Best stocks to hold for 10 years

Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. So what are the best stocks to buy now or put on a watchlist? General Motors (GM), Texas Roadhouse (TXRH), Invesco Solar (TAN), Dexcom (DXCM) and Caterpillar (CAT) are prime candidates.

With inflation worries high, and the Federal Reserve tightening rates aggressively, market action has been challenging so far in 2022. The Russian invasion of Ukraine also continues to weigh on markets. Rising troubles in China due to rising Covid infections and unrest over lockdowns could also spook indexes.

Best Stocks To Buy: The Crucial Ingredients

Remember, there are thousands of stocks trading on the NYSE and Nasdaq. But you want to find the very best stocks right now to generate massive gains.

The CAN SLIM system offers clear guidelines on what you should be looking for. Invest in stocks with recent quarterly and annual earnings growth of at least 25%. Look for companies that have new, game-changing products and services. Also consider not-yet-profitable companies, often recent IPOs, that are generating tremendous revenue growth.

IBD's CAN SLIM Investing System has a proven track record of significantly outperforming the S&P 500. Outdoing this industry benchmark is key to generating exceptional returns over the long term.

In addition, keep an eye on supply and demand for the stock itself, focus on leading stocks in top industry groups, and aim for stocks with strong institutional support.

Once you have found a stock that fits the criteria, it is then time to turn to stock charts to plot a good entry point. You should wait for a stock to form a base, and then buy once it reaches a buy point, ideally in heavy volume. In many cases, a stock reaches a proper buy point when it breaks above the original high on the left side of the base. More information on what a base is, and how charts can be used to win big on the stock market, can be found here.

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Don't Forget The M When Buying Stocks

A key part of the CAN SLIM formula is the M, which stands for market. Most stocks, even the very best, follow the market direction. Invest when the stock market is in a confirmed uptrend and move to cash when the stock market goes into a correction.

A stock market rally that kicked off 2022 soon fell on its face. While the market battled back amid a better than expected earnings season, the previous uptrend failed amid disappointing inflation data. The market had been trying to battle back, with the S&P 500, the Nasdaq and the Dow Jones Industrial Average all powering off lows for the year. The S&P 500 achieved a key milestone by retaking its 200-day moving average.

The confirmed uptrend resumed after the market rallied on a cooler-than-expected CPI report and action since has been constructive. Now is the time to get back into the market, though exposure should be increased in a measured fashion. Focus on fundamentally strong stocks coming out of sound chart patterns, such as those in the IBD 50. These names will tend to have rising relative strength lines. The stocks below are good candidates.

It is key for investors to keep their wits about them given the current challenging nature of the market. It is also key to stay on top of sell signals as not every trade will work out, even in an uptrend. Any stock that falls 7% or 8% from your purchase price should be jettisoned. Also beware of sharp breaks below the 50-day or 10-week moving averages.

Remember, there is still significant headline risk. Inflation remains a key issue while the Russia-Ukraine conflict is a wild card that has proved its ability to shake the market.

Things can quickly change when it comes to the stock market. Make sure you keep a close eye on the market trend page here.

Best Stocks To Buy Or Watch

• General Motors
• Texas Roadhouse
• Invesco Solar
• Dexcom
• Caterpillar

Now let's look at GM stock, Texas Roadhouse stock, Invesco Solar stock, Dexcom stock and Caterpillar stock in more detail. An important consideration is that these stocks all boast impressive relative strength.

GM Stock

GM stock is trading just below a cup-with-handle base ideal entry point of 40.20, MarketSmith analysis shows. On a weekly chart, GM also has a handle with a 41.68 buy point.

General Motors stock is back above the key 50-day moving average, though much of the base formed below it. GM forged the handle right around the 200-day line.

The RS line is taking a pause once again after fighting back from a recent dip. It remains off highs for the year.

Stock market performance and earnings are moving roughly in lockstep. The stock has been rebounding of late but has more work to do to recoup its losses for the year.

General Motors has just snapped a four-quarter streak of declining earnings. GM earnings rebounded 48% to $2.25 per share, topping analyst estimates. Revenue bounced 56% to $41.889 billion, but was light of Wall Street expectations.

Despite the big Q3 beat, General Motors still sees full-year EPS $6.50-$7.50. It continues to expect 25%-30% higher wholesale volumes and automotive free cash flow of $7 billion-$9 billion.

Wall Street now sees full-year GM earnings per share of $7.19, up 2%.

Big money has been buying up the stock of late, which is reflected in its Accumulation/Distribution Rating of B. In total, 48% of its stock is held by funds.

One key part of the CAN SLIM formula that GM is pursuing is the N, which stands for New Products. GM has said it hopes to phase out the sale of ICE light vehicles by 2035.

At a Nov. 17 investor day GM gave updated guidance. GM expects to produce 400,000 EVs in North America from 2022 to mid-2024 as its five assembly plants ramp up. By the end of 2025, General Motors plans to produce 1 million EVs annually in both North America and China.

GM estimates it will sell 44,000 electric vehicles in the U.S. this year for a loss. But CEO Mary Barra said at the event she expects new EV profits to be in-line with gasoline cars and trucks by 2025. GM's calculations factor in federal incentives under the Biden administration's Inflation Reduction Act that will effectively subsidize EVs.

The firm now expects adjusted automotive free cash flow between $10 billion and $11 million, up from its earlier guidance of $7 billion to $9 billion for the year.

For General Motors an EV ramp is key as it attempts to compete with Tesla (TSLA).

GM aims to deliver 400,000 EVs in North America through 2024. But its pricey new Hummer and Lyriq EV models sold less than 500 units combined last quarter, with an older but refreshed Chevrolet Bolt model comprising the bulk of its EV sales.

Next year, the automaker plans to increase Bolt EV production by nearly 60%. In 2023, GM also plans to launch the first all-electric versions of the Silverado truck, Blazer SUV and Equinox SUV crossover, all from its Chevrolet brand, which is known for value.

Along with earnings, auto industry forecasts are under close scrutiny. Investors and industry watchers are bracing for any signs of weaker demand as interest rates rise and recession fears grow. GM CEO Mary Barra said "demand continues to be strong," echoing similar statements from both GM and Ford management earlier in October.

Texas Roadhouse Stock

Texas Roadhouse is trading in a buy zone after previously clearing a flat-base entry point of 95.52. It comes after it previously broke past an early trendline entry.

TXRH stock has continued to show strength following earnings, outperforming the overall stock market by moving higher still.

The relative strength line for TXRH is remarkable. It is currently catching its breath after making new highs for months. This is especially impressive as retail and consumer-spending sector leaders are few and far between.

Overall powerful performance is reflected in an IBD Composite Rating of 91. The stock has seen its price pop by more than 9% so far in 2022.

Texas Roadhouse's first shop opened in Indiana, very close to its current headquarters of Louisville. It follows a simple strategy: Provide a fun, family friendly dining experience with great value.

The pitch has one plenty of institutional support, with 63% of its stock currently being held by funds.

The casual dining specialist has over 680 locations in 49 states and 10 foreign countries. It also operates under the Bubba's 33 and Jaggers names.

The firm currently boasts average EPS growth of 14% over the past three quarters. Texas Roadhouse has also posted average EPS growth of 43% over the last three years.

The purveyor of hearty fare like Texas Size Combos and Fall-Off-The-Bone Ribs reported Q3 earnings after the close on Oct. 27.

A 24% EPS increase in the third quarter of 2022 comes on top of 79% growth in the same quarter a year ago. Quarterly sales have averaged 36% year-over-year growth over the past six quarters through Q3 this year. A recent study by research firm Placer.ai notes that Texas Roadhouse is one of the best-performing U.S. restaurant brands in terms of visits, up 27% in the third quarter vs. the same period in 2019.

Wedbush recently hiked its price target on Texas Roadhouse stock to 98 from 95 while maintaining an outperform rating. The firm noted "consistent market share gains' for the dining chain.

Looking For The Next Big Stock Market Winners? Start With These 3 Steps

Invesco Solar Stock

The Invesco Solar ETF is in a buy zone after clearing a cup with handle with a buy point of 83.20.

Shares are trading above their 50-day moving average, an encouraging sign.

The fund has increased in value by nearly 7% so far this year, far better than the performance of the S&P 500.

Indeed, it is in the top 16% of stocks in terms of price performance over the last 12 months.

Solar stocks have gotten a boost by the massive green energy bill known as the Inflation Reduction Act. It was signed into law by President Biden in August. The legislation unlocks $370 billion for clean-energy incentives and consumer benefits.

The Inflation Reduction Act is the largest federal government spending increase on alternative energy in U.S. history. Further, its impact could last over the next decade, affecting TAN stock and other issues.

Also, economics are pushing renewables such as solar and wind energy to the fore, thanks to tax credits and cheaper equipment. According to the International Energy Agency, solar is now less expensive than natural gas and coal.

One key feature of the Invesco Solar fund is it offers way into solar energy while minimizing risk.

TAN stock and other solar energy stocks already were getting a boost from international agreements to slash carbon emissions and lessen the impact of global warming.

TAN stock is international in scope and includes companies in all areas of the solar economy from parts makers to panel manufacturers to battery storage suppliers. ETFs are a way to play solar with less volatility than one might experience with a single stock.

It offers exposure to a range of solar stocks in its portfolio, including First Solar (FSLR)), Enphase Energy (ENPH), and SolarEdge Technologies (SEDG).

While First Solar and Enphase are leading the solar group, the bulk of solar plays are all rallying now, so TAN is not a half-baked ETF of winners and losers.

Dexcom Stock

Dexcom recently flashed an early entry after rebounding from its 21-day moving average.

Dexcom stock now has a flat base on a weekly chart with a 123.46 buy point, according to MarketSmith analysis. That flat base could be seen as a handle to a deep cup going back to early April.

DXCM has posted two positive gap-ups in rising volume since early October, a sign of institutional demand.

Dexcom makes continuous glucose monitoring systems for ambulatory use by patients with diabetes. That's a landmark change in diabetes care.

The company ended many years of losses with earnings of 9 cents a share in 2018, then saw a 397% surge in EPS to 46 cents in 2019.

Dexcom has now launched its newest sensor, dubbed G7, in five countries. It hopes to follow suit in the U.S. in the first quarter. The sensor helps run Dexcom's continuous glucose monitor, or CGM. The body-worn device helps diabetics keep tabs on their blood sugar levels.

Chief Executive Kevin Sayer says the G7 launch is Dexcom's biggest ever. The new sensor offers an array of improvements over its predecessor, the G6. The G7 is more accurate, 60% smaller, has more convenient onboarding options and a better app experience for patients, he said.

"Everything anybody loves about G6 gets better with G7," Sayer told Investor's Business Daily.

Investors in Dexcom stock now are watching for the Food and Drug Administration's decision on G7. The company expects the FDA to sign off on the new sensor this quarter ahead of a first-quarter launch.

Bank of America analyst Travis Steed says it's "a matter of timing, not a matter of if" when it comes to Medicare reimbursement for CGM use among patients who either take insulin once a day or suffer from low blood sugar but don't take insulin. He has a buy rating on Dexcom stock.

"We see mid-20% growth for at least the next five to seven years and 2024 could be very exciting with basal/G7/international (sales growth)," he said in a recent note to clients.

5 Stocks Near Buy Points Amid Market Rally

Caterpillar Stock

CAT stock currently sits just below a cup base buy point of 238. It is also offering up a higher alternate entry of 239.95.

To underline the strength of its recent performance, the stock has staged a massive 46% rally since bottoming in late September.

The relative strength line is taking a breather at the moment following as sharp upwards spike from late September until early November.

The Dow Jones stock currently holds a very strong IBD Composite Rating of 94 out of 99. While stock market performance is its strongest suit, solid earnings are reflected in an EPS Rating of 85 out of 99.

Investors may wonder why CAT stock is making such a strong move when the global economy could be potentially sliding toward recession in 2023

For even in a soft landing, residential construction, which accounts for 25% of Caterpillar's construction industry sales, is going to struggle. In addition, China, which drives a lot of the demand for global commodities, is also having a tough time.

But Caterpillar has so many other things going in its favor, starting with three big Biden-era spending packages. Together they could plow $1 trillion into earth-moving projects over a decade, starting with the $500 billion in new infrastructure spending approved in the fall of 2021.

Then, over the summer, Congress passed the CHIPS Act to boost domestic semiconductor production with up to $250 billion in authorized funding. And the Inflation Reduction Act will put up $369 billion to expedite the mining projects and the build-out of green energy infrastructure. That includes factories to make EV batteries, photovoltaic cells and wind turbine blades.

Those latter two bills tap into the push to build a domestic supply chain for critical inputs. That has become all the more important amid Russia's invasion of Ukraine and growing tensions with China.

Caterpillar's energy-sector business also stands to benefit from Europe's push to secure non-Russian energy capacity, including the buildout of terminals for shipping LNG.

As Wall Street probes potential weak spots in the thesis of a sustained investment upcycle for Caterpillar, there's more reason to be reassured. Strong order backlogs are providing a degree of visibility, while Caterpillar says that dealer inventories are at the low end of the typical range.

CAT management says the company can pivot quickly if conditions warrant, as it did when sales tanked after Covid hit. "We still met our margin targets that year," CEO Jim Umpleby said in the Q3 earnings call on Oct. 27. "So again, we know what to do. But as we sit here today, even though we're watching things very closely, we continue to see healthy demand across most of our end markets."

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