Last Updated on Nov 15, 2022 by Aradhana Gotur

Whether you want to meet a financial goal or leave a legacy for your children, buying stocks with good fundamentals and prospects is the best investment you can make. That’s not it, holding them for the long term is also key to generating wealth. Doing this will allow your money to grow multifold in line with the company’s performance. So if you are looking for the best stocks, we have filtered five based on a few metrics. Read on to find them out.

Best stocks to consider buying for the long term

NameMarket Cap (Rs. in cr.)Close Price (Rs.)ROCEDebt to Equity5Y Historical EPS Growth5Y CAGR (%)
Larsen & Toubro Infotech Ltd88,706.365,05833.229.4718.1739.88
Divi’s Laboratories Ltd86,845.393,271.430.290.0322.7926.33
Mphasis Ltd43,154.062,026.6525.567.5915.1822.53
Nestle India Ltd1,95,940.8320,322.555.0212.7516.4521.15
Havells India Ltd77,459.601,236.4524.287.2819.2719.77

Note: The data in the above table is dated 14th November 2022. The stocks are filtered using Tickertape Stock Screener based on the following parameters:

  • Nifty 100
  • ROCE – set to high and sorted by high to low
  • Debt to equity ratio – set to low
  • 5Y Historical EPS Growth
  • 5Y CAGR

Analysis of the above 5 best shares to buy for long term

  1. Larsen & Toubro Infotech Ltd (LTI)

Engaged in computer programming, consultancy, and related activities, Larsen & Toubro Infotech is a reputed company in the IT sector. It is a large-cap stock with a market cap of Rs. 88,706 cr. LTI stock price grew at a 5-yr CAGR of 39.88. Its ROCE is 33.22, and 5Y historical EPS growth is 18.17. The company has a debt-to-equity ratio of 9.47.

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LTI paid a final dividend of Rs. 30 in FY 2022. Keep track of all corporate actions of LTI in the Events section of the Stock Page on Tickertape.

  1. Divi’s Laboratories Ltd

A reputed pharma company, Divi’s Laboratories Limited manufactures and sells Active Pharmaceutical Ingredients (APIs) and Intermediates. Its product portfolio includes Peptide Building Blocks, Carotenoids, Generic APIs, and Intermediates.

Having a market capitalisation of Rs. 86,845.39 cr., Divi’s Labs is a large-cap stock. Its 5-yr CAGR is 26.33%, and the ROCE is 30.29. The company has a comfortable debt position with a debt-to-equity ratio as low as 0.03. Divi’s 5-yr Historical EPS Growth has been 22.79.

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Divi’s paid a final dividend of Rs. 30 in FY 2022. Keep track of all corporate action of Divi’s Labs in the Events section of the Stock Page on Tickertape.

  1. Mphasis Ltd

Mphasis Limited is an IT services and solutions provider offering applications, Business Process Outsourcing (BPO) and infrastructure services. The company is from the mid-cap category having a market capitalisation of Rs. 43,154.06 cr. Mphasis has an attractive ROCE of 25.56, and a 5-yr CAGR of 22.53. Its 5-yr historical EPS growth is 15.18.

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Mphasis is purported to be moving from the mid-cap to the large-cap universe during the next stock reclassification by the Association of Mutual Funds in India (AMFI). To know more such recent developments about the stock, follow the News section on Tickertape.

  1. Nestle India Ltd

A well-established company in the FMCG sector, Nestle India Limited is engaged in the food business. It operates brands including Maggi, Nescafe, BarOne, KitKat, Munch, and Eclairs.

Having a market capitalisation of Rs. 1,95,940.83 cr., Nestle India is a large-cap stock. It has a debt-to-equity ratio of 12.75 and 5-yr historical EPS growth of 16.45. Nestle’s stock price grew at a 5-yr CAGR of 21.15, and its ROCE is 55.02!

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To stay updated about the recent developments in Nestle India, visit the News section on the Stock Page.

  1. Havells India Ltd

Havells India Limited is one of the leading manufacturers of switch gears, cable, electric consumer durables, and lighting and fixtures. Having a market capitalisation of Rs. 77,459.60 cr., Havells India is a large-cap stock. Its ROCE is 24.28 and a 5-yr historical EPS growth is 19.27. Havells’ stock price grew at a 5-yr CAGR of 19.77. Its debt-to-equity ratio is 7.28.

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Check out the recent developments in Havells India Ltd in the News tab of the Stock Page on Tickertape.

Key parameters used to filter the best 5 stocks

Now that you know some of the top shares to buy, read more about the key parameters that we used to filter them using Tickertape:

  1. Nifty 100: This is a diversified stock market index that consists of the top 100 NSE stocks representing major sectors of the Indian economy.
  2. ROCE: This is an important accounting ratio that suggests how efficiently a company uses shareholders’ equity to attain growth. A high ROCE (Return on Capital Employed) suggests that a company enjoys operational efficiency.
  3. Debt-to-equity ratio: This is a financial ratio that indicates the proportion of shareholders’ equity and debt used to fund a company’s assets. A lower ratio indicates that the company uses less debt and employs more equity. Therefore, the lower the ratio, the better it is.
  4. 5Y Historical EPS Growth: This is the compounded annual Earnings Per Share (EPS) growth rate over the previous five fiscals. A positive EPS growth suggests that a company is getting more profitable.
  5. 5Y CAGR: This indicates the compounded annual growth rate of the company’s stock price over the last five financial years. The higher, the better.

Note that none of the above metrics should be considered in isolation when evaluating a stock, as it can be misleading. For instance, a company can have a low debt-to-equity ratio, but its ROCE might not be that impressive. It wouldn’t make sense to invest in a company that is not efficiently using your funds (shareholders’ equity) to grow.

Things to keep in mind before investing in the best stocks

  1. In addition to the above, take time to do an industry analysis of the stock you want to invest in. This will give you an idea of how the industry has performed in the past and what can be expected in the future. This has a direct bearing on the company’s prospects as well.
  2. The stock market can be volatile in the short term. But history is testimony to the fact that it grows with time. So let short-term fluctuations not put you off. Hold your stocks for the long term to reap the best returns. Long-term can mean 5, 7 or more years.
  3. Analyse your risk tolerance. Large-cap stocks are considered to be relatively safer than mid-cap and small-cap shares. However, investing in shares is a risky business by nature. So ensure to invest in stocks that are in line with your risk tolerance. You can check out the Overview section of the Stock Page on Tickertape. Here’s an example of the riskiness of investing in LTI.

Interested in buying these stocks? Add them to the Basket on Tickertape and execute multiple stock orders in one go!

Alternatively, you can track the performance of these stocks by adding them to the Watchlist on Tickertape.

Frequently asked questions

Which are the best shares to buy?

The best stocks to buy today depend on various factors like your investment objective, risk tolerance, holding period, sector preference, industry prospects, company performance, and so on. In case you have a low-risk tolerance, large-cap stocks would be a good choice for you as they are relatively stable. But if you are young and can afford to take on a higher risk, you can consider fundamentally-strong mid-cap and large-cap stocks.

What are the best long-term stocks to buy?

When looking for long-term stocks to buy, analyse their fundamentals well. Gauge how the stock has performed in the past few years and the scope in the future. One of the most important things to look at is whether the company’s products and services can stay relevant in the upcoming years. Additionally, find out the company’s outlook on change management and innovation, which are vital to keeping the business relevant at all times. Read Best Stocks for Long Term Investment to get a list.

Aradhana Gotur
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