Everyone has to start somewhere! For beginner investors, it’s determining what companies to add to their portfolio for maximum success. Yet, there is the fear of buying the wrong stock and losing your money! Rest assured, if you pick well-known companies with an excellent track record, the chances of you losing all your money on day one are slim.
So, what are the best stocks to buy for beginners just starting? I’ve hand-selected ten companies that are a perfect fit for beginner investors. Each company on this list has a great product or service, excellent leadership, strong financials, and a track record of success.
What Makes A Stock Beginner Friendly?
The goal of a beginner investor is NOT to make easily avoidable mistakes. When it comes to picking stocks, beginner-friendly means finding companies that have relatively low levels of risk.
Characteristics of a company that make for a lower risk investment include:
- Large market-cap: Market capitalization is the total value or size of a company. Companies like Amazon or Google have valuations over $1 trillion! In other words, their market and presence is so big that it would take a lot for a company of that size to fail overnight.
- Strong brand: The majority trusts companies with a well-known brand name. If the majority of the world trusts a brand, then they likely rely on that brand as well, making it a great beginner-friendly investment.
- Global market: A company whose market isn't secluded to just one country or geographical location is more likely to have continual customers buying their products. A larger market reach means just one country's economic events may not affect the company's performance as much since it's diversified globally.
- Provide necessary products: Necessary products or services are products that we use every day like soap, shampoo, toothpaste, food, water, etc. Companies that provide these products will likely always be needed regardless of economic circumstances, making for a great beginner-friendly investment.
Beginner-friendly stocks can be thought of as the foundational companies that you start your portfolio with. They have steady and continual growth with relatively little volatility.
10 Stocks To Buy For Beginners
While this list could be much larger than just 10 companies, I narrowed it down to these 10 by including companies I invest in. Each company has a strong product or service, great brand recognition, a large addressable market, and strong financials.
I'm sure we're all familiar with the e-commerce giant Amazon (NASDAQ: AMZN). Amazon not only sells products online, but they provide smart home technology, AI-powered technology, streaming media devices, and services, as well as unlimited libraries for music. And this is just the start!
As of this writing, Amazon has a market cap of over $1.5 trillion, annual earnings growth of over 190%, and about $68 billion in cash. Today, Amazon is one of the most well-known brands globally and has improved the lives of billions of people across the world.
Perhaps one of my favorite companies of all time is Apple. I own an iPhone, iPad, Apple Watch, Apple TV, and AirPods – all of which I use regularly. If that's not proof enough that they are a stable company, I don't know what is.
Apple is also considered by many to have the most valuable brand in the world. As of this writing, Apple is worth over $1.9 trillion with over $90 billion in cash – both great signs of a strong company to invest in.
Costco is the equivalent to Walmart's SamsClub, but better (in my opinion). They are a big-box retailer that provides household goods in bulk at wholesale prices.
Their company culture is second to none, and I have never heard anyone say a negative thing about Costco – both from an employee standpoint and a customer standpoint. This is money for spotting a good investment! And that's not to mention their growing revenue and sound financials.
Intuit is a game-changer for managing your money. They own Quickbooks, Turbotax, and Mint. Quickbooks helps businesses manage their accounting, Turbotax helps businesses and consumers file their taxes, and Mint allows consumers to automatically budget their money.
Most of you reading this will have used one or more of their products, a sign in and of itself that they are doing great things – which makes for a great investment!
When was the last time you used paper money? Probably not nearly as often as you used to years ago! That's because companies like PayPal are revolutionizing the way we handle and transfer money. Not only are they a convenient option for peer to peer transfer payments, but they also provide world-class payment gateway options for e-commerce websites.
In fact, a growing number of e-commerce websites now include a payment option via a convenient “PayPal” button, making the checkout process even smoother. Combine that industry moat with a strong brand name, visionary founders, and growing revenue and earnings – and you've got another great starter stock to consider adding to your portfolio!
Shopify has revolutionized the way we do business by making it easy for anyone to take their company online. They also provide payment gateway options for their customers and have become the largest player in the “build your own e-commerce website.”
They have triple-digit quarterly revenue growth, billions in cash, and even less debt, with over a hundred million in levered free cash flow (cash available after expenses). Shopify is a fantastic company to add to your stock portfolio.
I like to think of Spotify as the “Netflix of music.” While Netflix (also another potential beginner stock to invest in) is the go-to for streaming video, Spotify is the go-to for music and podcasts.
Their exclusive podcasts give them a major competitive advantage, with exclusive partners like the world's largest podcast show “The Joe Rogan Experience.” They are a large-cap company with ever-growing earnings and revenue.
Peter Lynch is famous for investing in companies that are “boring” by nature. What more of a boring company is there than one that deals with taking out the trash? Waste Management owns most garbage disposal companies across the US and is leading the industry with evergreen solutions.
They likely manage the trash of most of us reading this and even have a brand name recognized by most (the green and yellow WM is hard to miss!). A company that manages an important aspect of keeping our economy clean and safe is one that will be around for a long time, another great indicator of an exceptional long-term investment.
Walt Disney Company
When it comes to remembering your childhood, there is one thing we all likely have in common; watching classic cartoons and family shows produced by the Walt Disney Company. Furthermore, its famous theme parks have managed to earn the nickname “the greatest place on earth.”
Disney continues to impress with innovative products like their new Disney+ streaming app and its acquisition of reputable companies like Pixar and Marvel. Investing in a company that could quite literally be described as owning the childhood entertainment industry will do nothing but help your portfolio over the long run.
Invest In What You Know & Love
When all is said and done, the important thing is that you invest in companies that you understand and ideally that you are a loyal customer to. Consider the market cap, the performance history, the company's financials, its leadership and the company culture. If all spark positive for you then it's a green for go!