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If you’re new to investing, you might feel overwhelmed. There are so many companies to choose from and invest in, but how do you know which ones are reliable or not? A starter stock should have certain criteria to look out for, which include an easily understood business model, good current and projected profitability, solid management, and low volatility. In this article, we explore stocks that follow this criteria and can be used in creating a starting portfolio. These are just our recommendations, and it is not guaranteed that you will make money by investing in these stocks. However, if you’re new to investing, these are just a few to look into! Keep reading to learn more about these companies.
Apple
Everyone knows Apple. It is the leading company in the world and is worth a whopping $2.3 trillion. Apple continues to invent and launch new products that are instant hits among consumers. Because of this, Apple is a company to consider, and should remain steady in the coming years. According to analysts, Apple's earnings per share for their first quarter will be $1.94, a decrease of 8% from the previous year due to the tough economic climate. Regardless, Apple has proven to be a strong stock over the past 30 years with a talented management team and innovative ideas. You can invest in Apple through any brokerage firm, but you cannot buy directly from the company. Learn how to invest in Apple here.
Amazon
Amazon is another corporate giant that you may want to invest in if you’re just starting out. E-commerce sites are more popular than ever before, and profits are growing non-stop, specifically for Amazon. Amazon is reportedly a very reliable and consistent stock due to its high revenue, strength in the online market, and amazing customer service. Amazon is worth a whopping $998.54 billion in US dollars, and this year, it's on track to generate roughly $40 billion in revenue. Another plus side to amazon is the fact that the advertising industry is growing at a rapid rate, and Amazon is now the 3rd largest advertising platform behind Google and Facebook. All around, Amazon is an ever growing company that is projected to only get more profitable as time goes on. Learn how to invest in amazon here.
Costco
The third company to consider investing in to create a starting portfolio is Costco. Costco is a membership warehouse club that offers customers low warehouse prices on name brand products. It is the 6th largest retailer in the world and the third largest in the US, behind Walmart and Amazon. It’s a company to look into when considering investing because Costco has very strong financials due to its popularity in the market. Costco saw revenues of $222.7 billion in 2022 and is projected to make a little over $231 billion this year. With steady revenue growth and high profits, it could be a safe bet for new investors. Costco also has a large market share. It has a total of 581 locations in the United States and 825 warehouses worldwide. Other assets of this membership warehouse chain are efficient operations, a diversified revenue stream, and projected e-commerce growth. Learn how to invest in Costco here.
Lululemon
Lululemon is another company to consider investing in to create a stable starting portfolio. Lululemon is an athletic wear company that blew up in the 2010s. They specialize in creating comfortable and sweat resistant yoga, running, and training apparel. However, consumers have started to wear their apparel not only for athletic pursuits but also for everyday leisure. Due to this, Lululemon is an extremely profitable company with high annual revenues. In 2022, Lululemon’s yearly revenue was $6.257 billion, which was a 42.14% increase from 2021, proving the company's rapid growth rate. This revenue is only projected to increase with athletic wear gaining popularity by the year. Health and wellness are huge consumer trends, which means that athletic companies will see a lot of profit in the coming months. Luluemon has already established themselves as a leading player in the industry, setting them up for even more opportunities to build their company and increase their revenue. They also offer a wide range of products, including clothing, accessories, and personal care items, which helps reduce the impact of fluctuations in demand for any single product. Learn how to invest in Lululemon here.
Tesla
Tesla is a cutting-edge company that specializes in the design, production, and sale of all-electric vehicles and energy storage solutions. With a focus on sustainability and innovation, Tesla offers a range of vehicles, from mid-size sedans to full-size sports utility vehicles, to meet the needs of a variety of consumers. Tesla also provides services through its network of service centers, body shops, and charging stations, making it a one-stop-shop for all things electric transportation. With its market-leading position and commitment to sustainability, Tesla is a company to keep in mind while shopping for stocks. Their net revenue for 2022 was $22.34 billion. Profit came in at $1.19 per share, or $3.7 billion, far surpassing the analyst prediction of $1.13 earnings per share. Although Tesla has seen a bit of a dip in revenue this past year, it is actually a perfect time to invest since prices per share have decreased. It is still a great long-term investment because the company is still seeing steady growth per year, and is continuing to create innovative products that consumers are interested in buying. Learn how to invest in Tesla here.
While the companies recommended in this article can serve as a starting point, it's important to remember that there are countless others out there that may also be worth considering. Every person's situation is unique, and what works well for one may not be the best fit for another. Keep in mind that It's crucial to do your research, understand all potential risks and rewards associated with each investment, and create a diversified portfolio that aligns with your financial goals and risk tolerance.
Summary
To summarize, if you’re looking to get into investing, these are 5 companies that can serve as a starting point for you. Each one of these companies has an easily understood business model, good current and projected profitability, solid management, and low volatility. As a reminder, you should not go all-in on any of these companies but rather invest a small amount of money in a couple of your choosing. Remember, investing in stocks is not a guarantee that you will make money. It is always best to start small and work your way up as you become more comfortable in the stock market. There is no pressure to invest large sums of money, especially as a beginner. After reading this article, we hope you feel more confident to start creating your portfolio today.