8 Best Stocks for Long Term Investment Tips Every Investor Needs

8 Best Stocks for Long Term Investment Tips Every Investor Needs

The best stocks for long term investment are businesses that generate returns on invested capital above 15% consistently, carry manageable debt, operate in industries with pricing power, and trade at prices that do not demand flawless execution to justify. You are looking for the intersection of durable quality and reasonable valuation. That intersection is smaller than most investors expect, but it does exist in every market environment.

This post walks through 8 names that meet the criteria as of April 2026, with the data behind each selection.

Key Takeaways

• ROIC above 15% sustained over a decade is the strongest predictor of long-term stock outperformance found in academic and practitioner research.
• Price paid matters. Apple at ROIC 45.1% and P/E 28.3 is a different risk profile than Apple at P/E 45.
• A P/B ratio near historical lows for a quality business often signals better forward returns than a low absolute P/E on a low-quality business.
• The margin of safety principle applies even to great businesses. Buying at a 20-30% discount to intrinsic value absorbs errors in your growth assumptions.
• Berkshire Hathaway (BRK.B) at P/B 1.5 is historically near the buyback threshold Buffett has stated, which sets a practical floor on valuation risk.
• Using the ValueMarkers screener to apply ROIC, P/B, and DCF filters together surfaces these names in minutes rather than days.

What Makes a Stock Worth Holding for Decades

Long-term investment performance traces back to a small number of factors. ROIC determines how much value the business creates on each dollar it retains. The durability of that ROIC determines whether it is a competitive advantage or a temporary windfall. The reinvestment rate determines how much of that value creation compounds over time.

A business with ROIC of 25% that reinvests 50% of earnings at that same rate compounds book value at 12.5% per year before dividends. A business with ROIC of 8% and a 50% reinvestment rate compounds at 4%. Over 20 years, that difference transforms a $100,000 investment into either $1,100,000 or $219,000. The multiple is ten to one.

The P/B ratio is the market's price for that compounding engine. A P/B of 5 means you are paying $5 for every $1 of book value. For a business compounding at 25%, that is a reasonable price. For a business compounding at 8%, it is a wildly overpriced one.

8 Best Stocks for Long Term Investment

1. Apple (AAPL)

P/E: 28.3. ROIC: 45.1%. Dividend yield: 0.5%. Annual dividend growth: 5-year average of 7%.

Apple generates more free cash flow per share than almost any business in history. Its Services segment (App Store, iCloud, Apple TV+, Apple Pay) now contributes roughly 25% of revenue at 70%+ gross margins, far above the hardware segment's 36% margins. The installed base of 2.2 billion active devices creates a switching-cost moat that makes customer acquisition costs near zero for Services revenue.

The risk is in the P/E. At 28.3, Apple requires continued mid-single-digit earnings growth to justify the price. A contraction to P/E 22 with the same earnings would reduce the share price by roughly 22% from current levels. That is the valuation risk in owning a top-tier business at a near-premium price.

2. Microsoft (MSFT)

P/E: 32.1. ROIC: approximately 35%. Dividend yield: 0.7%. Annual dividend growth: 5-year average of 10%.

Microsoft's Azure cloud platform is growing at approximately 28% annually. The enterprise software suite (Office 365, Dynamics, LinkedIn) generates high-margin recurring revenue with minimal churn. The GitHub acquisition at $7.5 billion has proven to be the infrastructure layer for the AI development ecosystem via Copilot integration.

At P/E 32.1, MSFT is priced for above-average growth. The 10% annual dividend growth over five years indicates management's confidence in sustained earnings expansion.

3. Berkshire Hathaway B (BRK.B)

P/B: 1.5. P/E: approximately 21. Dividend yield: 0%.

BRK.B is Warren Buffett's stated buyback threshold. He has said publicly that Berkshire will buy back shares when the stock trades at or below 1.2 times book value as a conservative threshold, and that 1.5 times book represents good value. BRK.B currently trades at 1.5 times book.

Berkshire owns 180+ businesses outright and holds a $300+ billion equity portfolio. The operating earnings from insurance, railroads, utilities, and manufacturing fund share buybacks without requiring equity market timing. It is the closest publicly available vehicle to the private equity compounding model at a fair price.

4. Johnson & Johnson (JNJ)

P/E: approximately 15.2. Dividend yield: 3.1%. Consecutive years of dividend growth: 62.

JNJ's pharmaceutical pipeline reduces concentration risk. The medical device and surgery segments produce recurring revenue tied to procedure volumes, not drug patent cliffs. Operating margins sit near 30% and ROIC above 20%.

At a P/E of 15.2, JNJ offers something Apple and Microsoft do not: a price below the market median despite equal or higher business quality. The DCF intrinsic value calculation at 6% earnings growth and a 20x terminal multiple suggests fair value near $185, approximately 15% above recent prices.

5. Visa (V)

P/E: approximately 29. ROIC: above 30%. Dividend yield: 0.8%.

Visa operates the payment rails used by approximately 4 billion cardholders worldwide. It takes a fee on every transaction but carries no credit risk (that sits with the issuing banks). The network effect means that adding one more merchant increases the network's value for all existing cardholders, and adding one more cardholder increases the value for all existing merchants. This is a self-reinforcing moat that is almost impossible to replicate from scratch.

6. Alphabet (GOOGL)

P/E: approximately 22. ROIC: approximately 25%. Dividend yield: 0.5%.

Google Search processes approximately 8.5 billion queries per day and generates $200+ billion in annual advertising revenue. YouTube's watch time exceeds 1 billion hours per day. Google Cloud is growing at 28% annually and approaching breakeven on a standalone basis. At a P/E near 22, Alphabet is one of the few mega-cap technology companies where the earnings yield (approximately 4.5%) is competitive with long-term bond yields even before accounting for earnings growth.

7. Procter & Gamble (PG)

P/E: approximately 23. Dividend yield: 2.4%. Consecutive years of dividend growth: 68.

P&G's 65 brands across household staples, personal care, and baby care sell in 180 countries. The company has raised its dividend for 68 consecutive years, the longest active streak in the S&P 500. Revenue growth is modest at 4-5% annually, but pricing power has been demonstrated repeatedly through inflationary periods. The payout ratio sits near 60%, leaving room for continued increases.

8. Costco (COST)

P/E: approximately 53. ROIC: approximately 24%. Dividend yield: 0.5%.

Costco is an anomaly on this list. The P/E looks expensive until you understand the business model. Costco makes essentially zero profit on merchandise. All of its earnings come from membership fees ($64 billion in fee revenue annually, growing at 7%). Members renew at a 93% rate globally. The model creates an annuity on top of a retail operation, which explains the premium multiple. At the right entry price (pullbacks toward P/E 45 have historically been good entry points), Costco earns its place on any long-term list.

Fundamental Comparison Table

All data approximate as of April 2026.

Applying Margin of Safety to Each Name

None of the 8 names above are automatically good buys at any price. The margin of safety principle requires buying at a discount to the intrinsic value your analysis produces.

For Apple, using the DCF calculator with 8% revenue growth for 5 years, 15% free cash flow margin, and a 20x terminal multiple produces a fair value near $195. At $225, the margin of safety is negative. At $175, it is roughly 10%. A 10% margin of safety is thin but acceptable for a business with Apple's ROIC profile.

For JNJ, the same DCF at 6% earnings growth and a 20x terminal multiple produces fair value near $185. At $160, the margin of safety is approximately 14%. That is a more comfortable entry for a business with lower ROIC but also lower valuation risk.

The margin of safety is not a fixed percentage. It should scale inversely with the predictability of the business. A business with 20 years of steady earnings growth at 6% deserves a thinner margin of safety than a cyclical business with variable earnings.

How to Screen for These Names Systematically

The screener applies all 120 fundamental indicators simultaneously. For the long-term investment filter, set:

• ROIC: minimum 15%
• P/E: maximum 35 (screen out the most extreme valuations)
• Debt-to-equity: maximum 1.5
• 5-year EPS CAGR: minimum 6%
• VMCI Score: minimum 7.0 out of 10

The VMCI Score weights Value (35%), Quality (30%), Integrity (15%), Growth (12%), and Risk (8%). A score of 7.0+ means the company passes on most dimensions without a fatal flaw in any single pillar.

Further reading: SEC EDGAR · Investopedia

Why long term stock picks Matters

This section anchors the discussion on long term stock picks. The detailed treatment, formula, and worked examples appear in the body of this article above. The points below summarize the most important takeaways for value investors who want to apply long term stock picks in real portfolio decisions. ValueMarkers exposes the underlying data on every covered ticker via the screener and stock profile pages, so the concepts in this article translate directly into actionable filters.

Key inputs for long term stock picks

See the main discussion of long term stock picks in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using long term stock picks alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.

Sector benchmarks for long term stock picks

See the main discussion of long term stock picks in the sections above for the full treatment, including the inputs, the calculation methodology, the typical sector benchmarks, and the most common pitfalls to avoid. The ValueMarkers screener lets value investors filter the full universe of 100,000+ stocks across 73 exchanges using long term stock picks alongside the rest of the 120-indicator composite, with sector percentiles and historical trends shown on every stock profile.

Related ValueMarkers Resources

• Pb Ratio — Glossary entry for Pb Ratio
• Margin of Safety — Margin of Safety expresses how cheaply a stock trades relative to its fundamentals
• DCF Intrinsic Value — DCF captures how cheaply a stock trades relative to its fundamentals
• Best Dividend Stocks To Buy And Hold — related ValueMarkers analysis
• Best Index Funds For Long Term Investing — related ValueMarkers analysis
• Michael Burry — related ValueMarkers analysis

Frequently Asked Questions

what does ebitda stand for

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. The metric strips out financing decisions (interest) and non-cash accounting charges (depreciation and amortization) to show operating cash profitability. For long-term investors, EBITDA matters most as a component of the EV/EBITDA multiple, which is used to compare company valuations across different capital structures. A company with $5 billion in enterprise value and $500 million in EBITDA trades at 10x EV/EBITDA. Comparing this multiple to the industry average tells you whether the market is paying a premium or a discount for that particular business's earnings power.

what stocks to buy

The starting point is quality: find companies with ROIC consistently above 15%, operating margins above 15%, and debt-to-equity below 1.5. The ending point is valuation: confirm that the current price offers a margin of safety versus your DCF intrinsic value estimate. The 8 names in this post are candidates as of April 2026. None of them are automatically good buys without checking the current price against your own valuation model. The screener at ValueMarkers tracks 120 indicators for every major stock, so you can filter quality and valuation simultaneously in under 5 minutes.

what are penny stocks

Penny stocks are shares of small companies that trade at low prices, typically below $5. They are characterized by thin trading volumes, minimal public disclosure requirements, limited operating histories, and susceptibility to price manipulation. The low nominal price is not an indicator of value. A stock at $2 can be wildly overvalued if the company earns nothing. A stock at $800 can be cheap if it earns $100 per share. Penny stocks have no place in a long-term buy-and-hold strategy built on fundamental quality. The metrics that predict long-term outperformance (high ROIC, durable competitive advantages, consistent free cash flow) are almost never present in penny stock companies.

what does cagr stand for

CAGR stands for Compound Annual Growth Rate, the annualized rate at which a value grows from a starting point to an ending point over a defined period. Formula: (end value / start value)^(1/years) - 1. An investment that grows from $10,000 to $21,589 over 10 years has a CAGR of 8.0%. CAGR is more meaningful than simple average returns because it accounts for compounding. The screener shows revenue CAGR, EPS CAGR, and dividend CAGR over 3-year and 5-year windows for every stock in the database, giving you a clean picture of each company's growth trajectory.

what are the best stocks to buy right now

The best stocks to buy right now depend on your price versus each company's current intrinsic value. Using the ValueMarkers DCF calculator and screener, identify names where the VMCI Score is above 7.0 and the current price is below your DCF fair value estimate. As of April 2026, JNJ at a P/E near 15.2 and Berkshire Hathaway at P/B of 1.5 offer the most comfortable margin of safety among the names in this post. Apple and Microsoft are high-quality businesses but require growth assumptions at the top of the historical range to justify current prices.

what is eps in stocks

EPS stands for Earnings Per Share, calculated as net income divided by diluted shares outstanding. It is the foundational metric for most valuation ratios. The P/E ratio is simply the stock price divided by EPS. EPS growth of 10% per year means the business is generating 10% more earnings per share annually, which (assuming a stable P/E multiple) translates directly into 10% annual stock price appreciation. The screener tracks trailing EPS, forward EPS estimates, and 1-year, 3-year, and 5-year EPS CAGR for all stocks in the database, making it straightforward to compare earnings growth trajectories across the 8 names in this post.

Run the ValueMarkers screener and apply the ROIC, VMCI Score, and P/E filters to find additional long-term investment candidates beyond the 8 names in this guide.

Written by Javier Sanz, Founder of ValueMarkers. Last updated April 2026.

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Disclaimer: This content is for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.