The best stocks for beginners to buy now include the right amount of risk.
People with a longer investment horizon could take the conservative route, buying value stocks and low-cost ETFs, but a long horizon also means they can take some risks as well.
A moderate-risk approach to investing for the beginner makes the most sense. It includes a lot of growth potential balanced by several dividend-bearing shares while benefitting from secular trends.
This list of the best stocks for beginners to buy now includes a balanced approach that could be adjusted later but which will teach an investor about the broader market.
|BRMK||Broadmark Realty Capital||$3.56|
Berkshire Hathaway (BRK.B)
Berkshire Hathaway (NYSE:BRK.B) is one of the best stocks for beginners to buy now. Berkshire Hathaway’s holdings can be seen here.
The primary benefit of the Berkshire Hathaway investment style is its safety and long-term gains. In a down market like that which we’re currently experiencing, BRK.B stock will tend to outperform. Case in point: BRK.B shares slid 2.94% in Q3. Meanwhile, the S&P 500 declined roughly 6.3% during the same period.
BRK.B is a great starter for a beginner investor, especially those who are more risk-averse. Those investors will find that Berkshire Hathaway may provide lower returns in the short term but with less stress.
XPeng (NYSE:XPEV) lies decisively on the growth side of the spectrum, but still is one of the best stocks for beginners to buy.
XPeng is squarely at the front of exciting growth. It produces vehicles in the fast-growing electric vehicle segment. And it does so primarily in China, the largest and fastest-growing EV market globally.
XPEV stock is much cheaper now than it was at the beginning of 2022. It has fallen from $50 to below $10. XPEV is now cheap and is nearly guaranteed to appreciate in price rapidly when the business cycle again favors growth stocks.
Beginner investors who understand Microsoft’s (NASDAQ:MSFT) returns over the past decade should quickly recognize why it’s one of the best stocks for beginners to buy.
Over the past 10 years, MSFT stock has provided an annual return of 27.14%. An investor with a set-it-and-forget-it mentality would have seen their capital multiply in value by 11X during that same period.
Whether interest rates remain higher or not, Microsoft is a great stock to own. The company has a long history of creating value based on a return on invested capital of 28.5% which is more than quadruple its cost of capital. There is little to suggest that it won’t continue to do the same moving forward.
Fisker (NYSE:FSR) has just begun production and remains a bright spot among a wasteful period of SPAC-funded startup fervor that saw a lot of investors get burned.
Fisker’s asset-light operating model is just beginning to prove what many suspected all along: The company made great choices that will serve it well in the long run.
Those choices really boil down to Fisker’s decision to outsource the manufacturing of its Ocean SUV. The result is that production of the Fisker Ocean began on Nov. 17 as promised.
The company relied on Magna (NYSE:MGA) to manufacture the vehicle in Austria, depending on the firm’s long pedigree in outsourced automotive manufacturing.
Investors should understand that several of Fisker’s SPAC competitors are simply gone now. Others will have far less financial flexibility after building manufacturing from the ground up.
Expect the Ocean to be more reliable given Magna’s history and experience. Expect FSR stock price to rise because of the prudent decisions making it one of the best stocks for beginners to buy.
Costco (NASDAQ:COST) is arguably the best stock to buy in today’s environment. It encompasses defensive positioning with strong exposure to the consumer staples sector.
The company sells staple consumer items in bulk including things like bulk pasta, rice, meat, vegetables, and other foods along with personal items like tissues. Those items are among the last to fall off of a grocery list meaning they have high demand inelasticity.
That said, COST stock remains down this year by 19%. Costco shares have seen periods of rapid growth and price appreciation during 2022. They cooled as retail worries mounted. That’s where they are currently: Down after mounting concerns again. Experts expect Costco to move up again in 2023 and it is cheap now so all investors ought to consider it.
Broadmark Realty Capital (BRMK)
Broadmark Realty Capital (NYSE:BRMK) is a REIT (real estate income trust) which means by law it must pay 90% of its annual taxable income to shareholders as dividends.
REITs are a great investment class for those seeking income. That said, they are risky. REITs invest in large portfolios of real estate using significant leverage. That means they sometimes end up underwater, unable to service the loans they’ve assumed to control vast quantities of real estate assets.
REITs, as a class of stocks, are less liquid than other stock classes and bonds, but the upside is the income they provide. Broadmark Realty Capital includes a dividend yielding 11.3% annually and pays on a monthly basis. That allows for faster reinvestment than a quarterly dividend and could thus lead to higher returns in the long run.
Coca-Cola (NYSE:KO) includes a dividend that has not been reduced since 1963. The dividend pays 2.77% so the income it provides is relatively modest by comparison.
KO stock doesn’t suffer from any of those risks mentioned in relation to REIT investing. Rather, it’s very liquid, and with a leverage ratio of 1.45, it’s not leveraged to a high degree.
Coca-Cola is also a great defensive stock that performs particularly well in down markets and recessions. In fact, it has appreciated in price in 2022. That makes it very rare, one. And two provides compelling evidence that Coca-Cola is a great stock that investors of all experience levels will appreciate.
On the date of publication, Alex Sirois 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.
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