February 21, 2024

Tricia Oak

Business & Finance Excellency

Top 10 Stocks to Buy and Hold in 2023

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 that many investors don’t know where to begin. And although the market is well above its recent bear market lows, plenty of stocks are trading for significantly less than they were a year or two ago.

A stock chart showing upward price movement.

Image source: Getty Images

But what are the best stocks to buy in 2023? 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 2023 for long-term investors looking to put their money to work.

Why these 10?

Why these 10?

Before we get to the stocks, let’s acknowledge three caveats:

  • Choosing the best stocks to buy today 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 choosing the right stocks for you.
  • I like these stocks as long-term investments, even in a bear market. 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, interest rates climb higher than investors believe they will, or the U.S. falls into a deep 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 2023 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 (VT -0.44%).

Now let’s get to my list of the 10 best stocks to buy and hold for the long term — from smallest market cap to largest — followed by the summarized buy thesis for each.

Publicly Traded Company

A company that issues shares that are publicly traded, meaning the shares are available for anyone to buy and sell on the stock market.

The top 10 stocks

The top 10 stocks to buy in October 2023

  1. Etsy (ETSY 0.14%), $8 billion
  2. Pinterest (PINS 1.08%), $18 billion
  3. Realty Income (O -1.59%), $38 billion
  4. MercadoLibre (MELI 2.17%), $67 billion
  5. PayPal (PYPL -2.63%), $68 billion
  6. Shopify (SHOP -0.62%), $75 billion
  7. Intuitive Surgical (ISRG -0.2%), $105 billion
  8. Walt Disney (DIS -0.56%), $150 billion
  9. Berkshire Hathaway (BRK.A -1.32%)(BRK.B -1.32%), $815 billion
  10. Amazon (AMZN 6.83%), $1.42 trillion

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 as a long-term stock to invest in.

1 – 3

1. Etsy

Before the COVID-19 pandemic, Etsy was growing nicely by connecting craft 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.

As the pandemic and its accompanying e-commerce surge have cooled off, so has Etsy’s momentum. However, its growth has been strong across all product categories and continues to be impressive despite the tough economic climate. In fact, in the second quarter of 2023, Etsy’s marketplace sales volume was up 175% over comparable pre-pandemic (2019) 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 — if not trillions — of dollars. With about $13 billion in sales on its platform in 2022, 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.

2. Pinterest

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 — ideas.

People go to Pinterest to focus on things, not on other people. Whether 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.

Recent results show that Pinterest’s growth has resumed, with the user base growing by 8% year over year to 465 million in the second quarter of 2023. There’s still lots of long-term user growth potential, and management recently said that growth is re-accelerating.

The most exciting thing from a long-term investor’s perspective is that Pinterest has a massive opportunity when it comes to the monetization of its users. This is especially true internationally, where the bulk of Pinterest users are located but where the least monetization has occurred.

There’s also a big monetization opportunity as the company pivots away from its traditional ad-focused model and tries to find ways to incorporate e-commerce into its platform. And the pivot certainly makes sense.

Pinterest is a place where people go to find things they might want to buy, and it hired e-commerce veteran Bill Ready as its CEO in 2022 to accelerate its pivot. It could take a while for the company to truly realize its e-commerce potential, but it is making impressive progress, and long-term investors could be handsomely rewarded.

3. Realty Income

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 with it, Realty Income is a real estate investment trust, or REIT, and primarily invests in freestanding, single-tenant retail properties. Walgreens (WBA -2.58%), Dollar General (DG -1.34%), and FedEx (FDX 0.4%) are just a few examples of its top tenants.

Realty Income owns about 13,100 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, the company’s triple-net lease structure helps create a steady, predictable income stream.

The proof is in the performance. Since its 1994 listing on the New York Stock Exchange, Realty Income has produced 14.2% annualized total returns, handily outperforming the S&P 500. It has paid 639 consecutive monthly dividends, and as of September 2023, its yield is about 5.7%. The company has increased its payout for more than 100 consecutive quarters, and there’s no reason to think this pattern will end anytime soon.

4 – 6

4. MercadoLibre

As 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 with a dominant presence in some of the region’s most populous nations, 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 $10.5 billion in merchandise volume in the second quarter of 2023, 47% higher than the same quarter in 2022. Mercado Pago processes almost $170 billion in annualized volume, with almost three-fourths coming from outside the company’s e-commerce platform.

Both main parts of the business are growing rapidly. And don’t overlook Mercado Credito, the company’s young but fast-growing (and highly profitable) lending business. Mercado Credito has $3.3 billion of outstanding loan balances and has grown rapidly so far.

The best part is that all these businesses are in the relatively early stages. MercadoLibre’s merchandise volume is roughly 8% of Amazon’s, and its Mercado Pago payment volume is about 12% of the amount that PayPal (PYPL -2.63%) 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 in a much earlier stage of growth. As the e-commerce and fintech landscapes in Latin America evolve over the coming years, MercadoLibre could be a major long-term beneficiary.

5. PayPal

PayPal is an absolute cash machine that has been beaten down by about 75% from its highs.

The main reason is that investors were disappointed when PayPal’s growth abruptly slowed down in 2022, and management conceded that its previous user growth targets were unrealistic. Plus, with fears of a recession, we could certainly see lower consumer spending in the near term — which would mean lower fee income for PayPal.

However, it’s important for investors to realize that this is still a strong and highly profitable business. The company has about 430 million active users between PayPal and Venmo and processes about $1.3 trillion in annualized payment volume. The company expects about $5 billion in free cash flow for 2023 and has been aggressively buying back its own stock.

It’s not hard to see why PayPal’s management is choosing to use its capital this way. The stock is trading at its lowest price-to-sales ratio ever and trades for just 12 times forward earnings.

6. Shopify

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 with them by establishing long-term relationships.

Shopify offers a subscription plan starting at $39 per month for businesses and 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 $6.3 billion in revenue over the past four quarters. However, 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 slightly more than 15% of retail sales in the United States. Shopify has the No. 2 share, giving it a powerful ecosystem with network effect advantages over competitors.

The stock’s price is still well below the highs in the recent market downturn due to recession fears and signs of a slowdown in consumer spending, and Shopify looks like a great long-term opportunity.

7 – 10

7. Intuitive Surgical

Robot-assisted surgery beats shaky human hands. 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, with a market share of about 80% worldwide. And it has lots of room to grow as the adoption of its surgical systems and the number of supported procedures increase 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.

8. Disney

The House of Mouse is like 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 about 146 million subscribers fewer than four years after launching, while the company’s initial five-year goal called for 60 million to 90 million. To be sure, Disney is still trying to figure out the best ways to make Disney+ a profitable business, but it’s clearly progressing in the right direction. The market is absorbing price increases with little impact on the subscriber count.

In 2023, demand for Disney’s theme parks, movies, and cruise line has been very strong despite inflation pressures and recession fears. In fact, revenue is far greater than in comparable pre-pandemic times in Disney’s parks due to initiatives that have driven higher per-guest spending. Plus, the company recently announced it will invest $60 billion over the next 10 years in its theme parks and cruise lines to make sure they stay full for the foreseeable future.

With Disney also laser-focused on the profitability of Disney+ and its other streaming platforms, Hulu and ESPN+, this could be a powerful combination of profitable all-weather revenue streams. In a nutshell, Disney might be the ultimate combination of an in-person experiential play and a tech-focused 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 profit growth potential as the newer areas of its business evolve.

9. Berkshire Hathaway

Although most of this list is made up of growth stocks, or at least stocks that have some exciting growth drivers, this is the relatively boring value pick of the bunch (but in the best possible way).

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 about $355 billion that includes massive stakes in Apple (AAPL 0.8%), Bank of America (BAC -3.64%), Chevron (CVX -6.72%), American Express (AXP -1.42%), and Coca-Cola (KO -0.97%), as well as positions in dozens of other companies.

Most of the larger positions were personally handpicked by legendary investor Warren Buffett, who still manages the bulk of Berkshire’s investments. In fact, If Berkshire were a mutual fund, it would be the world’s largest actively managed mutual fund.

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 3,787,464% return (not a typo) it has produced from the time Buffett took the helm through the end of 2022, there’s no reason to believe it won’t continue to outpace the S&P 500 for the foreseeable future.

Buffett won’t be in charge forever. But Berkshire is his legacy, and he’s been stress-proofing it for years to ensure it’s in solid shape long after he’s no longer running things. Showing his faith, he and longtime business partner Charlie Munger have been buying back shares regularly. That’s a good sign for patient long-term investors like us.

10. Amazon

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. And its Amazon Web Services cloud platform is also a market leader, with a significant lead over the other two large players in the space, Microsoft (MSFT 0.59%) and Alphabet (GOOGL -0.09%)(GOOG -0.03%).

However, more growth potential exists than you might think. We’re a long way from maximizing e-commerce adoption; it still accounts for a little more than 15% of all U.S. retail sales. The cloud industry is relatively young and expected to roughly quadruple in size to a $2.3 trillion market by 2032. Amazon also has a ton of potential in other areas, such as healthcare, grocery stores, neighborhood markets, and more.

Related investing topics

How to use this list

How to use this stock list

If you’re just starting out on your investing journey (or want a sanity check), please read through our guide on how to invest in stocks (mentioned above). 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 all be the best choices for investors without established and diversified portfolios. Even the most stable companies on this list aren’t immune to volatility in their stock prices, especially over short periods.

For this reason, if you’re just getting started, you’ll also want to see our list of the five top tips for investing in 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.

Good luck!

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Matthew Frankel, CFP® has positions in Amazon.com, American Express, Bank of America, Berkshire Hathaway, FedEx, MercadoLibre, PayPal, Pinterest, Realty Income, Shopify, and Walt Disney. The Motley Fool has positions in and recommends Alphabet, Amazon.com, Apple, Bank of America, Berkshire Hathaway, Etsy, FedEx, Intuitive Surgical, MercadoLibre, Microsoft, PayPal, Pinterest, Realty Income, Shopify, and Walt Disney. The Motley Fool recommends Chevron and recommends the following options: long January 2024 $47.50 calls on Coca-Cola and short December 2023 $67.50 puts on PayPal. The Motley Fool has a disclosure policy.