The stock market remained volatile for much of this year but it also presents a great opportunity for beginners. Most major stocks are priced at their worst-case scenario at the moment. This means an investment made today can result in lucrative long-term returns. But which stocks to buy for beginners?
When it comes to making investments in the stock market, it’s all about playing the long game. Stocks appreciate in value over time so you should be prepared to play the odds regardless of the investing environment.
Given that there is an element of time involved, you need to buy stocks that show promise of strong returns in the future. The wrong investment can be detrimental to your portfolio.
With that said, let’s take a look at the top three stocks to buy for beginners:
Stocks to Buy for Beginners: Starbucks (SBUX)
Starbucks is a name that needs no introduction. The company is a pioneer in the second wave of coffee shops and changed coffee culture as we know it. With a strong global presence and loyal customer base, few can rival this beverage giant. This makes Starbucks stock a great investment for long-term growth.
The pandemic led to a decline in sales for Starbucks but also presented an opportunity to pivot its business model. With shelter-in-place orders, the company leveraged its digital footprint to offset low in-store sales. In an effort to cater to the new normal, the coffee company deployed contactless options for customers. This includes digital orders via the app, handheld devices at drive-thru and streamlined delivery.
In addition to this, Starbucks recently announced its expansion into China, where the opportunity for growth is vast. The coffee market in China is heavily dependent on the in-store experience. But in lieu of the pandemic, Starbucks is refining its digital expertise. The goal is to open 500 stores in the region during this fiscal year.
While the future prospects for the company are bright, they haven’t translated to gains yet. Sales this year continue to remain low across the board. Same-stores sales in the U.S. were down by 11% in August and in China sales fell by 10% in July. The company estimates that it will take approximately six months to see a full recovery.
Nevertheless, Starbucks is one of the best stocks to buy for beginners for its long-term potential.
The novel coronavirus forced many companies to take their business online, making e-commerce the next big thing. This made the software provider Shopify one of the hottest names in the sector. In its most recent earnings report, the company reported a 97% spike in sales. This was in addition to a 119% increase in gross merchandise volume, which earned the company a net valuation of $117 billion.
Unlike competitors such as Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY), Shopify allows businesses to highlight their brand on its platform. This feature is incredibly appealing to sellers and enabled Shopify to enjoy record sales this year. Subscription plans on the platform can range from $9 to $2,000 depending on the size of the business. This allows the company to cater to a large share of the market with the potential for future growth.
However, Shopify isn’t just resting on its laurels. Instead, it maintains a strong focus on innovation to achieve greater levels of growth. The e-commerce giant recently introduced the Shop app, which connects users with local businesses on the platform. It also announced a partnership with Walmart to give Shopify merchants exposure on the retailer’s website.
The shift to online shopping has pushed Shopify stock to new highs. Although the company has an impressive valuation, there is still room for growth. Given that e-commerce will dominate the new normal, this is one of the best stocks to buy for beginners.
As a major power player in the tech sector, many investors want to take a bite out of Apple. The company is worth more than $1 trillion and has a portfolio of products that gets better each year. Although an expensive stock at one time, the recent stock split has made Apple an appealing buy for first-time investors. The stock is currently trading round the $110 mark.
Apple’s stock price dipped this year amid the pandemic but its fundamentals remain stronger than ever. The company released the iPhone 12 on Oct. 23, which is its first 5G-enabled device. The technology is still in its early days so the new device could be a major growth driver in the future. The product also comes at four different price points, catering to a wider market share.
In addition, Apple has reported an increase in sales across all units. The company’s wearable technology sales jumped 16.74% while services such as Apple Music and TV increased by 14.85% this past quarter. Paid subscriptions are also expected to hit 600 million by the end of the fiscal year.
Apple’s strong focus on innovation since its founding will help the company thrive regardless of the economic environment. The company has garnered a cult following which will ensure a steady demand growth. As the company improves and expands on its products, the potential for growth is undeniable vast. This is one of the best stocks to buy for beginners
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston, Texas. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.