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20 of the Top Stocks to Buy in 2019 (Including the Two Every Investor Should Own)

Motley Fool Staff, The Motley Fool

Before we get to the stocks, let's acknowledge that these lists are tough.

The best stocks for you to buy today depends so much on your individual financial situation. To get a good read on where you stand, read our 13 Steps guide. It walks you through topics like establishing an emergency fund, asset allocation, when it makes sense to buy stocks, etc.

Now, onto the 20 stock ideas. Here's the entire list, followed by the summary buy thesis for each one.

  1. The Vanguard Total Stock Market ETF (NYSE: VTI)
  2. The Vanguard Total International Stock ETF (NASDAQ: VXUS)
  3. Amazon.com(NASDAQ: AMZN)
  4. Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL)
  5. Facebook (NASDAQ: FB)
  6. Intuitive Surgical (NASDAQ: ISRG)
  7. Axon Enterprises (NASDAQ: AAXN)
  8. AT&T (NYSE: T)
  9. Verizon Communications (NYSE: VZ)
  10. Ford Motor Company (NYSE: F)
  11. General Motors Company (NYSE: GM)
  12. ONEOK (NYSE: OKE)
  13. TerraForm Power (NASDAQ: TERP)
  14. Brookfield Infrastructure Partners L.P. (NYSE: BIP)
  15. CareTrust REIT (NASDAQ: CTRE)
  16. iRobot (NASDAQ: IRBT)
  17. lululemon athletica (NASDAQ: LULU)
  18. Wayfair (NYSE: W)
  19. Netflix (NASDAQ: NFLX)
  20. Constellation Brands (NYSE: STZ)

The first two are a bit of a cheat because they're actually exchange-traded funds (ETFs). ETFs allow you broad exposure to a basket of stocks, and these two are some of the best low-cost index funds around:

  • US Stocks: The Vanguard Total Stock Market ETF
  • Foreign Stocks: The Vanguard Total International Stock ETF

The first ETF (VTI) gives you exposure to basically the entire U.S. stock market by investing in over 4,000 stocks. The second ETF (VXUS) fills in the rest of the world with exposure to over 6,000 global stocks outside the U.S. (the top six countries represented, in order, are Japan, the UK, Canada, France, Germany, and China).

Some combination of these two is an excellent foundation for the equity portion of just about anyone's portfolio. They allow you to match the performance of the U.S. and international stock markets (less some extremely low fees). And for those who don't have the time or inclination to pick individual stocks, it could be your entire stock portfolio.

But since you clicked on our headline, you're probably looking for some individual stock ideas in your quest to beat the market, too.

5 of the Best Stocks for Beginning Investors

Let's start with five that are particularly good for beginning investors because of their strong balance sheets, positive free cash flow, and competitive advantages:

  • Amazon.com
  • Alphabet
  • Facebook
  • Intuitive Surgical
  • Axon Enterprises

The first three stocks are all "FAANG" (Facebook, Amazon, Apple, Netflix, and Google) stocks. These Big Tech companies have their hands in seemingly everything and have the potential to disrupt the parts of the economy they don't.

Stock Market Graphs and Bar Charts With Arrow Pointing Up

The bull case on a stock buy. IMAGE SOURCE: GETTY IMAGES

Their large market capitalizations reflect the fact the market knows this, too. That said, beginning investors are generally better off sticking to well-known large cap stocks with strong brand recognition as they start off on their investing journey versus getting too cute with under-the-radar smaller cap stocks. And all investors should stay away from penny stocks!

Amazon dominates online retail to the tune of about half of all U.S. e-commerce! If that doesn't amaze you, how about the estimates that over 100 million Americans are now paying the $119/year price tag to be Amazon Prime members?

And that's not even where it gets most of its profit. That comes from Amazon Web Services, its cloud computing offering. While its retail segment sells us literal picks and shovels, Amazon Web Services sells the virtual picks and shovels of the Internet.

As a bonus, Amazon throws in other goodies like its burgeoning original content as well as its subsidiaries like high-end organic retailer Whole Foods and the gaming-related live streaming video platform Twitch.

Alphabet (aka the owner of Google) is no less impressive. Its search engine might be better termed a "money engine." That's what happens when you have around a 90% market share worldwide.

In addition, YouTube is the #1 video platform in the world while Android is the #1 mobile operating system.

Also within the Alphabet umbrella are a whole bunch of futuristic moonshots and other "alpha bets" (get it?). As a result, Google is involved in everything from driverless cars to virtual reality to drones to artificial intelligence (AI).

Rounding out the FAANG companies here is Facebook, the ruler of social media with Instagram and WhatsApp in addition to its namesake Facebook and Facebook Messenger platforms. Each of those four platforms counts at least a billion monthly users. Pretty impressive when the world's population is also counted in the single-digit billions.

And yeah, don't forget about their Oculus VR tech and other bets, too.

Getting out of the Big Tech space a bit, there's healthcare pioneer Intuitive Surgical, which makes robotic surgery a reality with its da Vinci surgical systems. The technology assists surgeons in making procedures less invasive, leading to better patient outcomes. Far from an unproven flyer, Intuitive Surgical already has billions in annual sales and has been consistently wildly profitable -- think gross margins in the 60% to 70% range and net margins in the 20% to 30% range.

It's easy to see a growth path forward with increased adoption by surgeons and hospitals and increasing numbers of approved procedures.

Finally, we come to Axon Enterprises, known for its law enforcement and self-defense products. To wit, its Taser stun guns, Axon body cameras, and Evidence.com (uses AI to analyze uploaded video footage) offerings give an integrated solution to police departments.

For more in-depth breakdowns of the buy rationale for the five stocks above as well as other considerations before buying individual stocks, go to our analyst Brian Stoffel's full write-up on these top stocks for beginning investors.

8 of the Best Dividend Stocks

Dividend stocks make sense for many kinds of investors -- not just those looking for a regular income stream or DRIP investing. After all, there have been many long-term studies that have shown that dividend payers have outperformed those stocks that haven't paid dividends.

Let's take a look at eight appealing candidates for today's market. Each sports a dividend yield that's roughly two to three times the S&P 500's current dividend yield of 2%.

  • AT&T -- 6.5% forward annual dividend yield
  • Verizon Communications -- 4.1%
  • Ford Motor Company -- 6.7%
  • General Motors Company -- 4%
  • ONEOK -- 4.9%
  • TerraForm Power -- 5.9%
  • Brookfield Infrastructure Partners L.P. -- 4.8%
  • CareTrust REIT -- 3.8%

The first two stocks, AT&T and Verizon, together dominate the U.S. telecommunications market -- both wireless and the legacy landline. As our data, telecommunications, and media needs continue to grow, these two are poised to profit. Buzzwords like Internet of Things, 5G networks, and cloud computing all provide opportunities for these two.

Another pair to consider is Ford and GM. They play in an automotive space that was capital-intensive and competitive before the rise of electric, hybrid, and self-driving cars as well as ride-hailing services. Now the competition includes not only traditional car manufacturers, but also upstarts like Tesla, Uber, and Lyft, as well as many of Silicon Valley's largest tech players. Plus foreign competitors with the same ideas. A reason Ford and GM are both interesting for more research is that the market is also seeing these headwinds and is pricing them each at single-digit P/E ratios, leading to the nice dividend yields above. Of course, it's all for naught in the long term if you don't buy their strategies and plans for the future.

The next three, ONEOK, TerraForm Power, and Brookfield Infrastructure Partners L.P., are all at the cross-section of energy and infrastructure:

  • ONEOK specializes in natural gas/natural gas liquids pipelines and other midstream services.
  • TerraForm Power is all about renewable power. It owns and operates a bunch of solar and wind assets in the U.S and Europe.
  • Brookfield Infrastructure Partners L.P. is focused on infrastructure but its investments are pretty diverse within that niche. As its investor relations team describes it, their networks "facilitate the movement and storage of energy, water, freight, passengers and data." Think of it as a kind of private equity model where they "acquire high quality businesses on a value basis, actively manage operations and opportunistically sell assets to reinvest capital into the business." Be aware that Brookfield is a master limited partnership (MLP), so make sure to read up on the MLP tax consequences prior to owning this stock.

Finally, we have CareTrust REIT, which, as its name suggests, is a real estate investment trust (REIT). Like with MLPs, you'll want to read up on the special characteristics of a REIT before investing. CareTrust owns and leases out senior healthcare and housing facilities. It's an interesting play for those interested in the baby boomer/aging America trend.

Make sure to read our analyst Jason Hall's full buy thesis on each of these eight dividend stocks.

5 of the Best Growth Stocks

In contrast to dividend stocks, growth stocks often pay little (or none) of their earnings back to investors as dividends. In fact, many are at the pre-earnings stage or have such small earnings that their P/E ratios are stratospheric. And if they do have earnings, they tend to plow them back into their businesses.

  • iRobot 
  • lululemon athletica 
  • Wayfair 
  • Netflix 
  • Constellation Brands

iRobot is known for its Roomba line of robotic vacuum cleaners. Bears worry about the threat of increased competition. Bulls, however, point to the huge potential for optionality (i.e. a company morphing and pivoting over time to become something we can't envision today). iRobot is already expanding its offerings into robotic lawn mowers, so it's not hard to imagine it going after other household and commercial applications soon. More broadly, though, there's a lot of room for pivoting into interesting spaces when you're an early ish mover into robots, machine learning, and artificial intelligence. It's hard to speculate on exactly what iRobot could become, but at just over $3 billion in market capitalization, it's still less than 1% the size of Facebook, Alphabet, or Amazon, meaning there's lots of room for the stock price to run if its wildest goals come true. And plenty of room for success in between if there's a more conventional outcome.

Springing from its core yoga apparel base, the Lululemon brand has become an absolute force in athleisure. There are debates about whether athleisure (e.g. wearing spandex as if it were denim) is merely a trend or here to stay. While the answer to that debate may affect shorter-term growth, consumers will need fitness apparel for a long time to come. Beyond that, Lulu can grow internationally, beyond its North American stronghold (while Lululemon is a Canadian company, about 70% of its sales come from the U.S. and only about 10% of its sales come from outside the U.S. and Canada). Another potential growth driver is expansion beyond its traditionally female target demographic.

Wayfair is an online destination for furniture and other home items. Retail in any channel is tough, and it's no different for Wayfair. Competition is fierce, featuring major online players like Amazon, all the traditional bricks-and-mortar players, and a host of online boutique start-ups. To buy the Wayfair story, you'll probably want to believe that Wayfair can build up a brand, customer loyalty, and scale that'll enable it to boost margins to a point where it can be sustainably profitable. One favorable indicator for that case is Wayfair's 5-year sales growth rate near 50%.

Netflix needs no introduction. It's been able to stay steps ahead of doubters as it has vanquished Blockbuster, pivoted from mailed DVDs to online streaming, created award-winning original content, and kept total content costs contained enough to be consistently profitable. The worries today include ever-present competition (including other streaming service entrants from formidable content owners), fears of domestic saturation, and even higher content costs. On the other side, Netflix seems to have brand and pricing power, the notion that cable cutters can sign on to more than one online service, international expansion possibilities, and economies of scale as it continues to grow the top line (30%+ the past few years).

Constellation Brands is aptly named. Even if you haven't heard of the company, you know many of the alcohol brands it either owns outright or markets. These include beers like Corona, Modelo, and Ballast Point, wines like Robert Mondavi, Clos du Bois, and Ruffino, and spirits like SVEDKA Vodka. It's accomplished much of this through acquisitions over the years (and decades), a strategy that is generally riskier than growing organically. So far, however, it's worked out pretty well for Constellation. Most recently, it's branched out further still by buying a large stake (38%) in marijuana play Canopy Growth.

For more information, see our analyst Demitrios Kalogeropoulos's in-depth write-ups on these five growth stocks

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The Motley Fool's board of directors includes: John Mackey, CEO of Whole Foods Market, an Amazon subsidiary; Suzanne Frey, an executive at Alphabet; Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Axon Enterprise, Facebook, Intuitive Surgical, iRobot, Netflix, Tesla, and Wayfair. The Motley Fool owns shares of CareTrust REIT and has the following options: short January 2020 $155 calls on Apple and long January 2020 $150 calls on Apple. The Motley Fool recommends Brookfield Infrastructure Partners, Constellation Brands, Ford, Lululemon Athletica, ONEOK, and Verizon Communications. The Motley Fool has a disclosure policy.