I’m on the hunt for the best stocks on the market! I think I may have just found them

This Fool is on the lookout for the best the stock market has to offer. He reckons these two could be solid candidates.

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Investing in the stock market can be difficult. Nowadays, there’s so much information available to investors promoting things such as get-rich-quick schemes.

I’m blocking all that out. I invest in the market to build my wealth over time. I want top-quality businesses in my portfolio that I believe can perform strongly over a long stretch.

The stock market is vast, but I’ve put most of my energy into focusing on FTSE shares, which have gone on a tear this year. I like what I see with these two.

Should you invest £1,000 in Diageo right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo made the list?

See the 6 stocks

GSK

First is pharmaceutical giant GSK (LSE: GSK). The stock has taken full advantage of the market rally. It’s up 11.6% so far this year.

Created with Highcharts 11.4.3GSK PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

But with its share price sliding around 5% in the last week, I reckon now could be a time to swoop in and buy some shares. It trades on 15.1 times earnings. I see that as good value for a high-quality business.

GSK is on my list due to its defensive nature. Regardless of external issues such as a weak economy, people will always need access to medicine and treatments.

That’s not to say the stock is risk-free. For example, some market spectators have concerns about the firm’s drug pipeline. The company has underperformed compared to its peers recently. Furthermore, it’s facing further legal trouble surrounding heartburn drug Zantac, which sparked its fall recently.

But with it now having nearly 90 products in its R&D pipeline, it seems the firm is turning a corner. As such, analysts have its earnings growth rising from 3% this year to 10% and 11% in 2025 and 2026 respectively. Its 12-month price target is £19.51, which represents an 18.1% premium from its current price.

I like to target income. Therefore, its 3.6% yield, in line with the Footsie average, is also attractive.

Diageo

I also think one of the market’s best offerings right now is Diageo (LSE: DGE). Unlike GSK, its share price has faltered lately. It’s down 5.8% year to date. Diageo shares have lost 20.7% of their value in the last 12 months.

Created with Highcharts 11.4.3Diageo Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

The spirit maker has struggled as consumers have cut back on splashing out on its premium brands in favour of cheaper alternatives given the current economic environment. Sales have been hit especially hard in the US, which is the company’s largest market.

But I still see an incredibly strong underlying business. The company owns high-quality names such as Guinness and Captain Morgan. In the years to come, I think demand for its products will steadily grow due to rising wealth in developing countries.

With its share price struggling, investors can now pick up Diageo shares trading on 19.2 times earnings. That’s above the Footsie average (11) but considerably lower than its historical average of around 24.

To go with that, the stock has a 3.1% yield. That may not seem enticing given some of the higher yields available on the Footsie. However, it has increased its payout for 37 years on the trot, which is an incredible record.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

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Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Diageo Plc and GSK. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

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