During the novel coronavirus, people have taken up all kinds of hobbies to pass the time. Some have used their extra free time during work-from-home conditions to dive into stock investments. In mid-August, millennial-focused trading app Robinhood raised $200 million. Now valued at $11.2 billion, stocks for beginners have driven a lot of its growth in 2020.
Unfortunately, for every story about rookie investors doing well during the pandemic correction, there’s another that reveals the sordid underbelly of the market. I’ve been writing about stocks for more than a decade and the only thing I know is how much I don’t know.
For those who want to give investing a try, there are plenty of discount brokers that provide fractional share trading. Robinhood has become quite wealthy as a result of this surge in interest.
Back in July, I wrote about nine stocks perfect for beginners. For my latest round of stocks for beginners, I’ll select 10 from Robinhood’s top 100 stocks.
Here are 10 stocks to buy now for new investors beginning their portfolios:
- Amazon (NASDAQ:AMZN)
- AstraZeneca (NYSE:AZN)
- Beyond Meat (NASDAQ:BYND)
- Coca-Cola (NYSE:KO)
- DraftKings (NASDAQ:DKNG)
- JPMorgan (NYSE:JPM)
- Microsoft (NASDAQ:MSFT)
- Nike (NYSE:NKE)
- Nintendo (OTCMKTS:NTDOY)
- Starbucks (NASDAQ:SBUX)
All 10 of these companies have easily understood businesses that can be described in a single sentence. Happy investing.
Stocks for Beginners: Amazon (AMZN)
Amazon is the world’s largest e-commerce company.
Of course, Jeff Bezos’ brainchild is more than just online retail, but that’s what put it on the map. Now of course, it’s a titan of the cloud via Amazon Web Services (AWS), video streaming and music with Prime, digital advertising, grocery stores, grocery delivery, online pharmacy, robotics and so much more.
On September 14, InvestorPlace’s Louis Navellier argued that the recent dip in AMZN stock served as a great opportunity for investors to pick up shares:
“If you’ve been sitting on the sidelines to buy a AMZN stock, now’s as good an entry point as you’re probably going to get in the near future. It’s your chance to invest like an e-commerce tycoon, even if you don’t have Bezos’ bankroll.”
I couldn’t agree more. In fact, I believe Amazon could hit $10,000 by January 2023.
AstraZeneca is one of the world’s largest drug companies.
This U.K.-based drug company was created in a 1999 merger between Astra of Sweden and the U.K.’s Zeneca Group. Some of the company’s top-selling drugs include Symbicort (asthma), Tagrisso (lung cancer), Nexium (heartburn) and Crestor (lowers cholesterol).
During the novel coronavirus, AstraZeneca has been on the radar for many investors as it develops a Covid-19 vaccine in partnership with the University of Oxford. The company’s Phase 3 clinical trial was paused for six days in early September after one of the participants in the trial suffered some neurological symptoms. The trial resumed September 14.
InvestorPlace’s Faisal Humayun recently selected AstraZeneca as one of four perfect stocks to buy for beginners:
“Besides being a front-runner in the race for the Covid-19 vaccine, there are other reasons to like AstraZeneca from a business perspective. The company has a strong late-stage pipeline of drugs and that will translate into strong growth in the coming years.”
Humayun is right. It’s an excellent stock for beginners to own.
Beyond Meat (BYND)
Beyond Meat is one of the leading players in plant-based meats.
The competition in the meatless industry continues to ratchet up, most notably from Impossible Foods. On September 18, BYND stock was downgraded by JPMorgan from “neutral” to “underweight” due to Impossible Foods taking market share in grocery stores.
“In the long run, we believe Beyond Meat’s growth opportunity is excellent, and we see the company as well managed with strong innovation and marketing plans,” JPMorgan said. “But we believe Street estimates are a bit aggressive right now – especially with chief rival Impossible Foods making strong inroads into Beyond Meat’s on-shelf presence, and with many restaurants not adding menu items – and we think the stock is ahead of itself.”
I recommend you try Beyond Meat’s spicy sausages. Frankly, they taste better than meat versions and the casing is a vast improvement over most meat-based sausages.
Consider buying BYND if it drops down to the $125 level. Long-term (over 2 or 3 years), even at $148, you ought to make money.
Coca-Cola is the largest manufacturer of non-alcoholic beverages in the world.
Once upon a time, Coke’s stock outperformed the rest of the components in the Dow Jones Industrial Average. In recent years, as consumers shift towards healthier drinks, the company’s been forced to develop healthier options. But investors continue to doubt whether it can change its tune, as shares in Coca-Cola have lagged the market.
In February, InvestorPlace’s Luke Lango suggested that KO stock would push into the $60’s as it met the changing needs of the world’s beverage drinkers. That hasn’t happened. It started 2020 at $55, dropped below $40 in March and now trades around $50, down slightly from the beginning of the year.
At the end of August, the company announced a restructuring including voluntary layoff packages for 4,000 employees in the U.S. and Canada. As part of the reorganization, KO plans to reduce the number of divisions from 17 down to nine in order to get new products to market faster.
Despite ongoing concerns, Coca-Cola remains tremendously profitable and a good pick for the portfolio.
DraftKings operates one of the world’s most successful online sports betting, fantasy sports and iGaming platforms.
Now that the NFL season is up and running, DraftKings is ready to take the ball all the way down to the endzone for a big score. The company said the first week of the 2020 NFL season brought more new customer signups than it’s had since 2015. Sports fans are starving for action after months of sporting events being postponed or canceled due to Covid-19.
Now, to be clear, the first week came with lots of free promotions, so investors shouldn’t read too much into the early action. But those promotions shouldn’t be seen as a sign of DraftKings’s weakness in the context of the wider market.
“Everyone signing up for a sportsbook account is doing it through some kind of offer for a risk-free bet or deposit bonus,” says Dustin Gouker of the website Legal Sports Report. “There’s almost nobody signing people up without a promo offer. So I would not discount the customer gains based on that, although DraftKings has been particularly aggressive.”
In the long run, I believe that DraftKings is one of the best investments you can buy. If DraftKings doesn’t succeed, it will be because it failed to execute, not because online sports betting didn’t take off in this country.
JPMorgan is the largest U.S. bank with $2.82 trillion in assets.
As bank stocks go, you can’t get much better than JPMorgan. Boris Schlossberg, the managing director of foreign exchange strategy at BK Asset Management, recently told CNBC that JPM is like the Apple (NASDAQ:AAPL) of banking.
“I actually love JPMorgan. [It] is not the best in everything, but it does everything incredibly well from the consumer side and the corporate side,” Schlossberg said September 4.
“The banks are surely due for a bounce. Simply because they’ve just underperformed the broader market by so much that they are really relatively cheap to the rest of the market. Their underlying business is quite good.”
Down 27.4% year to date through September 17, JPM is bound to break out at some point. In the meantime you’ll get paid a 3.7% dividend yield to wait for its resurrection.
Microsoft is one of the world’s largest developers of software, for both consumer and enterprise markets.
Once the house that Bill (Gates) built, it’s now CEO Satya Nadella’s baby, and investors, including Gates himself, are benefiting from his excellent leadership. Since Nadella became CEO in February 2014, MSFT stock has appreciated by 426%.
In recent times, Microsoft has been popular with investors because of the work it’s doing in the cloud, not because of its legacy products such as Windows. In September, tech stocks experienced a serious selloff. Microsoft is no different, down 12% through the first 18 days of the month.
InvestorPlace contributor Matt McCall believes “MSFT stock has the fundamentals and secure revenue growth to keep long-term investors satisfied.”
McCall’s is primarily attracted to its free cash flow generation, which is the bedrock of any excellent investment:
“Microsoft generated free-cash flow of $45.2 billion last fiscal year. That’s a massive figure and it represents growth, too. The company generated $38.2 billion in 2019, $32.2 billion in 2018 and $31.7 billion in 2017.”
You can’t go wrong with Microsoft.
Nike is the largest athletic footwear company in the world.
Shoe Dog by Phil Knight, the founder of Nike, is easily among the top three business books I’ve ever read. Knight’s retelling of the swoosh’s rise from small business to massive global brand is a story that every investor should read. Rarely do you see such honesty from a CEO or founder.
And as an investment, there aren’t many stocks that have done as well over the long haul. A $10,000 investment in Nike 15 years ago would be worth $125,972 today. That’s a 12-fold return. I’ll take that kind of performance everyday, and twice on Sundays.
Nike is shifting toward a direct-to-consumer business approach. This means that in the short-term, sales and profits will suffer. But long-term, this decision will pay dividends.
“Nike’s decision to no longer sell to nine multi-branded wholesale accounts is positive for Nike, as it takes control of more of its own destiny,” Susquehanna analyst Sam Poser and his team stated September 18.
Of the 31 analysts covering Nike’s stock, 26 rate it a “buy” or “overweight.” Only one analyst considers it underweight or a sell.
All good things come to an end. On September 17, Nintendo announced that it would discontinue manufacturing the 3DS handheld console to focus exclusively on its household console, the Switch. During its lengthy 10-year run, the 3DS sold nearly 76 million units.
How successful have the Switch consoles been? Since launching in 2017, they’ve sold more than 60 million units, with lots of growth ahead. Nintendo plans to bring out an upgraded version of Switch in 2021, as well as a bunch of new games to keep buyers happy.
While new gaming consoles from both Xbox and PlayStation will be released soon, analysts believe sales will remain strong for Nintendo.
“Our data suggest the Switch hasn’t fulfilled demand yet,” Industry tracker Katsuhiko Hayashi said recently. “Switch sales are likely to gain further momentum at the year-end.”
Year to date Nintendo stock is up 43%, and up 27.6% on an annualized basis over the past five years. Expect this performance to continue.
Starbucks operates the world’s largest chain of coffee shops.
The other business book that I recommend Pour Your Heart Into It, Howard Schultz’s story of joining and growing the coffee chain into the global powerhouse it is today. First published in 1997, readers learn that he had to leave Starbucks to buy it.
One story I didn’t know was that Bill Gates’ dad helped Schultz buy the company for $3.8 million in August 1987. The rest, of course is history. You can read the story behind Gates Sr.’s involvement in this excellent article by GeekWire’s Kurt Schlosser.
One thing I’ve learned over the past decade-plus writing about stocks is that Starbucks always figures out a way to reignite the growth engine. Right now, the pandemic has changed the way consumers consume coffee. As a result, Starbucks is moving to smaller stores and focusing on grab-and-go and drive-thru locations for those on the move.
Sure, there will still be room for a “third place,” just not as many. After all, you adapt or you die. Luckily for investors, Starbucks adapts better than most.
The cream always rises to the top.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.