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, there are plenty of stocks trading for significantly less than they were just six months or a year ago.
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 stocks to outperform in 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), $11 billion
- Pinterest (NYSE:PINS), $14 billion
- MercadoLibre (NASDAQ:MELI), $37 billion
- Block (NYSE:SQ), $40 billion
- Sea Limited (NYSE:SE), $42 billion
- Shopify (NYSE:SHOP), $43 billion
- Intuitive Surgical (NASDAQ:ISRG), $77 billion
- Walt Disney (NYSE:DIS), $181 billion
- Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B), $625 billion
- Amazon (NASDAQ:AMZN), $1.2 trillion
(Market caps as of July 20, 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 first quarter of 2022, Etsy's marketplace sales volume was up 177% 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.
The knock against Pinterest, despite its solid community and sales growth, has been a lack of Facebook (NASDAQ:META)-level monetization. This is especially true internationally, which accounts for 80% of its user base but just a small fraction of its revenue. But I see a massive opportunity here.
Speaking of opportunities, it's also worth noting that Pinterest is starting to explore where it fits in the e-commerce landscape. 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's really easy to envision how seamless advertising, lead generation, and product placement could be when people are already there for suggestions. The company has been testing personalized shopping feeds and recently agreed to acquire fashion shopping platform The Yes.
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 almost $8 billion in merchandise volume in the first quarter of 2022, and Mercado Pago processes more than $100 billion in annualized volume. Both are growing rapidly.
MercadoLibre isn't just the Amazon of Latin America -- it's the Amazon, PayPal (NASDAQ:PYPL), Square, Shopify, and more, all rolled into one, and it's at a much earlier stage of growth. In fact, MercadoLibre does just 5% of Amazon's merchandise volume and just 8% of PayPal's payment volume despite leading market shares in Brazil, Argentina, and more. E-commerce and cashless payment adoption are still in their early innings, and MercadoLibre could be a major long-term beneficiary.
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 $178 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 tens of millions of active 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 will only get stronger.
5. Sea Limited
Sea Limited is rapidly growing into a powerhouse in Southeast Asia. The company operates the large Garena digital gaming platform, but the most promising growth drivers are its Shopee e-commerce platform and SeaMoney digital payments platform, both of which have been growing rapidly. In the first quarter of 2022, Shopee revenue grew 64% year over year, while SeaMoney (the newest part of the business) grew by a staggering 360%.
With Garena, Shopee, and SeaMoney, Sea Limited has three fast-growing and high-potential businesses. It is quickly becoming a leader in all three, both in its home region and in other key markets around the world. Although its two most exciting businesses are in the earlier stages, I consider it one of the best long-term stock investments for international exposure.
Shopify operates a platform designed to allow businesses of all sizes to sell their products online, with a particular focus on empowering smaller businesses. Shopify offers a subscription plan starting at $29 per month for businesses, and it also offers many adjacent services that help businesses operate smoothly.
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 $4.8 billion in revenue in the past year, 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. With shares down sharply in the recent market downturn, Shopify looks like a clear choice for the best stocks to buy in 2022.
7. Intuitive Surgical
Robot-assisted surgery beats the shaky hands of humans. That general thesis hasn't changed much from when I first bought 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.
Don't let any short-term political headwinds distract you. 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 2022, demand for Disney's theme parks and movies is coming back stronger than ever. Disney+ has been a massive success. 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 almost $330 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.
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. 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 at a historic clip. 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 annual gross merchandise sales, 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.
Related investing topics
Accounts That Earn Compounding Interest
Quite simply, this is when interest earns interest. How do you get it working for your portfolio?
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.
Start with the stocks that speak to you, and feel free to ignore the ones that don't.