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8 Stocks to Buy for Beginners in a Hot Market

stocks to buy - 8 Stocks to Buy for Beginners in a Hot Market

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If the Reddit saga involving the forum r/WallStreetBets has taught us anything, it’s that a group of retail investors on the same side of the trade can be a powerful (and profitable) force. Powerful enough to gut check some of Wall Street’s most influential hedge funds. Because of the euphoria, there’s a temptation to join in. However, newcomers should really focus on stocks for beginners.

Now, don’t get me wrong — I’m not here to tell you what to do with your money. Certainly, an argument exists for speculation. While the best investing roadmap involves tried-and-true strategies, sometimes, you want to try to bake in some luck. Throw a few dollars into potentially viable startups and eventually, you may hit pay dirt. But that’s not a core strategy for stocks for beginners.

Instead, if one of the Reddit plays has got you thinking about investing in general, at least the craziness was good for something! While I’m not sure how long the boom will last, eventually, these euphoric rallies crumble. Regarding stocks for beginners, your main purpose is to find compelling opportunities that will either provide stable growth or are undervalued relative to their company or industry fundamentals.

As well, we’re entering a new era under the administration of President Joe Biden. Of course, I’m not naïve to assume that every American is happy about it. But the important point here is that Biden, with Democrats controlling Congress, will push policies that overtly benefit certain sectors, such as clean energy and electric vehicles. And there are plenty of stocks for beginners in these arenas.

Also, there might be some upside regarding the novel coronavirus pandemic. As I write this, Covid-19 infections are sharply declining, which is a huge positive. However, I don’t think it’s unreasonable to assume that such a shock health and economic crisis will impose a lingering effect. Ultimately, you have many areas to explore regarding stocks for beginners:

  • Apple (NASDAQ:AAPL)
  • American Well (NYSE:AMWL)
  • Livent (NYSE:LTHM)
  • Brookfield Renewable Partners (NYSE:BEP)
  • CVS Health (NYSE:CVS)
  • Ford (NYSE:F)
  • AT&T (NYSE:T)
  • Ocean Power Technologies (NASDAQ:OPTT)

Before we dive in, I kept with one exception the unit price under $100. Although fractional share ownership is becoming popular among online brokerages, it’s not a standard feature. Since we’re talking about stocks for beginners, I deliberately crafted a list of accessible names.

Stocks to Buy for Beginners: Apple (AAPL)

An Apple (AAPL) MacBook Air laptop sitting under bright purple lights.

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We’re going to start with the exception among this list of stocks for beginners and that is consumer electronics giant Apple. Previously, I wondered about how sustainable AAPL stock would be with Steve Jobs tragically out of the picture. It was really his vision and his outside-the-box thinking that catapulted Apple to where it is today.

Further, I worried about the increasing competition. With the smartphone market being saturated, it didn’t seem that there was enough distinction for the company moving forward. But I was wrong.

Frankly, I’m still not sure if Apple products are really all that much better to justify their price tag relative to rival offerings. Nevertheless, you have the power of Apple’s brand, which truly resonates with the consumer. In addition, the Apple ecosystem is intuitive and convenient, both from a personal and professional standpoint.

And that has kept consumers buying more — even during this once-in-a-century pandemic. That bodes well for AAPL stock as a core holding for newcomers’ portfolios.

American Well (AMWL)

The logo for American Well (AMWL) displayed on a smartphone screen. The smartphone rests on top of a keyboard.

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When the coronavirus pandemic first roiled our nation, the last thing that Americans had on their mind was visiting the doctor’s office. With a mysterious virus rippling throughout the globe, seeking medical treatment was a hazardous activity and not worth the risk — unless of course the situation was life-threatening.

However, you can’t ignore medical advice indefinitely, which is what caused Teladoc Health (NYSE:TDOC) to skyrocket throughout 2020. A leading investment in the telehealth industry, TDOC is extremely relevant today. However, it’s not what I would call the most accessible among stocks for beginners. That’s why you may wish to consider American Well.

At a time of writing price under $40, AMWL stock better fits the newcomer’s portfolio. You can buy shares of this and other viable names, giving you greater diversity. But what I really like about American Well is its contrarian pertinence.

True, declining Covid-19 cases don’t necessarily do AMWL stock any favors. However, as research published by the Centre for Economic Policy Research indicates, the 1918 influenza outbreak “had long-lasting social consequences leading to a decline in social trust.”

This fairly sums up what we should expect in the next few years, creating an intriguing setup for AMWL.

Livent (LTHM)

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Over the next several decades, the U.S. and other nations will push for net-zero-emissions policies. Logically, this means that we’ll see more electric vehicles hitting the road, while simultaneously witnessing a phasing out of the internal combustion engine. However, I believe the mistake is to assume that the EV revolution will happen overnight. Therefore, we’re seeing some EV manufacturers sporting some crazy valuations.

Yes, I get the argument that many EV companies like Tesla (NASDAQ:TSLA) are aspirational. Therefore, standard analyses may not apply. Setting that aside, it’s hard to ignore that EV shares look frothy. To better avoid holding the bag while still getting exposure to this market, you may want to consider Livent as one of the stocks for beginners.

With LTHM stock, you don’t have to figure out which EV brand will outshine its rivals. Instead, you’re going with an organization that feeds the core lithium commodity to these manufacturers. Look at it this way: you’re selling tickets to the game instead of gambling which team will win.

Better yet, LTHM stock is tied to many other relevant markets — such as aerospace, polymers and pharmaceuticals — giving you broad exposure and thus a measure of reliability.

Brookfield Renewable Partners (BEP)

The Brookfield Renewable Partners (BEP) logo is displayed on a smartphone screen in front of a digital American flag background.

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As one of the world’s largest publicly traded renewable power platforms, Brookfield Renewable Partners was already an important component of the broader push for clean energy. However, the heightened political state of 2020 made the case for BEP stock all the more pertinent.

There’s some truth to the concept that regular folks shouldn’t get too emotional about what’s happening in Washington. For the most part, whether Democrat or Republican, the drama appears the same old manufactured dog-and-pony act.

Nevertheless, elections do have consequences, and this is perhaps no more evident than in the environmental realm. As the Washington Post reported, President Trump stripped protections from Alaska’s Tongass National Forest, an ecologically significant region. I can’t imagine that had Biden been president during that time, such a move would have occurred.

Thus, BEP stock may have a viable upside pathway, at least for the next four years (although we’ll see how the Democrats fare in the upcoming midterm election). Even if a power struggle occurs, both conservatives and liberals should agree on clean energy in terms of independence from foreign markets.

CVS Health (CVS)

A CVS (CVS) pharmacy counter at a drugstore in Revere, Massachusetts.

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From the get-go, I’m going to warn you that CVS Health is a forward-looking contrarian play baking in some assumptions about society and the economy. Therefore, it’s not the safest idea among stocks for beginners. But if you don’t mind the threat of volatility and have a patient outlook, CVS stock could work for you.

Economically, I believe analysts are being more optimistic than what the data justifies. For instance, we hear the weekly ups and downs of new jobless claims. But the overriding narrative is that since late August/early September of last year, these initial claims have stabilized around the 800,000 mark.

That’s utterly terrible when you consider that these figures are worse than the Great Recession peak — and have been occurring weekly. Not only that, check out the personal saving rate in December, which ticked up to 13.7% from 12.9% in November. Clearly, consumers were not feeling the holiday spirit in terms of gift purchases.

In my view, this suggests that we’ll see less medical visits, and an increase in self-care purchases. Cynically, this bodes well for CVS stock.

Ford (F)

Ford (F) logo on a steering wheel.

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Previously, I mentioned that lithium providers offer a more reasonable risk-reward profile toward the EV market. Because it’s such a new concept that requires a broader infrastructural buildout among other challenges, going all-in on one particular EV company isn’t the most prudent choice. And I’m not about to suggest that Ford is an exception. However, regarding EV stocks for beginners, this is one to consider for a balanced portfolio.

Here’s the deal with EVs — they’re awfully expensive, especially when you take out the tax incentives which won’t be there indefinitely. For instance, the median household income in the U.S. is just under $69,000. When you take into account taxes, the net amount makes buying a Tesla Model 3 — the cheapest car in its lineup — a questionable proposition.

That’s why I think combustion cars will be around for a while. With their superior economies of scale, Ford can deliver reasonably priced cars and SUVS for the masses. This alone is a catalyst for F stock.

As well, you have the Ford Mustang Mach-E. While it peeved Mustang enthusiasts, the Mach-E is an able competitor in the EV arena. Watch F stock carefully because this might be one of the most underappreciated automotive investments.

AT&T (T)

Image of AT&T (T) logo on a gray storefront

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Although AT&T fundamentally benefits from the widescale 5G rollout, many investors have taken a dim view on T stock. Relevance isn’t enough to overcome some ugly fundamentals, primarily the underlying company’s massive debt load. Thanks to the cord-cutting phenomenon and some very unfortunately timed acquisitions, AT&T on paper does not look appetizing.

Even its generous dividend yield is not a cause for celebration. Indeed, many analysts warn that such a high payout indicates instability. In other words, AT&T has to do something to earn your investment dollars. A high yield just might lure some naïve people in.

I could be one of those naïve people. Time will tell. However, at these prices, T stock is certainly intriguing because it doesn’t seem to reflect the potential of its HBO Max streaming service. The reality is that HBO has a history of delivering compelling content, which should draw in consumers.

Further, most Americans are afraid to go to the movie theater for the first six months of this year. Therefore, people will have to rely on streaming services for the big Hollywood hits. More so than other streaming companies, this benefits AT&T in my opinion, making it a risky but intriguing name among stocks for beginners.

Ocean Power Technologies (OPTT)

a light buoy in the middle of the ocean. stocks under $10

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If you really want to get crazy with your stocks for beginners, Ocean Power Technologies is it. On a year-to-date basis, OPTT stock is up nearly 82%. I mention this because a possibility exists that shares could tumble having gone up so much in a short period of time.

Then again, we’ve seen some gravity defying investments, including some publicly traded companies with incredibly flawed fundamentals. So if those organizations can fly, I like my chances with Ocean Power Technologies.

As you might infer from its name, Ocean Power specializes in wave energy, essentially harnessing the movements of the ocean to generate clean, renewable energy. Primarily, the advantage is that OPTT stock is levered toward an always-on source, unlike solar and wind which are intermittent.

Second but just as importantly, wave energy platforms are out of sight and out of mind. While the technological improvements in wind and solar are exciting, they’re either eyesores or require much real estate. Plus, with wind, you have the ecological impact of the propellers killing birds and other flying animal species.

Again, OPTT is risky so you should only play with a small amount of funds earmarked for speculation. But for a beginner, I think this is speculation worth taking.

On the date of publication, Josh Enomoto held a long position in F and T.

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.

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