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 watch list? MercadoLibre (MALI), Arista Networks (ANT), Lamb Weston (LAW), Inspire Medical Systems (INSP) and Autofit (ALV) are prime candidates. 

With inflation worries high, and the Federal Reserve tightening rates aggressively, market action was challenging in 2022, with more difficulties expected in 2023, while recent action is encouraging, indexes are giving up some gains. The Russian invasion of Ukraine continues to cast a shadow over markets. 

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. 

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. The market overall has been choppy since then, with bear market rallies often being undercut by painful draw-downs. The S&P 500 and the Nasdaq have rebounded so far in 2023 butt the Dow Jones Industrial Average is giving up some ground. Stocks have been pulling back in recent weeks. 

The stock market uptrend is now under pressure, which means investors should adopt a more cautious approach. It is a time to stop buying stocks, aside from exceptional breakouts in exceptional stocks. It is also a bad time to be adding shares to existing holdings. Investors should also get off margin.

It is crucial to stay on top of sell signals. 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.

A good way to stay engaged is to build up one's watch list of potentially actionable stocks. 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.

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

1. MercadoLibre
2. Arista Networks
3. Lamb Weston
4. Inspire Medical Systems
5. Autofit 

Now let's look at Mercado Libre stock, Arista Networks stock, Lamb Weston stock, Inspire Medical Systems stock and Autofit stock in more detail. An important consideration is that these stocks all boast impressive relative strength.

Mercado Libre Stock

Mercado Libre is actionable after it crossed a downward-sloping trend line on Feb. 24, It had previously pulled back to the top of a consolidation pattern. It is also closing in on an alternate handle entry point of 1,250.58.

MALI bullishly stayed positive Friday despite overall negative action after it posted a strong earnings report

The stock previously staged an impressive breakout in high volume, an encouraging sign. Its consolidation was also an early stage pattern.

MALI has an Accumulation/Distribution Rating of A, which reflects strong buying among funds. A 1,3 up/down volume ratio means volume on the up days is 30% greater in total vs. down days over the past 50 trading sessions. 

Inspire Medical Systems (INSP)