If you’re just starting off in the stock market, the present juncture represents both opportunity and peril. On one hand, so many people have piled into equities during the initial wave of novel coronavirus lockdowns, a phenomenon known as the Robinhood effect. But on the flipside, the turmoil of the pandemic as well as escalating unrest makes the concept of “beginner stocks to buy” seem like an oxymoron.
Of course, this is a huge debate that will materially impact how you approach the equities sector. For full disclosure, I’m on the cautious side as I don’t like some of the economic and monetary signals that I’m seeing. Nevertheless, the general consensus is that over time, investing in the capital markets is one of the best ways to grow your money. So in that respect, eyeballing prospects for beginner stocks makes perfect sense.
Further, despite the obvious headwinds that pose an immediate threat to your portfolio, it’s easy to forget that many remarkable innovations have sprouted over the past few years. Even in the midst of the pandemic, the power of human ingenuity and cooperation were evident, with multiple pharmaceutical companies forwarding coronavirus vaccines. That’s something to keep in mind as you strategize your best beginner stocks.
Also, we’re seeing massive social changes. True, some of the changes don’t necessarily have a positive connotation. For instance, because of the pain of the pandemic, it’s likely that we will incur significant behavioral changes in society. There is plenty of precedent for this in the historical and medical records. But you can also get ahead of this incoming trend by buying businesses that will benefit — and there are beginner stocks that are appropriate for such speculation.
But before you get too bummed out, we should also remember that there were significant developments that were burgeoning before the pandemic hit us. One of the biggest is the gig economy, which will play an increasingly critical role for our country and the rest of the world. Therefore, these beginner stocks don’t just have relevance for today but for decades down the line.
For this list, I’m assuming that you’ve got a timeline that can absorb a shock deflationary event if we suffer one. Hopefully, that won’t happen, but it may be wise to keep the powder keg dry. Moreover, I’ve divided these nine beginner stocks to buy in three segments: reasonably safe, moderate risk and higher risk. This way, there’s something for everyone’s risk-reward profile.
- Albemarle (NYSE:ALB)
- Johnson & Johnson (NYSE:JNJ)
- NextEra Energy (NYSE:NEE)
- Kaman Corporation (NYSE:KAMN)
- Axon Enterprise (NASDAQ:AAXN)
- Glu Mobile (NASDAQ:GLUU)
- ConocoPhillips (NYSE:COP)
- H&R Block (NYSE:HRB)
- Service Corporation (NYSE:SCI)
Beginner Stocks: Albemarle (ALB)
I’ve been growing increasingly skeptical about the business proposition of the electric-vehicle craze, and you know what that means. Endless accusations of my chromosomal deficiencies along with countless ad hominem not at all suitable for print.
But for beginner stocks to buy in the EV space, I have an idea. It’s called Albemarle, the world’s largest producer of lithium for EV batteries. With ALB stock, you don’t have to pick the winner of the Super Bowl (any Buffalo Bills fans on here?). Instead, you’re selling tickets to the game.
Sure, ALB stock is not going to give you the tremendous riches of picking a Tesla (NASDAQ:TSLA) at an early stage. But with rising competition, it’s hard to see how powerful EV makers can survive largely on government incentivizes. Albemarle takes out some of the question marks of EVs while still being exposed to this exciting space.
Johnson & Johnson (JNJ)
One of the biggest reasons why Johnson & Johnson has been making headlines, both recently and throughout much of 2020 is its novel coronavirus vaccine. While other companies have beat the healthcare giant to the punch, JNJ stock is incredibly relevant in the SARS-CoV-2 battlefront.
From a CNBC report, Johnson & Johnson’s Covid-19 vaccine candidate generates promising immune response. Much more importantly, though, it’s a one-shot administration. That is massive considering the logistical challenges that the present vaccine rollout of Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) have experienced.
Additionally, the approach that Johnson & Johnson is using, a viral-vector vaccine, doesn’t require the onerous frozen storage requirements of messenger-RNA-based vaccines that Pfizer and Moderna have deployed. That’s a huge plus for JNJ stock.
But is this appropriate as an idea among beginner stocks? After all, the Covid-19 narrative could decline over the next several months. I believe it is because of the aforementioned behavioral changes — we’re going to take epidemiological threats seriously from this day forward. And until a vaccine is available for everyone, most sick people will just have to deal with the coronavirus through over-the-counter solutions, one of JNJ’s specialties.
NextEra Energy (NEE)
If you’re looking for beginner stocks that should be relevant for at least the next half-century, NextEra Energy would be it. Of course, the immediate narrative for NEE stock is the incoming administration of President-elect Joe Biden. He has pledged that he’ll put the U.S. on the path to being net-zero emissions by 2050.
We’ll see how that goes.
Regardless of whether we hit the target or not, NEE stock is near perfect for those who have a very patient outlook. That’s because even under the outgoing administration of President Donald Trump, there was consistent pressure, both from domestic political opposition and the international community, for the U.S. to embrace the green revolution. And with the future President Biden enjoying a Democrat-dominated Congress, this vision for the future will be accelerated.
Despite the clear implications politically, you do want to be a bit careful with NEE. Until technology improves to the point where we can effortlessly and viably harness the intermittent source of wind and solar at scale, traditional energy sources will still be around. Nevertheless, the outlook calls for greenery, so make sure to watch for any dip-buying opportunities in NextEra Energy.
Kaman Corporation (KAMN)
If I had to guess, most folks probably are not too familiar with Kaman Corporation. But in some sense, this is perfect for beginner stocks to buy. KAMN stock flies under the radar compared to the behemoths in the commercial and defense aerospace industry. Specializing in advanced technical solutions, Kaman is particularly interesting for its unmanned aerial systems and its SH-2G Super Seasprite multi-mission naval helicopter.
First, with the devastating losses incurred during our operations against international terrorism, the American appetite for war has arguably declined. Thus, unmanned weapons systems have become increasingly popular. Basically, they allow our service members to stay out of harm’s way while carrying out missions.
Second, the naval warfare aspect of KAMN stock is already supremely pertinent because of our longstanding conflict with China. Here, President-elect Biden can achieve rare domestic and geopolitical consensus if he chooses to go after the Chinese government. It’s not a popular institution, to say the very least.
And he might have to if he wishes to work with Republicans as he has claimed.
Axon Enterprise (AAXN)
Last year will forever be defined and scarred by the coronavirus. But if there was another prevalent theme in 2020, it would be calls for social justice. Arguably, the biggest battle cry for this movement was George Floyd, a man who was killed in police custody. However, Floyd was just one of many whom social rights advocates have stated were victims of police brutality.
Now, I don’t want to get into a discussion of this and other awful events. Suffice to say, police officers cannot use lethal force once a suspect has been put under physical submission. However, we must also honor the men and women who correctly perform an increasingly thankless (and dangerous) job.
To that end, one of the best beginner stocks to buy is Axon Enterprise. It may not seem like it on the surface. However, AAXN stock is levered to non-lethal weapons, which can better lead to positive outcomes in otherwise out-of-control situations.
Perhaps more importantly, though, Axon’s body cameras will be crucial in figuring out the facts behind police-involved shootings. Look, the law enforcement controversy won’t go away anytime soon. But Axon is part of the solution, which makes AAXN stock compelling.
Glu Mobile (GLUU)
During the initial wave of coronavirus-fueled global lockdowns, entertainment companies that delivered their content via contactless channels performed very well. Essentially, anything that didn’t require sharing public space — movie theaters, for instance — generally performed well. That includes mobile-gaming firms, making Glu Mobile one of the riskier, but more intriguing names, among beginner stocks to buy.
According to the World Economic Forum, Covid-19 “became the perfect match for gamers.” Obviously, with millions of worker bees forced indoors, they had to keep themselves entertained — because really, who works from home? In the U.S., we experienced double-digit sales bumps over 2019 levels. Furthermore, mobile game sales increased significantly across the world, boding well for the fundamental case of GLUU stock.
Moving forward, I believe the thesis is still positive for Glu Mobile and similar organizations. If the crisis is not contained, we could see additional international lockdowns, cynically benefiting gaming-related companies. Plus, if the economy tanks, people may prefer the cheap solution offered by Glu as opposed to expensive consoles.
After about a year of warning against the oil industry, it might be time to reconsider this embattled sector. Mainly, oil indices have performed very well in anticipation to a return to normal — or somewhat normal. With vaccines being distributed and more of them on the way, it seems right to bet on humanity. And that implies positive upside for ConocoPhillips and specifically COP stock.
Personally, I’m not sure if I’m ready to jump on the bandwagon. But setting aside my own biases, if you’re focused on beginner stocks to buy — that is, you have a long-term outlook — then oil firms may represent an intriguing contrarian setup. After all, no pandemic has ever permanently disrupted civilization, and that’s not going to happen with the coronavirus.
Moreover, I believe the whole idea of EVs and clean energy is a bit overstated. Yes, EVs will become cheaper eventually. But so will combustion cars. Until the broader framework supports EVs at a scale competitive to “regular” cars, I see electrification taking many decades. Therefore, COP stock has a surprisingly robust pathway to sustained profitability.
H&R Block (HRB)
There’s a strong case to be made that Utah is the most accommodating state for the gig economy. Generally, this is because of its vibrant labor market and “supportive” regulatory environment. In other words, if you set up shop in Utah, you’re not going to be taxed like crazy. Yes, California Governor Gavin Newsom, I’m talking to you!
As you know, the gig economy was a burgeoning phenomenon well before the Covid-19 pandemic. But with this crisis, many worker bees had their first real taste of the gig life. Sure enough, the recently telecommuted don’t want to give up some of the core benefits of remote operation. Of course, not all companies will oblige, meaning increased demand (hopefully) for H&R Block.
How so? Well, the tax preparation for gig workers is more complicated than for employees. And you want to get this right; otherwise, there’s this federal institution called the Internal Revenue Service (IRS) that will have something to say to you. For that reason, I like HRB stock.
To be fair, I’ve been discussing this narrative for some time. Unfortunately, HRB stock hasn’t cooperated. Nevertheless, as a play among beginner stocks, your patience has fundamental justification.
Service Corporation (SCI)
My friends, we’re at the end of this list of beginner stocks to buy. Therefore, I think it’s more than appropriate that we finish with Service Corporation. I imagine that if Full Metal Jacket was about the coronavirus pandemic, Gunnery Sergeant Hartman would say something like this:
“From now on, until the day you die, wherever you are, every SCI shareholder is your brother. Most of you will get Covid-19. Some of you will not give it back. But always remember this: SCI shareholders die, that’s what we’re here for. But SCI stock lives forever. And that means you live forever!”
Obviously, no institution is guaranteed to carry on indefinitely. But the business of “final arrangements?” That is one of the two guarantees in life. And if you live in California, both guarantees are equally unpleasant.
Therefore, my solution to these problems is this: Life sometimes stinks, so why not profit from it? Yes, SCI stock has an air of cynicism to it. But it’s a basic fact of life, and this is about as good time as any to consider this service.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.