Looking for some of the top stocks for beginners on a budget? You’re at the right place. You don’t need a lot of money to invest in the stock market. Fractional stock trading allows investors to buy any stock with as little as $1. It’s a good way to build your positions with spare change, even if you can’t buy an entire share.
If you are just getting started, starting with small investments is a good idea. You shouldn’t put your entire savings into the stock market if you’re still developing your investment criteria. However, there are a few things that investors should look for in any company.
The first key detail is a corporation’s financial growth. A company should regularly report year-over-year revenue and net income improvements. Financial strength leads to market outperformance. Companies with flat or declining revenue and net income growth tend to lag the stock market. Catalysts and valuation are two other factors to consider. Investors looking for some ideas may want to consider these top stocks for beginners.
Alphabet (GOOG, GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) comes to roughly $170 per share. The company is poised to expand its online advertising and cloud computing market share. Both industries have helped the company outperform the stock market for several years. Shares are up by 21% year-to-date and have gained 170% over the past five years.
The tech giant is in the middle of a correction despite respectable earnings. Revenue increased by 14% YOY in the second quarter of 2024. Net income soared 28.6% YOY to reach $23.6 billion in the quarter. The stock trades at an affordable 24.5 price-earnings ratio and offers a 0.47% yield.
Bullish Alphabet investors are plentiful. The average price target from 39 Wall Street analysts implies a 23% upside from current levels. Alphabet is rated as a “Strong Buy.” The highest price target of $240 per share suggests the stock can gain an additional 44%.
Walmart (WMT)
Walmart (NYSE:WMT) is the most affordable stock on a per-share basis. After a 3-for-1 stock split, Walmart stock trades at roughly $70 apiece. The stock has a 30 P/E ratio thanks to a 31% year-to-date gain. Shares are also up by 85% over the past five years and come with a 1.19% yield.
The global retailer is one of the most recognizable brands. Many customers go to Walmart to buy everyday items at low prices. Recent financial results suggest that Walmart is still one of the top choices for consumers. Revenue increased by 6.0% YOY to reach $161.5 billion in the first quarter of fiscal 2025. Meanwhile, adjusted EPS increased by 22.4% YOY. Walmart put its profits to work with a $1.1 billion stock buyback. After the share repurchase plan, Walmart has $9.4 billion in cash and cash equivalents.
Walmart offers more stability than most growth stocks during economic slowdowns. People will turn to affordable products and services when the economy slows down. However, Walmart is also able to perform well in booming economies. Investors’ recent quarterly dividend payments are all the same. That makes it one of the best stocks for beginners on a budget.
American Express (AXP)
American Express (NYSE:AXP) is the most expensive stock on this list if you are looking at the market price. While the stock trades at just below $250, it also has an 18 P/E ratio. That’s the lowest valuation on this list, and American Express continues to report solid financial growth.
The fintech firm delivered 8% YOY revenue growth in Q2 FY24 to reach $16.33 billion. Net income jumped by 39% YOY to reach $3.02 billion. American Express decided to raise its full-year EPS guidance from the $12.65-$13.15 range to the newly established range of $13.30-$13.80. Revenue growth should remain between 9% to 11% YOY for fiscal 2024.
American Express makes a small cut from each credit or debit card transaction. The business model has benefitted the company and its shareholders for several decades. However, stock gains aren’t the only benefit. American Express has a 1.14% yield and regularly maintains a double-digit growth rate. That includes a 17% dividend hike earlier this year. Definitely one of the top stocks for beginners on a budget.
On this date of publication, Marc Guberti held a long position in GOOG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
