15 Best Stocks to Buy For Beginners
Picking the right stocks for your investment goals and budget is an important first step toward building wealth in the stock market.
But with thousands of stocks to choose from, it can be overwhelming for new investors to decide which stocks to buy in their brokerage accounts. Today’s market uncertainty doesn’t make it any easier, either.
In this post, you will learn about 15 of the best stocks to buy for beginner investors. I’m also going to cover some underlying investment strategies and tips that factor into my selections.
The Best Stocks To Buy for Beginners in 2021
Here are the 15 best stocks for beginners to buy:
- Amazon (NASDAQ: AMZN)
- Alphabet (NASDAQ: GOOG)
- Apple (NASDAQ: AAPL)
- Costco (NASDAQ: COST)
- Disney (NYSE: DIS)
- Facebook (NASDAQ: FB)
- Mastercard (NYSE: MA)
- Microsoft (NASDAQ: MSFT)
- Netflix (NASDAQ: NFLX)
- Nike (NYSE: NKE)
- Pinterest (NYSE: PINS)
- Shopify (NYSE: SHOP)
- Spotify (NYSE: SPOT)
- Teladoc (NYSE: TDOC)
- Tesla (NASDAQ: TSLA)
Note: This list is in alphabetical order, and doesn’t include ETFs, index funds, or mutual funds, which I cover separately.
Amazon (NASDAQ: AMZN)
Amazon (AMZN) is one of the best-performing stocks of all-time, and one of my personal favorites. Not only because I’ve made a ton of money from it, but also because I see the company as very well-positioned for growth in the future. That’s in part because Amazon has so many ways to win: not just taking over more and more areas of online sales, but also through web hosting, subscriptions, or even self-driving cars.
With Amazon’s stock price around $3,375 at the time of this writing, you may have to purchase fractional shares to get your hands on some. But don’t let that scare you away.
It’s hard to believe it, but Amazon’s stock has tripled in value over the past three years. Their annual revenue has more than doubled in that same time period.
It’s impossible to know how high Amazon will go, but I will most certainly be along for the ride.
Where to invest $500 right now
Lots of new investors take chances on long shots instead of buying shares of great companies. I prefer businesses like Amazon, Netflix, and Apple — they’re all on my best stocks for beginners list.
There’s a company that “called” these businesses long before they hit it big. They first recommended Netflix in 2004 at $1.85 per share, Amazon in 2002 at $15.31 per share, and Apple back in the iPod Shuffle era at $4.97 per share. Take a look where they are now.
That company: The Motley Fool.
For people ready to make investing part of their strategy for financial freedom, take a look at The Motley Fool’s flagship investing service, Stock Advisor. They just announced their top 10 “best buys now” across the entire stock market. Whether you’re starting with $100, $500, or more, you should check out the full details.
Alphabet (NASDAQ: GOOG)
Alphabet is the parent company of search giant Google. The company oversees all products and services related to Google Ads, Android, Chrome, Google Cloud, YouTube, Google Maps, and more. Like Amazon, this company’s got lots of ways to win.
After doing over $183 billion in 2020, and positioned to exceed $200 billion in revenue in 2021, Alphabet is one of the world’s largest and most profitable companies. In one way or another, their products and services are embedded in nearly every computer and mobile device on the planet.
As of late, Alphabet’s stock price has swung a bit due to market volatility and also regulatory and compliance issues. All that aside, I think Alphabet is a solid buy-and-hold stock for new investors — especially those looking to dabble with fractional shares.
Apple (NASDAQ: AAPL)
Apple is another top tech stock that consistently reports top-ranking revenue numbers and returns for investors. This makes Apple a solid buy-and-hold choice for beginner investors.
Apple is most famous for inventing the iPhone, iPad, iTunes, AppleTV, iCloud, and Apple Watch. Apple also designs and manufactures a wide range of high-end personal computers, like the Macbook Pro and Macbook Air.
After a stock split in the summer of 2020, shares are currently around $135 at the time of this writing. (Stock splits shouldn’t really matter — it’s just cutting the same pie into more pieces, but they can cause investors to get excited and see the stock as more affordable.) If you invested $5,000 in AAPL five years ago, those shares would be worth around $15,000 today. Not too shabby! And with the company rolling out new products regularly, I think Apple shares are going to keep on climbing.
Costco Wholesale (NASDAQ: COST)
Whether you’re stocking up on paper towels or finding a new TV, you can find what you need at your local Costco. The company’s stock has also delivered the goods with a steady march upwards over the years. Today, shares are around $355 each, just about the highest they’ve ever reached.
But they’re not showing signs of letting up. At its most recent count, Costco had more than 100 million cardholders, a number that’s been climbing as steadily as its share price. On top of that, the company is likely to keep growing its membership and sales numbers, and could even bump its annual fee by $5 for even more profits to the bottom line. As a bonus, the company recently increased its dividend — basically, they are paying you 70 cents each quarter for every share you own!
Disney (NYSE: DIS)
The Walt Disney Company’s holdings stretch far beyond the Magic Kingdom. Under the Disney umbrella, you’ll find ESPN, Fox, Marvel, Lucasfilm (Star Wars), National Geographic, and a wide range of vacation-oriented locations and services located throughout the world.
Suffice it to say that today and into the future, everybody either wants to watch a Disney-backed movie or TV show or visit one of their many theme parks.
In my opinion, their massive reach, and ability to engage consumers all over the world, and of all ages, makes Disney a solid buy-and-hold stock for beginners. Even with a pandemic that forced that shutdown of their amusement parks for the better part of a year, the company still found a way to make its investors happy: the launch of its Disney+ video-on-demand streaming service brought in revenue from more than 80 million subscribers (and counting!) and allowed Disney to use its video library and new content to make it a strong Netflix competitor.
Facebook (NASDAQ: FB)
Facebook is the social media and advertising giant that was founded by Mark Zuckerberg. The company’s current stock price is around $270, which is more than seven times higher than it was during its IPO in 2012.
The company also owns Instagram and WhatsApp. Together, their products and services have over 2.8 billion active users as of the first quarter of 2021. That means one out of every three people on the planet uses their platforms. Wow!
With numbers like that, it’s easy to see why so many beginning investors are getting on board with Facebook shares. The company’s been in a bit of hot water from governments around the world for some of their business practices, including accusations that it’s a monopoly. But Zuckerberg and team have been through this kind of heat before.
Overall, the company has a massive audience all over the world of engaged users and continues making smart investments (e.g., Oculus virtual reality). Add it all up, and Facebook seems poised to continue marching toward a $1 trillion market cap.
Mastercard (NYSE: MA)
Someday, people might use bitcoin for their daily transactions and make Mastercard a company of the past. But that’s not going to happen anytime soon. Despite the buzz around it, bitcoin is light years from matching the payment system offered by Mastercard, which can settle 5,000 transactions per second. Bitcoin transactions take an average of 10 minutes apiece!
And it’s not just swiping your Mastercard at the mall. The company has positioned itself as a critical player in many different types of transactions and is ahead of the curve as we move more toward digital payments. It’s not as big as rival Visa (Visa has 42% of the market, according to the Nilson Report, compared to 25% for Mastercard), but it’s a smaller company with faster revenue growth, and a lot of room to run.
Microsoft (NASDAQ: MSFT)
Microsoft is among the most valuable stocks in the U.S., battling for the top spot with Apple and Amazon. At last count, it had slipped into third.
Still, Microsoft is holding strong, providing millions of users with computers, hardware, software, and cloud computing throughout every corner of the globe. In large part, this is due to CEO Satya Nadella’s impressive tenure at the head of the company, where he’s overseen the acquisition of GitHub, heavy investments in Azure, the company’s cloud computing platform, and the release of services like Microsoft Teams.
Despite the global pandemic, Microsoft stock isn’t far off its all-time high at around $243 per share at the time of this writing. Like many smart tech companies, it’s found a way to make itself more valuable to users even during tough times.
Microsoft’s recent performance is proof of the value of buying and holding when it comes to blue-chip stocks. And that’s precisely why I recommend Microsoft as a solid stock to buy for beginners.
Netflix (NASDAQ: NFLX)
Netflix is the pioneer of streaming video. The company earned just over $25 billion in revenue in 2020, and it recently surpassed 200 million subscribers around the world.
One thing I really like about Netflix is that it still has so much potential to grow its market share. Currently, less than half of Netflix’s subscribers are located in the United States. As highly-populated countries like Brazil and India continue to modernize their internet infrastructure, it’s safe to assume that Netflix stands to benefit in the form of tens of millions of additional subscribers.
I also wouldn’t be surprised if one of the other companies on this list — like Apple — decided to buy Netflix one day. Apple is sitting on a ton of cash and hasn’t really come up with a new line of products in a while (unless you count the over-the-ear headphones that’ll set you back more than $500). Maybe Apple decides to use some of that cash to make a splashy acquisition over the next few years? Who knows?
One thing’s for certain: I’m keeping Netflix in my portfolio to capture my slice of that potential upside, just in case.
Nike (NYSE: NKE)
Nike is the largest manufacturer and supplier of athletic shoes and sports equipment in the world. Since 2016, the company has consistently exceeded $30 billion in annual revenue. And, like all of the stocks in this post, the company’s share value continues to rise over time.
Nike is another one of those safe, blue-chip stocks from the leader in its segment. This is purely my own speculation, but as the population continues to grow, so too, should Nike’s global reach.
It’s worth noting that most of the companies on this list are tech companies. Any good portfolio should be balanced, so adding a solid retailer like Nike to your portfolio is always a good way to diversify your investments.
Pinterest (NYSE: PINS)
Pinterest went public in 2019. The company offers a visually-focused social media platform that gives people a unique way to share and learn about travel experiences, design and decor, art, recipe ideas, and more.
Personally, I think Pinterest is a solid buy, and it could be a bargain right now. While their stock price has been somewhat of a rollercoaster since their IPO, it feels like almost every big tech stock experiences ups and downs in the early years.
It’s seen a bit steadier of a climb recently. As Pinterest figures out additional ways to monetize its platform and grow its user base, don’t be surprised to see its stock growth accelerate.
Shopify (NYSE: SHOP)
This one isn’t the long-time, steady-growth giant as some of the others on the list. With that comes a bit more risk than with Apple or Amazon or Microsoft. But, in investing, you find that greater risk often leads to greater reward. We’ll see.
Shopify lets merchants of all sizes do business online. With Shopify’s help, any company can create an ecommerce site and use their tools to handle all the back-office tasks, from driving sales to tracking customers to managing day-to-day operations.
Even before the pandemic made in-person shopping a challenge, we were moving quickly toward a retail world increasingly dominated by e-commerce. Shopify is helping to make that happen and investors who saw that trend and jumped on board have done very well of late. The share price is now over $1,200, so you might need to go with fractional shares to jump in, but I think the climb will continue.
Spotify (NYSE: SPOT)
Spotify’s stock value is on fire lately due to partnerships earlier this year with Kim Kardashian West and Joe Rogan. Pundits believe that these celebrity endorsements help the streaming music juggernaut stand out from its competition, and that over time, the company should continue to gain market share.
At last count, Spotify has over 144 million paid subscribers and over 286 million active users on the platform. It’s hard to predict how much higher their stock will climb. At the time of this writing, Spotify costs about $320 per share, up from around $149 during its IPO in 2018.
The stock is not cheap — it’s around its highest price ever. But the company continues to make good decisions. Its exclusive Michelle Obama podcast was among the most popular podcasts in the world last year, and Spotify keeps finding new audiences and new ways to make money on their services. It’s a bit riskier than some of the other suggestions here, but it might be worth an investment if you believe in the future of podcasts. Just my two cents!
Teladoc Health (NYSE: TDOC)
Here’s one you might not have heard of, especially if you don’t spend a lot of time with your doctor. Teladoc Health works to keep people out of the doctor’s office, a trend that was picking up steam even before the pandemic. They provide a platform for healthcare customers to meet with their doctors via video-conference (aka, tele-health).
Teladoc saw its virtual visits this year more than triple over the previous year, thanks largely to the pandemic. But I don’t think that’s a trend that’s going away as soon as it’s safe to leave your house again. So many people are finding out you can take care of many of your medical needs from your own home — why go back if you don’t have to?
While its sales have been increasing rapidly, Teladoc’s share price also increased significantly this past year, mostly hanging near the $275 range. Nevertheless, I think this is still a well-positioned player in a growing field, so it’s worth a look for even beginning investors.
Tesla (NASDAQ: TSLA)
Tesla is one of my favorite stocks. Not only because I’ve made a ton of money with it but because I’m such a huge fan of the company’s innovative technology and potential for future digital disruption.
If you’re a firm believer that electric cars are the future of automotive transit, and you’re a fan of Elon Musk’s bold visions, Tesla could be a solid addition to your portfolio. Keep in mind Tesla isn’t just cars, either. The company is also focused on disrupting the battery sector and purchased SolarCity a few years ago.
Like Apple, Tesla performed a stock split this year, and shares are now more than $850 each. Some (including Elon Musk) might say that the share price is overvalued. But I think we’re still in the early stages of what Tesla might eventually mean to the world … and to its investors.
Where to invest $500 right now
Before you buy Amazon, or Netflix, or Apple, consider this...
The team at Motley Fool first recommended each of those stocks more than a dozen years ago!
- They discovered Netflix for $1.85 per share, back in the days of DVDs by mail.
- And recommended Amazon at $15.31 in 2002, before most people were comfortable using credit cards online.
- And even hit Apple at $4.97 per share, about a month before the release of the very first iPhone.
Check out where those stocks are today. The bottom line: a $500 investment in all three of these stocks would be worth more than $200,000 today!
And here’s why that’s important: The Motley Fool’s flagship investing service Stock Advisor just announced their top 10 “best buys now” across the entire stock market. Whether you’re starting with $100, $500, or more, you’ll want to get the full details!
The Best Stocks to Buy in April
As we enter April 2021, the market has changed significantly over the past month. While the Dow Jones Industrial Average and S&P 500 are near all-time highs, the Nasdaq is down 8% from recent highs. More importantly, popular stocks included in the list above have seen much steeper sell-offs. As of March 29th, Tesla is off 31% from its 52-week high. Shopify is down 30%. Pandemic favorite Zoom Video Communications (Nasdaq: ZM) is off 47% from its recent highs.
What’s going on in the market? Simply put, investors have begun moving back into “reopening” stocks for the post-Covid world. As they’ve done that, many growth stocks that have seen incredible returns in recent years have sold-off.
If you’re an investor that has seen sell-offs in some of your growth stocks and want to add “reopening” stocks that could benefit as the in-person economy resumes in the second half of 2020, consider these stocks from the list above.
- Disney: It’s not just Disney’s parks that will benefit from a reopening world, but the company will also see tailwinds from the return of blockbuster movies in theaters and cruise ships.
- Costco: In the past year, Costco has grown sales by 13% while profits grew 15% in spite of the pandemic. With bricks and mortar competitors closing, Costco faces declining competition. In addition, Costco saw its online sales jump 50% in fiscal 2020. Even after the pandemic abates, the improvements Costco has made to its ecommerce operation should have continuing benefits.
- Mastercard: While most ecommerce shopping uses credit cards, the resumption of spending verticals like travel should provide tailwinds for Mastercard (and rivals like Visa) in the years ahead.
Stock Market Investing Tips for Beginners
1. Invest in Companies That You Understand
This might sound like common sense. But I’ve seen too many people invest in stocks (and therefore, in companies) purely based on advice from a friend, something they heard on the news, or even a mere whim. All too often, I’ve heard the horror stories of stocks losing massive amounts of value in a short time, making shares virtually worthless.
To avoid that fate, I only recommend investing in companies that are easy to understand and that have a proven track record.
For example, let’s say you like Apple (AAPL) or Amazon (AMZN). Either would be a relatively straightforward investment. You are buying shares of a mature business whose services you probably use — and whose values are consistently increasing over time.
2. Don’t Time The Market
According to the Oracle of Omaha, Warren Buffett, “trying to time the market” is the number one mistake that new investors make. That means don’t try to buy a stock when you think the price is low — it could dip even lower the very next day.
Instead, purchase a stock of a company that is likely to increase in value over time — regardless of what you might be hearing about the company in the news or from friends.
3. Avoid Penny Stocks
If a deal seems too good to be true, it probably is.
Such is the case with pretty much all penny stocks, which is why I don’t recommend them. Generally speaking, companies that are available on penny stock exchanges are not as well-positioned for growth and, therefore, can’t provide competitive returns over time.
4. Consider Buying Fractional Shares
The high prices of many blue-chip stocks are a common barrier to first-time investors. For example, if you only have a few hundred bucks saved, you can’t even buy one share of Alphabet (GOOG), which now sits higher than $1,700, or Amazon (AMZN), which is currently over $3,000!
If this sounds like your situation, where you don’t have a ton of money saved but would still like to get your hands on some prime blue-chip stocks, you’re in luck.
Companies Offering Fractional Shares:
For as little as $5 you can get a slice of a blue-chip stock. These fractional shares can be built up over time or sold like a normal stock.
Eventually, you might even be able to piece together several whole shares of stock by sticking to the course and buying fractional shares on a regular basis.
5. Stay the Course
If you want to be successful in the stock market, you cannot respond emotionally to market shifts or trending news topics. Stock investing is a long game. The only way to really see a return is to experience compounded growth, which builds up over years, as you continue to invest your money in certain funds.
Even seasoned investors like myself fall for the same trap of selling stocks when worried that those funds might sharply decline — due to a pandemic, for example. Unfortunately, we find out the hard way a few months later that those stocks that were sold potentially at a loss are now worth even more.
Staying the course also means being disciplined with buying shares over time. Find an investment schedule that works for you — for example, buying new shares on a monthly or quarterly basis — and stick to it.
If you only buy a handful of shares once, your earning potential will be far lower than if you purchase hundreds or even thousands of shares of that same stock over several years.
Additional Investing Resources:
- How To Start Investing For Beginners
- How To Start Investing in Stocks
- Start Investing with Little Money
- Best Low-Risk Investments
Picking the Best Starting Portfolio for You
When you buy a share of stock, you’re literally buying a piece of that company. If you’re still unsure of where to start, I recommend doing some soul searching and devising a game plan before jumping in.
Are there any companies on the above list with values, products, and services you agree with? What about other companies not on this list? Who do you think will be even bigger 30 years down the line when it’s time to cash in your retirement chips?
Once you identify a few companies that fit your criteria and risk tolerance, the next step is purchasing shares in your brokerage account.
By following the tips outlined above, and investing in any of the above stocks, chances are you will be happy you did. Here’s to finding the right stocks for you so your money can grow for you while you’re living your best life.