Did you know there’s a website called MoneyUnder30.com? It’s true. But if you’re looking for stocks to buy for investors under 30, I wouldn’t recommend you spend much time checking it out. The site appears to be nothing more than a way to generate traffic for other websites.
Fear not, I’m here to help you come up with some interesting possibilities.
Last May, I wrote a piece entitled “7 Tips for New Investors Young and Old.” I included common-sense tips such as focusing on stocks that consistently make money, understanding your risk/reward threshold, and lots of other good stuff.
The point is, if you follow these tips, you can do well over the long run. Young investors under the age of 30 are wise to read up on the tried-and-true methods successful investors have used to build their portfolios.
10 stocks to buy for investors under 30.
To make things interesting, I’ll try to ensure all of the stocks to buy are under $30 at the time of writing, and diversified by sector.
Many happy returns.
Stocks to Buy: Cleanway Energy (CWAY)
First up is the utilities sector. I picked Cleanway because it focuses on clean energy and people under 30 are generally more conscientious about the global climate crisis.
Cleanway has more than 7,000 megawatts (MW) of wind, solar, and natural gas-fired power generation. It used to be known as NRG Yield until Global Infrastructure Partners acquired NRG Energy’s (NYSE:NRG) stake in the company in February 2018. The name was changed in August of that year.
The company’s biggest generators of power include the Alta Wind Farm in Tehachapi, California (947 Net MW), Four Brothers Solar in New Castle, Utah (160 net MW), and Marsh Landing in Pittsburg, California (720 net MW).
On Nov. 5, it reported its third-quarter results. They included $332 million in revenue (up 12.2% year-over-year), $123 million in operating income (36.7% higher YOY) and adjusted EBITDA of $312 million (4.0% higher YOY).
Its annualized dividend of $1.27 yields a healthy 4.4%.
Slack Technologies (WORK)
Representing the technology sector in stocks to buy under $30 is Slack Technologies, the collaboration platform giving Microsoft (NASDAQ:MSFT) a run for its money.
There are plenty of people, including myself, who assumed that Slack will surrender market share to Microsoft Teams.
“Yet the news that Microsoft has 20 million daily active users, 66% more than Slack, and is growing DAUs at 50% per quarter, has got to be disheartening to Slack CEO Stewart Butterfield, who has seen Slack stock go from a 48.5% first-day gain in June to a 13.5% decline through Nov. 25,” I wrote in November 2019.
“While Butterfield swears employees of companies using Slack enjoy it — they reportedly spend nine hours a day using it (does any work get done?) — you can’t help but think Teams will soon put Slack out of business.”
Perhaps I was overstating my case a little. Since my article, WORK stock is up 23% through Nov. 19.
InvestorPlace’s David Moadel recently argued that the work facilitation platform’s a great contrarian play. He reasons that despite analyst concerns, the competition will eat into Slack’s market share. However, as David points out, Slack ended the second quarter with 380,000 connected endpoints and a paid customer base of 130,000, 30% higher over the same period a year earlier.
My colleague rightly points out that there’s plenty of room for more than one work facilitation platform. Microsoft doesn’t have to lose for Slack to win.
If Covid-19 has taught us anything, it’s that businesses that make remote working work will do well in the future. Slack included.
Invitation Homes (INVH)
What’s the one thing that most people under the age of 30 can’t afford?
Owning their own homes.
As a result, single-family home rentals have become one of the biggest growth businesses in the real estate industry. Invitation Homes is the premier owner and operator of single-family rental homes in the U.S. With over 80,000 homes to rent in 16 markets; nobody comes close to providing this kind of inventory of homes.
Right in Invitation Homes’ September 2020 presentation, it provides a chart showing the number of 30-year-olds hitting ‘adult’ milestones. In 1975, 56% of this age group owned a home; in 2015, the percentage had dropped to 33%.
Those people have to live somewhere. That’s where Invitation Homes comes in.
Despite a very challenging business environment due to Covid-19, its average occupancy rate in the most recent quarter was 97.8%, 190 basis points higher than a year earlier.
Invitation Homes’ business fundamentals are outstanding. You won’t get rich owning INVH stock, but it will deliver stable returns over the long haul.
Virgin Galactic (SPCE)
What young person isn’t interested in space flight? To go where no man or woman has gone and all that. I sure was when I was in my 20s. And with a visionary like Richard Branson leading the charge, I don’t see how you can go wrong investing in Virgin Galactic.
In June, I wondered whether the company could survive without Richard Branson’s involvement — at the time he was in the middle of a cash call for his airline, Virgin Atlantic — I concluded that the major steps required for commercial space flight had already been set in motion and investors wouldn’t be hurt if Branson had to bow out.
Recently, the stock fell by more than 10% after Virgin Galactic was forced to postpone its planned space flight due to Covid-19 restrictions in New Mexico, where the company’s Spaceport is located.
While it’s a speculative bet, under $20 remains an excellent entry point for space-related stocks to buy.
Canopy Growth (CGC)
The cannabis industry in both Canada and the U.S. remains a bit of a gong show for investors. It’s hard to know whether any of these businesses are gaining traction or not.
The company reported its second-quarter results on Nov. 9. Highlights include gaining 200 basis points of market share in the Canadian recreational-use market. It now holds a 15.5% market share.
Even better, it has gained a 54% dollar share of the Canadian cannabis-infused drink market with its ready-to-drink brands Tweed, Houseplant, and DeepSpace. CGC has shipped more than a million units since March 2020.
I recently discussed how the company’s 2019 investment in BioSteel energy drinks — Patrick Mahomes of the Kansas City Chiefs uses and endorses its products — is continuing to pay dividends for Canopy Growth.
The company continues to build a first-rate product offering in the Canadian marketplace. South of the border, its time will come. Canopy Growth is a long-term buy.
Ally Financial (ALLY)
According to Statista.com, 92.8% of millennials used mobile banking in 2018, considerably higher than the U.S. average of 73.8%. As a believer in Everyday Investing, a concept I developed that is based on Peter Lynch’s philosophy of investing in what you know, it makes sense that investors under the age of 30 look to online banking as a possible opportunity.
Of course, you could go with one of the big banks pushing online banking, but that would be mundane and boring. InvestorPlace contributor Stavros Georgiadis recommended in July that investors consider Chime, an online bank that was investable through equity crowdfunding.
I’m all for equity crowdfunding and private capital, but this is an article about public companies, so I’m going with Ally Financial, the Detroit-based digital financial services company with more than 8.5 million customers and $185 billion in total assets. It is one of the top 20 financial holding companies in the U.S.
In the third quarter, it had total revenue of $1.68 billion, 5% higher than a year earlier, with a 24% increase in adjusted earnings per share to $1.25.
The company established the Ally Charitable Foundation during Q3 2020. It plans to invest $30 million over the next three years into the communities it serves across the U.S.
Doing well by doing good is always a winning strategy.
BP is my choice for the energy sector. I’ve chosen the UK-based oil and gas company because it’s the only one of the majors that has admitted the end is near for fossil fuels. In February, it charted a new course toward a net-zero company.
“At bp, we are committed to playing our part. In February, we adopted a new purpose – to reimagine energy for people and our planet. And we announced a new ambition, to be a net zero company by 2050 or sooner and to help the world get to net zero,” stated chief executive officer Bernard Looney in the company’s 69th edition of the Statistical Review of World Energy.
“The experience of COVID-19 has only reinforced our commitment to this purpose and ambition, by highlighting both the fragility of our planet and the opportunities it provides to truly build back better.”
As The Guardian reported in September, BP plans to increase its low-carbon investments by tenfold by 2030. At the same time, it plans to cut its fossil-fuel output by 40% in its quest to become a producer of greener energy.
The company’s ambition to become carbon-neutral by 2050 is courageous, and I believe a smart one. If you care about the planet and its future, BP is your only fossil-fuel-driven energy choice.
Keurig Dr. Pepper (KDP)
There is no question that young adults are more likely to experiment with new beverages, especially those tilting to the healthier side.
Keurig Dr. Pepper, the company, has benefited greatly from moves it made leading up to and during Covid-19. At the end of October, the company reported excellent third-quarter results with sales up 5.2% to $3.02 billion while earnings on an adjusted basis increased 22% to 39 cents a share.
“Since the beginning of the pandemic, our broad beverage portfolio, unique route to market capabilities and resilient and dedicated team members have enabled KDP to successfully navigate through the challenging and volatile operating environment,” stated CEO Bob Gamgort.
Thanks to $525 million in free cash flow in Q3 2020, it could pay down $225 million of its bank debt. The company converted 94% of its income to free cash flow during the quarter, an excellent showing.
Heading into 2021, the company is so confident about its coffee business that it promoted its president of international and business development to head up its newly created coffee division. The company expects to add three million K-Cup users this year.
With its stock underperforming in 2020, I expect 2021 to be a breakout year for KDP.
Camping World Holdings (CWH)
If you’re under 30, the data suggests you or one of your friends is a closet camper. Kampgrounds of America surveyed American campers and found that 40% of them are millennials. Even more impressive, 55% of new campers are 18-29.
I remember when Marcus Lemonis, the CEO of Camping World, acquired hunting, fishing, and camping equipment retailer Gander Mountain in 2017. Investors wondered what the heck a retailer of recreational vehicles was doing buying a big-box operation. At the time, given Camping World paid peanuts for the business, I thought it wasn’t a bad way to expand its customer base for its core RV products.
“It was our backdoor entry into the market in Minnesota, Wisconsin, Indiana, Illinois, Pennsylvania and Texas, where we’re going to be putting RVs in most of those locations,” Lemonis told Mad Money’s Jim Cramer in June 2018.
At the time, CWH stock was trading around $25. Since then, it’s gone on a wild ride to as low as $3.40 during this year’s March correction. If you bought below $5, you’re sitting on some serious unrealized gains.
On Nov. 2, Camping World reported Q3 2020 sales of $290.8 million, 21% higher than a year earlier, and adjusted earnings of $143 million, considerably higher than the $5.3 million profit a year earlier.
Marcus Lemonis is getting the last laugh. Camping and related stocks to buy will never go out of style.
It’s been a while since I included China’s leading video streaming platform in an article. The last time was in June. Although I said it was a buy — it was trading around $23 — I did recommend that investors hold back some cash to buy some more should its stock get hit by the novel coronavirus.
It has been quite a year for IQ stock. Up 7.1% year to date through Nov. 19, it’s getting slaughtered by Netflix (NASDAQ:NFLX), which is up almost 50% YTD.
In September, my InvestorPlace colleague, Josh Enomoto, said that iQiyi was a buy for the new normal.
“[W]hile Netflix (NASDAQ:NFLX) has soared to unbelievable heights, IQ stock remains mired in the doldrums,” Enomoto wrote on Sept. 25.
“Still, that might make iQiyi one of the more appealing growth stocks to buy.”
As I look at the company’s Q3 2020 results, I see a business that isn’t firing on all cylinders, which is why revenues fell 3% during the quarter while its operating loss actually fell by 57% during the quarter.
I think if you take the time to look more closely at its financial results, you’ll see the “Netflix of China” has enough meat on the bone to do well in a post-Covid world.
My advice: Wait for it to correct into the teens before buying. You ought to get a chance between now and the end of 2021.
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.