Disney+ now has over 150 million subscribers less than three years after launching, while the company's initial five-year goal called for 60-90 million.
In 2022, demand for Disney's theme parks and movies is coming back stronger than ever. In fact, revenue is now greater than in comparable pre-pandemic times in Disney's parks due to initiatives that have driven higher per-guest spending. On the streaming side, Disney+ has been a massive success, and the company is rightly focusing on expanding it and the company's other streaming platforms, Hulu and ESPN+.
Disney might even be the ultimate combination of a reopening play and a pandemic-fueled growth business. Its amazing stable of intellectual property (Marvel Cinematic Universe/Star Wars/ESPN/Pixar/Disney) and cash-machine theme park business gives it a margin of safety that makes it perhaps the safest stock on this list. And it still has tremendous growth potential as the newer areas of its business evolve.
9. Berkshire Hathaway
While most of this list is made up of growth stocks, this is the relatively boring value pick of the bunch. Berkshire Hathaway owns a collection of about 60 subsidiary businesses, including household names such as GEICO, Duracell, and Dairy Queen, just to name a few. Berkshire also owns a portfolio of common stocks worth more than $340 billion that includes massive stakes in Apple (NASDAQ:AAPL), Bank of America (NYSE:BAC), Chevron (NYSE:CVX), American Express (NYSE:AXP), and Coca-Cola (NYSE:KO), as well as positions in dozens of other companies, many of which were personally handpicked by legendary investor Warren Buffett, who at age 92 still manages the bulk of Berkshire's investments.
The Buffett bears will say he has lost his fastball, but Berkshire continues to produce market-beating returns in most years despite its massive size. And while Berkshire certainly won't produce the 3,600,000% return (not a typo) it has produced since Buffett took the helm, there's no reason to believe it won't continue to outpace the S&P 500 for the foreseeable future. If Berkshire were a mutual fund, it would be the largest actively managed mutual fund in the world.
Buffett won't be at the helm forever. But Berkshire is his legacy, and he's been stress-proofing it for years to make sure it's in solid shape long after he's no longer running things. Showing his faith, he and partner Charlie Munger have been buying back shares regularly. That's a good signal for patient long-term investors like us.
Amazon doesn't really need much of an elevator pitch for most people. The company has a dominant lead in the U.S. e-commerce market with about $600 billion in gross merchandise sales last year, and its Amazon Web Services cloud platform is also a market leader.
However, more growth potential exists than you might think. We're a long way from maximizing e-commerce adoption; it still accounts for less than 15% of all U.S. retail sales. The cloud industry is relatively young as well. Amazon also has a ton of potential in other areas such as healthcare, grocery stores, neighborhood markets, and more.
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Final takeaways for using this stock list
If you're starting on your investing journey (or if you want a sanity check), please read through our how to invest in stocks guide. It goes through all the basics, from how to get started to how to determine your personal investing strategy, to how much of your money to invest in stocks.
Although I'm bullish on each of these stocks and think they are good stocks to buy right now, they might not be the best choices for investors who don't yet have established and diversified portfolios. If you're just getting started, you'll also want to see the 15 best stocks for beginners. To be sure, I think the 10 stocks discussed here are some of the best long-term stock investments you can buy now. But it's wise to start with the stocks that speak to you, and feel free to ignore the ones that don't.