Every week brings a new list of the best stocks to buy, and every week some of last week’s picks have already fallen out of favor. Those lists answer a question that sounds simple but has no single answer, because a stock that suits one investor can be a poor match for another.
Before you buy stocks, it’s worth looking beyond share prices to understand a company’s financial health, valuation, competitive position, and risks. This guide explains how to evaluate those factors, compare different types of stocks, and decide what belongs in a portfolio.
This is a marketing communication and in no way should be viewed as investment research, investment advice, or recommendation to invest. The value of your investment can go up as well as down. Past performance of financial instruments does not guarantee future returns. Investing in financial instruments involves risk; before investing, consider your knowledge, experience, financial situation, and investment objectives.
In this guide to choosing stocks
- No universal answer to the best stocks to buy
- The best stocks to buy now and why lists go stale
- 5 criteria for how to pick the best stocks
- A stock picking workflow for research and analysis
- Framework for how to know what stocks to buy
Why there’s no universal best stock to buy
The best stocks to buy depend on what an investor wants to achieve, how long they plan to invest, and how much risk they can accept. No single stock meets every investment objective, and even financially strong businesses can experience substantial share price declines.
For investors wondering what are the best stocks to invest in, the answer starts with understanding a company’s financial health, valuation, competitive position, and risks.
Readers new to the asset class can start with how stocks work, then return here for the framework.
The best stocks to buy now and why lists go stale
Most searches about what stocks to buy come with a sense of urgency. Investors look for the best stocks to buy now or ask which stocks to buy now, and the lists that answer them go out of date almost as soon as they are published.
Share prices move every trading day and company results arrive every quarter, so a stock that looked cheap on Monday can look expensive by Friday. A list built on last month’s momentum says little about the next 10 years.
The timing principle that never changes
Invest only money that will not be needed in the short term. An investor who may need the capital within months could be forced to sell at a loss. The real question is not which stocks are popular this week, but how to judge any stock at any time.
5 criteria for how to pick the best stocks
Professional analysts and private investors rely on many of the same building blocks when deciding how to pick stocks. The 5 criteria below cover the essentials of how to choose stocks, and each one can be checked against a company’s public reports. Together, they give a more durable answer to what are the best stocks to invest in than any ranked list.
1. Financial health
Revenue growth attracts attention, but growing sales don’t necessarily translate into stronger profits. A business may generate more revenue while facing increasing operating costs, shrinking margins, or substantial debt obligations.
Useful indicators include:
- Revenue growth: Whether sales are increasing consistently or fluctuating.
- Profitability: How much revenue remains after expenses.
- Operating cash flow: Whether core activities generate cash to support the business.
- Debt: The extent of borrowing and the company’s ability to meet repayments.
2. Valuation
Valuation measures compare what investors pay for a stock with the company’s earnings, assets, or growth prospects. One commonly used metric is the price-to-earnings ratio (P/E).
Higher ratios may reflect expectations of stronger future growth. Lower ratios may suggest slower growth, greater perceived risk, or potential undervaluation.
3. Competitive position
A company’s ability to defend its market position can influence profitability and long-term performance. However, competitive advantages can weaken. New technology, regulation, consumer preferences, and emerging competitors may challenge established businesses.
Understanding both the source and durability of an advantage is an important part of company analysis.
4. Dividends and capital returns
Dividend-paying companies return part of their profits to shareholders, while growth-oriented businesses may retain more capital for expansion.
A common measure is dividend yield, calculated as annual dividends per share divided by the current share price. However, a high dividend yield isn’t automatically favorable. It may increase because the share price has fallen, potentially reflecting concerns about the business.
Dividend payments can also be reduced or suspended. Investors therefore need to evaluate their sustainability rather than rely on historical payments alone.
5. Risk tolerance
Stocks differ in their sensitivity to economic conditions, competition, regulation, and market expectations. Volatility measures how sharply a share price swings, while cyclicality describes how closely a company’s results follow the economy.
Historical volatility offers insight into previous price movements, although it cannot capture every future risk. Portfolio exposure matters too. Owning several companies from the same industry may create concentration even when each business appears financially strong.
Types of stocks and their main characteristics
Investors exploring what stocks to buy can narrow their research by comparing stock categories. These classifications describe different company characteristics and potential portfolio roles, although individual businesses may fall into several groups.
Growth stocks
Growth stocks are generally associated with companies expected to increase revenue or earnings faster than the broader market.
They may operate in expanding industries or invest heavily in new products and technologies.
For example, artificial intelligence stocks can provide exposure to companies involved in semiconductors, software, cloud infrastructure, and related services.
However, industry growth doesn’t guarantee positive stock returns. High expectations may already be reflected in share prices, leaving businesses vulnerable to disappointing results.
Dividend, value, and defensive stocks
Dividend stocks focus attention on shareholder distributions, while value stocks are identified by comparatively low valuations against selected financial measures.
Defensive stocks typically operate in industries where demand is less sensitive to economic cycles, such as utilities or essential consumer goods.
These characteristics can overlap, but they don’t eliminate risk. A defensive company can still be overvalued, a dividend can be cut, and an apparently inexpensive stock can continue declining.
Blue chips and small-cap stocks
Blue-chip companies are generally large, established businesses with significant operations and long financial histories.
Small-cap companies have comparatively smaller market capitalizations and may operate at earlier stages of development.
Smaller businesses can offer exposure to different growth opportunities but may have fewer financial resources, less diversified revenue, and lower trading liquidity. Company size alone doesn’t determine investment quality.
Best stocks for beginners with little money
There is no fixed list of the best stocks for beginners with little money, but some characteristics make a company simpler for a new investor to judge.
A small budget is no longer the barrier it once was. Fractional shares make it possible to buy stocks with just a few euros, even when a full share costs hundreds.
On Mintos, stocks are available from €1, with no order fees from Mintos to buy, hold, or sell. The practical steps of opening an account and placing an order are covered in the guide on how to invest in stocks.
How to research stocks and evaluate the numbers
Knowing how to research stocks turns the criteria above into a repeatable process. Effective stock picking requires reliable information and consistent comparisons rather than relying on headlines, price charts, or individual opinions.
A practical starting point is the company’s financial statements, which provide information about profitability, financial obligations, and cash generation.
Key financial metrics
- Earnings per share (EPS): Profit attributable to ordinary shareholders divided by the weighted-average number of shares outstanding.
- Price-to-earnings ratio (P/E): The current share price divided by EPS, indicating how much investors are paying relative to earnings.
- Debt-to-equity ratio: A comparison of debt with shareholders’ equity, showing the extent to which a company relies on borrowing.
- Dividend yield: the annual dividend as a percentage of the share price
Fundamental vs. technical analysis
There are two main approaches to how to analyze stocks.
1. Fundamental analysis
Looks at the business itself, using its financial statements to estimate what the company is worth and comparing that estimate with the current share price.
2. Technical analysis
Sets the business aside and studies price charts and trading volumes, looking for patterns that might signal the next move.
Where to find reliable stock information
The most reliable data comes from the companies themselves:
- Published annual and quarterly reports
- Regulated disclosures with exchanges and supervisors
Third-party websites and news summaries are a quick starting point, but the original documents remain the primary source.
How to know what stocks to buy for your investment goals
Criteria and categories only become a decision once they are applied to a specific plan. The 5 questions below turn them into choices.
- What is the objective?
- What is the investment horizon?
- What level of risk is acceptable?
- What does the portfolio already hold?
- How much should one position represent?
The risks of individual stock investing
Individual stocks give investors control over company selection, but that control comes with specific responsibilities and risks.
- Concentration risk arises when portfolio performance depends heavily on a limited number of companies or industries. Unexpected earnings results, regulatory changes, or competitive disruption can cause substantial losses.
- Business failure can result in shareholders losing their entire investment if a company becomes insolvent.
- Emotional trading can lead to decisions driven by market excitement or fear rather than established criteria. Buying after rapid price increases or selling during downturns may undermine an investment strategy.
- Research requirements also matter. Monitoring results, management changes, valuations, and industry developments takes time.
- Currency exposure is another consideration for European investors. Stocks linked to non-euro currencies can be affected by exchange rate movements, even when purchased in euros.
Individual stocks are not the only route into the stock market. Funds such as ETFs spread an investment over hundreds or thousands of companies in one purchase, and many investors use them as the core of their holdings with a few individual stocks around it.
Other asset classes, like bonds or loans, could complement stocks too, and the guide to investments other than stocks covers the main options.
Where to invest in stocks
Once the research is done, the platform used to buy stocks also affects the outcome. Costs are the most visible difference. Some platforms charge a commission on every trade or add a currency conversion fee when euro-based investors buy US shares, and small charges on regular purchases add up over time.
Commission-free stock investing on Mintos
Mintos is an investment platform licensed and supervised by Latvijas Banka that provides access to more than 4,000 stocks from €1.
Individual stocks
Hand-pick your own stocks from Technology, Financials, Healthcare, Energy, Mining, and more, and manage your investments yourself. Every stock on Mintos is listed on a major regulated exchange, with sufficient trading volume and continuously available market pricing.
✔️ No FX charges, with US stocks traded in euros¹
✔️ Automated regular investing with Investment plan
✔️ Set limit orders based on price (coming soon)
✔️ Commission-free: €0 to buy, hold, or sell²
As with any investment, the value of stocks can go down as well as up, and you may receive back less than you invested.
¹ Many stocks are exposed to a currency other than the euro, such as US shares, even when bought and sold in euro on Mintos. Exchange-rate movements between the euro and that currency affect returns, independently of the stock’s own price.
² No order fees from Mintos to buy, hold, or sell stocks.
Frequently asked questions
What are the best stocks for beginners?
There is no single answer to what are the best stocks for beginners, but established companies with revenue from several sources are simpler to research.
What are the best stocks to buy now?
The answer to what are the best stocks to buy now is the same as at any other time: the ones that fit the investor’s plan.
When should you buy stocks?
When to buy stocks depends less on the calendar than on readiness, meaning once the research is done and the purchase fits a clear financial goal and time horizon.
How do I know what stocks to pick?
How to choose stocks comes down to 5 checks: financial health, valuation, competitive position, dividend history, and fit with risk tolerance. Knowing how to research stocks and how to analyze stocks through annual reports and key metrics like P/E turns those checks into a repeatable stock picking process.
