How to Pick the Best Stocks for Long-Term Growth: Why Novartis and Shopify Stand Out

Finding the right companies to invest in is the foundation of any successful long-term wealth-building strategy. While long-term investing appears straightforward on the surface—buy quality stocks and hold them for years—the real challenge lies in identifying which companies truly deserve a permanent place in your portfolio. To help you navigate this decision, let’s explore two compelling candidates that have demonstrated resilience, growth potential, and the ability to thrive across economic cycles: Novartis and Shopify. These represent the kind of best stocks to buy now if you’re committed to decades of patient capital deployment.

Novartis: The Pharmaceutical Powerhouse Built to Endure

For investors seeking long-term stability with growth, few industries matter more than pharmaceuticals. However, not every player in this space warrants your attention. Novartis is different, and here’s why.

Innovation as a Competitive Moat

The company has consistently demonstrated its ability to develop breakthrough medications across multiple therapeutic areas. By September 30, 2024, Novartis had achieved a remarkable milestone: 10 products generating over $1 billion in annual sales each, with several more approaching that threshold. Most of these drugs have maintained healthy revenue growth trajectories, indicating sustained market demand and pricing power.

Navigating the Patent Cliff Challenge

Patent expiration represents one of the pharmaceutical industry’s biggest risks. Novartis faced this head-on when Entresto—a blockbuster medication for chronic heart failure—lost exclusivity. Yet the company’s performance barely faltered. In Q3 2024, revenue climbed 8% year-over-year to $13.9 billion, while earnings per share reached $2.25, up 9% from the prior year. For a company managing a major patent cliff, these are impressive numbers. This resilience stems directly from Novartis’ diversified product pipeline. Recent launches like Fabhalta (approved in December 2023 for treating paroxysmal nocturnal hemoglobinuria) offset the revenue loss from older drugs.

Dividend Excellence for Long-Term Investors

Novartis isn’t just about growth—it’s about rewarding shareholders consistently. The company has increased its dividend for 28 consecutive years and currently yields 3%, substantially outpacing the S&P 500’s average of 1.2%. This dividend track record demonstrates financial discipline and consistent profitability, hallmarks of companies designed for long-term wealth accumulation.

Shopify: The E-Commerce Infrastructure Play with Decades Ahead

Shopify represents a different category of investment opportunity—one rooted in secular tailwinds and structural competitive advantages. The company has delivered exceptional results, with its stock surging 50% driven by strong financial performance and strategic execution.

Dominance in a Massive, Growing Market

Management has articulated an ambitious vision: building a company capable of thriving for 100 years. This isn’t mere rhetoric—the foundation is already solid. Shopify has established itself as the leading platform for small and medium-sized businesses to launch and scale online operations. The platform’s appeal lies in its balance of simplicity and customization. Merchants gain access to professionally designed templates, an expansive app ecosystem, and comprehensive business tools spanning marketing analytics, inventory management, and shipping logistics.

Market Position and Switching Economics

Market share data reveals Shopify’s momentum: the company captured 12% of the relevant e-commerce platform market by the end of 2024, up from 10% a year earlier. Beyond market share gains, Shopify benefits from powerful switching costs. Once merchants invest time and money building their storefronts, migration to competitors becomes economically irrational unless a compellingly superior alternative emerges. This creates a durable competitive moat that strengthens with each passing year.

The Profitability Inflection

A historical criticism was Shopify’s burn rate, but the company has fundamentally turned a corner. After divesting its logistics business, profitability metrics have improved dramatically. The company has generated net income in three of the last four quarters, while earnings and margins have trended consistently upward. This combination of growth acceleration and margin expansion positions Shopify to dominate its corner of the e-commerce ecosystem for decades.

Why These Companies Deserve Your Long-Term Capital

Selecting the best stocks for long-term holding requires identifying companies with enduring competitive advantages, consistent profitability, and management teams committed to shareholder value creation. Both Novartis and Shopify exemplify these qualities. History offers instructive examples: Netflix (recommended in December 2004) and Nvidia (recommended in April 2005) delivered extraordinary returns that would have turned a $1,000 investment into hundreds of thousands of dollars. While past performance never guarantees future results, these examples underscore why disciplined long-term investing in quality companies matters so profoundly.

The key insight is this: identifying the right stocks—companies with strong fundamentals, growing market opportunities, and proven management—and holding them through market cycles is how generational wealth gets built. Both Novartis and Shopify represent the type of best stocks to buy and hold now if you’re willing to give your capital time to compound.