Over the past couple of years, we have seen an influx of novice investors making a boat load of money from the stock market. Early last year, we saw how numerous young traders were able to flip the script on the stock market and usher in the era of meme stock trading. Hence, you can never be too early with investing, because the quicker you start, the more time you give your portfolio to grow, which is a good reason to consider stocks for college grads.
However, it is important to invest wisely, especially for new college graduates looking to build their portfolios. When choosing the best stocks for college grads, it’s important to look for a healthy risk/reward balance. I’ve carefully curated a list that includes a combination of growth and income-oriented stocks, which should help yield incredible returns over the long term. Moreover, these stocks are trading at a discount amidst the current market downturn.
Here are seven stocks for college grads to consider picking up.
|PG||Procter & Gamble||$139.30|
Online retail giant Amazon (NASDAQ:AMZN) has been a standout performer, generating over 27% average revenue growth over the past five years. Its core and non-core businesses have been firing on all cylinders for the past several years, which took its share price to meteoric levels. However, with its recent 20-for-1 stock split, its shares are significantly cheaper and accessible to the average trader.
Amazon’s e-commerce business was booming during the pandemic years, but growth rates have normalized since then. However, its cloud business seems to be following a completely different trajectory, consistently growing by double-digits in every passing quarter.
In its most recent quarter ended in March, Amazon Web Services (AWS) generated $18.4 billion in sales, up 37% from last year. Moreover, Amazon’s advertisement sales have risen by over 20% in each of the past six quarters, another lucrative long-term proposition for the company.
AMZN stock is trading at a multi-year low and has generated over 100% price return for its shareholders over the past five years making it a no-brainer investment.
Chip-maker Nvidia (NASDAQ:NVDA) operates a widely profitable business that enjoys robust cash flow generation. It is a unique company at the core of some of the biggest trends in technology, including AI, cloud, gaming, the metaverse and others. Moreover, in addition to its hardware stack, it is quickly expanding into software, which offers spectacular margin growth potential.
Operating results for Nvidia have been nothing short of astonishing over the years. It’s posted double-digit revenue and earnings growth on average over the past five years, with a massive increase in free cash flows.
NVDA stock has grown exponentially over the past decade, generating a 4,500% return. Moreover, it continues to reward shareholders through its share buyback program. It recently announced a bump in its share buyback program up to a total of $15 billion through 2023. Though the stock isn’t cheap, it trades considerably below its historical price multiples.
Meta Platforms (META)
Shares of social media giant Meta Platforms (NASDAQ:META) have taken a beating of late. Regulatory troubles, inflationary pressures and a departing COO are only a few of the headwinds that’ve weighed down FB stock. Moreover, the company is investing a truck-load of money in a relatively unknown industry, which could define its future.
The concerns over Meta’s future are valid but are remarkably overblown. The company has consistently proven its naysayers wrong, and the metaverse is essentially a bet on the adroitness of its illustrious management. Judging from their impeccable track record, the metaverse is likely to become the juggernaut everyone expects. The sector is estimated to be worth $426.9 billion by 2027, with an annual growth rate of 47.2% from 2022 to 2027.
Additionally, Meta’s social media businesses continue to post strong revenue growth backed by robust profitability. Add in the metaverse opportunity, and you’re looking at a colossal growth runway ahead.
Lumen (NYSE:LUMN) is a leading U.S.-based telecommunications services provider. Similar to other telcos, it is moving into other profitable verticals to fight the costs related to traditional landline services. It has recently expanded into fiber optics, multi-gig services and related architectures. Its efforts position it for massive growth from AR, gaming, VR and other high-bandwidth offerings.
In its most recent quarter, it raised its full-year EBITDA (earnings before interest, taxation, depreciation and amortization) guidance range to $6.9 billion to $7.1 billion, compared to $6.5 billion to $6.7 billion. Also, it bumped its free cash flow guidance by 25% to between $2 billion and $2.2 billion. Perhaps of greater interest for investors is that the management has maintained its 25 cents quarterly dividend for the year.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) is one of the best performing large banks in the U.S., with an asset base second to none. Moreover, it has been one of the most profitable financial institutions, with a return of over 17% annually for the past 10 years. The bank operates a diversified business, which reduces its risk and has helped generate massive cash flows. Its free cash flows came in at 198% growth last year compared to 2020.
Moreover, it boasts an amazing dividend profile, offering a 3.4% yield with nine years of growth. Additionally, its payout ratio is at a healthy 30%. JPMorgan has a market-leading position and a clean balance sheet, making its long-term position remains highly attractive.
Snack and beverage giant PepsiCo (NASDAQ:PEP) hasn’t been a growth stock by any stretch. It has, however, been one of the most reliable dividend stocks and a safe place for investors to grow their investment with minimal risk. Its dividends have grown over the past five years at 7.4%. Additionally, it has just achieved the exclusive Dividend King status with 50 years of dividend raises.
Its impressive pricing power enables it to pass on higher prices to customers without impacting demand. PepsiCo recently raised its organic revenue target from 6% to 8% on a year-over-year basis. Moreover, it also expects an 8% increase in earnings per share. The updated guidance is a testament to the strength and resilience of its operations.
Procter & Gamble (PG)
Consumer staples giant Procter & Gamble (NYSE:PG) has been a remarkable performer, posting healthy sales growth considering its sheer size and scale. Moreover, it’s a dividend king with 65 years of dividend expansion. Additionally, its payout ratio is 60% with a dividend yield of 2.5%.
Similar to other businesses in its niche, P&G is facing severe inflationary pressures. However, it’s done well to offset the higher costs by passing them along to its customers. Hence, it upgraded its sales growth guidance from 3.5% to 4.5% at the midpoint. The inelasticity of demand for the company’s products continues to hold firm, which is why it expects another solid year.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.