What Are the Best Shares to Buy Now?

The best shares to buy now could be those companies with solid financial positions, competitive advantages and long-term growth potential, in my view.

Deciding what are the best shares to buy now is clearly very subjective. Different investors are likely to have differing views on what traits are most attractive in a specific company.

However, the most attractive stocks to purchase today could be those businesses with solid financial positions and competitive advantages that provide less risk and greater return potential.

Furthermore, they are likely to trade at low prices that mean there is significant scope for capital growth in 2021 and over the long run.

Financially sound businesses may be among the best shares to buy now

The best shares to buy now could include those companies that are likely to overcome short-term economic and political risks. Threats such as coronavirus and Brexit could weigh on investor sentiment in the early part of 2021. They may even cause a market downturn that is catalysed by challenging operating conditions across many sectors.

Companies with strong balance sheets may be able to capitalise on difficult industry outlooks. For example, they may have access to capital that enables them to make acquisitions to strengthen their market position. Or, they may be able to outlast weaker peers to increase their market share. This could lead to them enjoying stronger profit growth in the long run as a likely economic recovery takes hold.

Sound strategies and a competitive advantage

The most appealing shares to buy today may also have competitive advantages versus their sector peers. For example, they could have a unique product or enjoy strong customer loyalty. This may mean they produce more resilient levels of sales and profitability in challenging economic conditions, and benefit to a greater extent than rivals from improving operating conditions.

Companies that have flexible strategies may also be more attractive buying opportunities at the present time. The world economy is undergoing rapid change that could fundamentally shift consumer demand within many industries. Those businesses with a low proportion of fixed costs and strategies that can adapt easily may find it less costly to adjust to a ‘new normal’ in the coming years. This may lead to greater profitability and a higher share price over time.

A wide margin of safety

The best shares to buy now are likely to have wide margins of safety. In other words, their present valuations are unlikely to accurately value their long-term financial prospects. This may be due to weak investor sentiment, or an uncertain near-term operating outlook. As a result, investors may be able to generate high returns as market sentiment improves and operating conditions do likewise.

Even after the stock market rally in the final three quarters of 2020, many stocks trade at attractive prices. Buying a diverse range of them may produce impressive returns over the coming years that are ahead of the wider market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

investment research
Dividend Stocks

Best Stock to Buy Right Now: TD Bank vs Manulife Financial?

TD and Manulife can both be interesting stock picks for today, depending on your investment style.

Read more »

A worker gives a business presentation.
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These stocks are out of favour but could deliver nice returns over the coming years.

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 5.5 Percent Dividend Stock Pays Cash Every Month

This defensive retail REIT could be your ticket to high monthly income.

Read more »

Confused person shrugging
Dividend Stocks

Passive Income: How Much Do You Need to Invest to Make $600 Per Month?

Do you want passive income coming in every single month? Here's how to make it and a top dividend ETF…

Read more »

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

ways to boost income
Investing

Are Telus and BCE Stocks a Smart Buy for Canadian Investors?

Telus (TSX:T) and BCE (TSX:BCE) have massive dividend yields, but their shares have been quite sluggish!

Read more »

investment research
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

Is OpenText stock poised for a 2025 comeback? AI ambitions, a 3.8% yield, and cash flow power make it a…

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »