The term “best stock to buy” applies differently to each investor according to their risk appetite. Thus, picking three stocks that fit all retail investors isn’t possible.
However, it is possible to find the three best stocks for the three main types of retail investors. These types are risk-averse, risk-neutral, and risk-seeking.
Risk-averse investors seek discounted stocks with little downside, inelastic demand, and significant insulation from recessionary pressures, while risk-seekers invest aggressively in high-risk businesses with more upside potential. Risk-neutral investors make more moderate investments and seek a balance of risk and reward.
With that in mind, at least one among the following three should fit the “best stock to buy” classification for most, if not all, investors:
PepsiCo (NASDAQ:PEP) has been in a sustained long-term uptrend for decades and is rightfully the safest stock to buy, in my opinion. The business provides significant insulation from volatility and has a well-established brand that will carry it forward for the foreseeable future, which sufficiently justifies its current 27x price-earnings premium.
PEP’s five-year gain aligns with the Nasdaq, and the stock has been almost unaffected by the selloffs. This doesn’t guarantee that PepsiCo’s stock will perform the same as we advance, but it shows that investors are confident in the business’s ability to generate profits, pay dividends, and weather harsh economic conditions.
Investors should also note the company’s steady financials and profitability. PepsiCo’s three-year revenue growth rate was ranked better than 76.67% of its peers. In terms of profitability in the last decade, it ranked better than 98.92% of its peers.
In addition, PepsiCo’s dividend yield of 2.61% should allow you to earn passive income while the storm passes. That’s a very dependable income as the Dividend King has 51 consecutive years of dividend increases.
In my book, PEP is the best stock to buy for risk-averse investors.
Lockheed Martin (LMT)
Risk-neutral investors should consider buying Lockheed Martin (NYSE:LMT) as it provides substantial long-term upside with tolerable downside risk. Russia’s invasion of Ukraine is by far the most significant upside catalyst here as more and more U.S. allies boost their defense budgets. Even if the war were to end, I don’t see the company losing too much business, as Lockheed’s cutting-edge hardware has become a critical part of many militaries worldwide.
I believe defense budgets will continue to surge and grow at a double-digit clip. Much of this money will find its way into Lockheed Martin due to its F-35, the most advanced fighter jet in the world. Many NATO allies are island nations, incentivizing higher air force and navy spending.
Furthermore, Ukraine receiving NATO fighter jets (like the F-16) is only a matter of time now — the U.K. has already announced its plans to train Ukrainian pilots, and I see the U.S. doing so, too, in the future. The company also has a $150 billion backlog as of Q4 2022, boosting its top and bottom lines for years to come.
Finally, Lockheed Martin has a 2.5% dividend yield to sweeten the deal.
Fiverr International (FVRR)
While growth has slowed for Fiverr International (NYSE:FVRR) in Q4, I see the company’s growth accelerating in the coming years. Fiverr’s general and administrative costs of $7.8 million are low compared to its high spending on marketing and research and development of $61 million. This spending has caused operating losses of $2.2 million. However, Fiverr’s marketing and development expenditure is slowly increasing the company’s dominance in the burgeoning gig economy.
The addressable market here is enormous, and there is still plenty of room for growth. The company has best-in-class customer retention and a business model that continues to perform better than its peers. Furthermore, marketing costs are among the easiest to cut, and Fiverr can become profitable when appropriate.
Once the company’s marketing effort starts to take off, Fiverr could soon become the go-to freelance marketplace and be a multi-bagger investment.
Regardless, it is still a high-risk, high-reward investment as there are many “ifs” going forward. Therefore, I only see it as the best stock to buy for aggressive investors.
On the date of publication, Omor Ibne Ehsan 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.