In this article, we discuss the 10 best beginner stocks to invest in right now. If you want to skip our detailed commentary on which stocks are best for beginners and why, go directly to 5 Best Beginner Stocks To Invest In Right Now.
Smartphone applications like Robinhood Markets, Inc. (NASDAQ:HOOD) which enable users to trade stocks and cryptocurrencies have led to a massive boom in the number of retail investors. Stuck at home during the Covid lockdowns and freshly rich from government stimulus checks, people flocked towards the stock market. Data company Envestnet Yodlee noted that trading stocks was the most common usage of cash from stimulus checks, and that individuals earning annual salaries between $35,000 and $75,000 reported trading activity about 90% higher than the week before they received government aid. The Covid pandemic ushered in a new generation of investors to the stock market, which online broker Charles Schwab calls the “Generation Investor.” In 2021, the firm reported that 15% of current retail investors had started trading during the lockdowns of 2020.
These amateur investors, unaware of the copious amount of fine reading involved in the process of choosing worthy stocks, and uninitiated in any systematic investment strategy, often end up losing large sums of money in short periods of time. Most experts suggest first-timers to choose well-renowned ETFs (exchange-traded fund), thereby spreading their investment across many stocks within a safe investment vehicle. But starting to trade stocks can be less daunting and more rewarding if you know where and how to spend your money. In the following list, we’ve chosen companies that are well-known in their respective industries, and boast solid track records of delivering shareholder returns and sizeable earnings. Although every investment carries a certain level of inherent risk, we’ve picked stocks which offer the least volatility in comparison to the larger market, providing modest but stable growth which is often paired with consistent dividend yields.
Investors can start their investment journeys by choosing proven names such as General Motors Company (NYSE:GM), NVIDIA Corporation (NASDAQ:NVDA) and Amazon.com, Inc. (NASDAQ:AMZN), and eventually develop the investing acumen to move on to high-risk/high-reward small cap names which can offer blockbuster upside potential.
Best Beginner Stocks To Invest In Right Now
16. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 26
NIO Inc. (NYSE:NIO) is a Chinese electric vehicle (EV) manufacturer which has been making waves with its premium EV lineup and swappable battery technology. Given that the EV market is growing every day due to global concerns around emissions, NIO Inc. (NYSE:NIO) is a stock well-positioned for the future.
On May 23, Mizuho analyst Vijay Rakesh gave NIO Inc. (NYSE:NIO) a ‘Buy’ rating and a $60 price target. He thinks the company is on track for long-term growth with its premium EV leadership, global expansion focus and a mass market brand launch in 2024. He sees the firm’s production getting back to pre-pandemic levels by June on account of improving supply chain. As of June 9, shares of NIO Inc. (NYSE:NIO) have gained 39.56% in the last 1 month.
26 hedge funds were stakeholders in NIO Inc. (NYSE:NIO) according to the Q1 database of Insider Monkey. The combined value of these holdings stood at $716 million. Its largest shareholder was D E Shaw with a position worth nearly $115 million. Jim Simons’ Renaissance Technologies was also bullish on NIO Inc. (NYSE:NIO) with a $113.7 million stake.
Just like General Motors Company (NYSE:GM), NVIDIA Corporation (NASDAQ:NVDA) and Amazon.com, Inc. (NASDAQ:AMZN), NIO Inc. (NYSE:NIO) is one of the best beginner stocks to buy now.
15. American Tower Corporation (NYSE:AMT)
Number of Hedge Fund Holders: 50
American Tower Corporation (NYSE:AMT) is one of the world’s largest real estate investment trusts (REIT), managing a portfolio of approximately 220,000 multi-tenant communication sites. The company owns cell towers and leases them to telecommunications firms across the United States, Europe, Africa, Australia and Asia. With growing demand of wireless connectivity and the increased adoption of 5G around the world, American Tower Corporation (NYSE:AMT) stock makes a safe bet for any new investor.
On June 5, BofA analyst David Barden resumed coverage of American Tower Corporation (NYSE:AMT) with a ‘Buy’ rating and a $315 price target. Citi analyst Michael Rollins added the firm to Citi’s “Positive Catalyst Watch List” in March, and gave it a ‘Buy’ recommendation with a $300 price target. He noted that equity funding for the CoreSite acquisition and growing leasing activity in the US will act as potential catalysts for the firm.
American Tower Corporation (NYSE:AMT) beat EPS estimates for the first quarter by $0.44. Revenue of $2.66 billion was up 23.3% from the year-ago quarter and also beat analysts’ forecasts by $47.52 million.
Of the 900+ elite hedge funds tracked by Insider Monkey, 50 reported ownership of stakes in American Tower Corporation (NYSE:AMT) with an aggregate value of $4.1 billion. With a $1.75 billion stake, Akre Capital Management was the top shareholder of American Tower Corporation (NYSE:AMT) in the first quarter of 2022.
Here is what Qualivian Investment Partners had to say about American Tower Corporation (NYSE:AMT) in its Q3 2021 investor letter:
“What Attracts Us
• High barriers to entry resulting from low bargaining power of suppliers (land owners) and customers (wireless companies). Neither can find reasonable substitutes for existing cell towers. Combined with low possibility of disruption, this results in a business oligopoly and pricing power.
• Stable business with consistent high returns on equity, low maintenance capital required, and strong cash generation.
− Ten-year, non-cancelable contracts with built in pricing escalators and high renewal rates
− 1%-2% churn
Superior Reinvestment Opportunities:
• Strong growth for the foreseeable future due to increasing demand for wireless data usage, resulting in wireless carriers Capex equipment spend on existing and new towers.
• Low maintenance capital expenditure requirements; most of capital expenditure is for growth
Superior Management / Capital Allocation:
• Capital reinvested back in business has had returns well above cost of capital
• Company has purchased stock opportunistically…” (Click here to see the full text)
14. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 56
Whether the economy is going through good times or bad, or whether the White House is occupied by Democrats or Republicans, Lockheed Martin Corporation (NYSE:LMT) keeps getting US government contracts which make it stand apart as arguably the best defense stock to buy. Geopolitical tensions anywhere around the world, which rarely seem like a far off possibility, mean instant gains for a company like Lockheed Martin Corporation (NYSE:LMT), which produces tanks, fighter jets, military hardware and weapons systems. It received a spate of US Navy and Army contracts in the month of May and June, and recently reported that it plans to double its production of Javelin missiles, the crucial anti-tank weapon helping Ukraine fight off Russia’s attack.
Investors were seen loading up on Lockheed Martin Corporation (NYSE:LMT) shares. 56 hedge funds were long on the company shares at the end of the first quarter, as compared to 42 hedge funds in the previous quarter. With 1.72 million shares worth $763.2 million, GQG Partners was the top shareholder of Lockheed Martin Corporation (NYSE:LMT) in the first quarter.
Argus analyst John Eade on April 20 raised the firm’s price target on Lockheed Martin Corporation (NYSE:LMT) to $500 from $415 and maintained a ‘Buy’ rating on the company shares. He expects the ongoing geopolitical tension to benefit the company’s sales and earnings in the near future, and cited his “favorable view” of its focus on international revenue diversification.
On account of supply chain issues affecting production at the end of 2021, here is what investment firm Vltava Fund had to say about Lockheed Martin Corporation (NYSE:LMT) in its Q4 2021 investor letter:
“Of course, not all of our companies are doing better than we expected. Lockheed Martin fell somewhat short of our expectations last year. In the cases of Lockheed disruptions in the supply and logistics chains. Lockheed uses a great many subcontractors from various countries and could not avoid issues with continuity of supplies. As a result, production will be slightly lower than we had expected.”
13. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 60
Walmart Inc. (NYSE:WMT) is a leading retail supermarket giant based in the United States. Although recent quarterly results reflected a slowdown in consumer spending amid inflationary pressures, Walmart Inc.’s (NYSE:WMT) market leadership, brand visibility and geographic diversification make it one of the best retail names to own.
On June 5, Baird analyst Peter Benedict gave Walmart Inc. (NYSE:WMT) an unchanged ‘Outperform’ rating and a price target of $155. He likes the firm’s combination of defensive near-term appeal and disruptive longer-term optionality, and returned from the company’s annual Shareholders’ Meeting with a bullish view.
60 hedge funds were bullish on Walmart Inc. (NYSE:WMT) at the end of Q1 2022, with collective positions worth $6.56 billion. GQG Partners was the top shareholder of Walmart Inc. (NYSE:WMT) in the first quarter, having increased its stake by 49% to consist of 15.43 million shares priced at $2.29 billion.
12. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 66
Hardly anybody can go wrong putting their money into energy firms these days. Devon Energy Corporation (NYSE:DVN) deals in the production and supply of oil, natural gas and natural gas liquids across the United States. As of June 9, the company shares have surged 162.50% in the last 12 months amid the broader market rally in the energy sector. It is also a solid dividend payer, with a current yield of 6.47% and 4 consecutive years of payout increases.
For Q1 2022, Devon Energy Corporation (NYSE:DVN) reported earnings per share of $1.88, above analysts’ estimates by $0.12. Quarterly revenue of $3.81 billion also outperformed Street estimates by $215.9 million, and was up 116.4% in comparison to the year-ago quarter.
On June 9, Raymond James analyst John Freeman kept a ‘Strong Buy’ rating on Devon Energy Corporation (NYSE:DVN) shares and raised the price target to $102 from $90 after the firm announced the $865 million acquisition of RimRock Oil and Gas, which the analyst sees as a good, immediately accretive deal.
Hedge fund sentiment around Devon Energy Corporation (NYSE:DVN) was recorded as overwhelmingly positive. At the end of the first quarter, 66 hedge funds disclosed ownership of stakes in the company with a combined worth of $1.92 billion. In comparison, 51 hedge funds were stakeholders in the company in the previous quarter.
11. Occidental Petroleum Corporation (NYSE:OXY)
Number of Hedge Fund Holders: 67
Occidental Petroleum Corporation (NYSE:OXY) is another energy firm which offers investors a no-brainer investment opportunity. The firm has oil and natural gas properties in the United States, Africa, Middle East and South America. As of June 9, shares of Occidental Petroleum Corporation (NYSE:OXY) have rallied 110.88% in the year so far.
On May 31, Mizuho analyst Vincent Lovaglio maintained a ‘Buy’ rating on Occidental Petroleum Corporation (NYSE:OXY) shares, and bumped the price target to $89 from $85. He notes that energy prices have risen due to a global undersupply, but macro uncertainty, logistics and supply chain concerns, and a shift in corporate behavior act as headwinds for this growth trajectory. The analyst sees this as favoring the US energy companies, and increased his price targets in the sector by 3% on average.
Warren Buffett recently built a $7.73 billion position in Occidental Petroleum Corporation (NYSE:OXY), with his Berkshire Hathaway standing as the firm’s largest Q1 shareholder. Overall, 67 hedge funds were stakeholders in the company at the close of Q1 2022, up from 58 hedge funds in the preceding quarter.
In the first quarter, Occidental Petroleum Corporation (NYSE:OXY) posted an EPS of $2.12, beating market estimates by $0.09. Revenue of $8.53 billion for the quarter showed year-on-year growth of 55.7%, and also exceeded analysts’ forecasts by $473.1 million.
Smead Capital Management talked about Occidental Petroleum Corporation (NYSE:OXY) in its Q3 2021 investor letter. Here’s what the investment management firm said:
“Oil stocks dominated our winners for the quarter. We showed that we have unlimited ability to tempt fate by buying into Occidental Petroleum (OXY) this year after it was our biggest loser of 2020. It gained 16.64% during the third quarter.”
10. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 75
The Home Depot, Inc. (NYSE:HD) is a home improvement retailer based in the United States, and a market leader in its space. Demand for the company’s outdoor, decoration and home building products surged during the pandemic as people were forced to stay home, and continues to remain strong. Truist analyst Scot Ciccarelli noted on May 18 that home improvement trends are proving to be far more resilient than many investors had anticipated, as The Home Depot, Inc. (NYSE:HD) posted another strong quarter despite weather headwinds and a negative investor sentiment towards housing and the larger economy. He maintained a ‘Buy’ rating on the company shares, and revised the price target to $375 from $405.
For the first quarter, The Home Depot, Inc. (NYSE:HD) beat EPS estimates by $0.40. The company’s revenue for the quarter also exceeded analysts’ forecasts by $1.27 billion, coming in at $38.9 billion.
75 hedge funds were long The Home Depot, Inc. (NYSE:HD) at the end of March, as compared to 68 hedge funds a quarter ago. Its largest shareholder in the first quarter was Fisher Asset Management with a massive $2.43 billion stake.
Ensemble Capital, an investment firm, discussed various stocks in its Q1 2022 investor letter, and The Home Depot, Inc. (NYSE:HD) was one of them. The fund said:
“Home Depot (7.7% weight in the Fund): The demand surge for remodeling and home improvement goods sparked by shelter in place orders, remote work going mainstream, and a shortage of homes on the market to buy, ran headlong into the supply chain crisis, triggering surging prices in the products Home Depot sells. But the company has been able to pass nearly all of these increased costs on to customers, with revenue growing 37% over the past two years while gross profits, or the profits the company makes on each item they sell, increased by 35%. Even this small difference appears to be due not to inflation eating away at Home Depot’s profits, but rather be a function of the huge increase in revenue the company has been generating in low margin lumber sales.”
9. General Motors Company (NYSE:GM)
Number of Hedge Fund Holders: 76
General Motors Company (NYSE:GM) is the largest automaker in the United States, offering cars under its four main brands: Chevrolet, Buick, GMC, and Cadillac. It has ventured into electric vehicles in recent years, bringing all the resources and expertise a 114-year old company with a $53.4 billion market cap can muster.
In early June, General Motors Company’s (NYSE:GM) autonomous driving subsidiary Cruise became the firm company to receive a permit to charge customers for self-driving car rides in San Francisco. This makes it the first company in the world to operate a commercial taxi service relying completely on autonomous driving cars. On June 1, Citi analyst Itay Michaeli reiterated a ‘Buy’ rating on General Motors Company (NYSE:GM) shares, and revised the price target to $87 from $98. The company remains Michaeli’s top pick in the auto sector.
Out of all the hedge funds tracked by Insider Monkey, 76 reported ownership of stakes in General Motors Company (NYSE:GM) at the end of the first quarter, with a combined worth of $5.5 billion. With more than 62 million shares priced at $2.71 billion, Warren Buffett’s Berkshire Hathaway was the most prominent shareholder of the auto company in the first quarter of 2022.
Here is what RLT Capital, an investment management firm, had to say about General Motors Company (NYSE:GM) in its Q4 2021 investor letter:
“Despite my enthusiasm for GM’s competitive positioning in the years to come, it’s the decidedly unsexy legacy operations that keep GM’s cash registers ringing in the here and now. On that front, investor enthusiasm for the current manufacturing – and financing – of internal combustion engines remains pretty muted by most measures. And understandably so:
-GM’s operations are capital intensive,
-GM’s marketplace is highly competitive (and with excess capacity to boot),
-GM’s supply chain is super complex (e.g., semi shortage, tariffs, etc),
-GM’s labor force is (very) unionized,
-GM’s liabilities are aplenty and long-dated (e.g., warranties, recalls, lawsuits, etc),
-GM’s operations have ample – and unavoidable – commodity exposure (in both raw materials & the resulting impact on product demand/mix), and
-There’s no shortage of debt to consider.
Although that hardly represents a comprehensive accounting of the risks that crowd GM’s disclosures, it’s more than sufficient to obscure the many positives to be found under GM’s hood. Of particular note is GM’s strong showing across seemingly every facet of the changes looming over the broader automotive industry:
-Internal Combustion Engines (ICE): If you think all the talk about electric and/or autonomous vehicles is either total hogwash or still decades into the future . . . GM’s legacy business has you covered. For as long as consumers continue to demand ICE powered vehicles, GM will capably meet said demand. In fact, despite the many headwinds faced by the entire automotive industry in 2021, GM still capably sold ~6.3 million vehicles, and generated ~$113.6 billion of automotive-related revenues…” (Click here to see the full text)
8. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Number of Hedge Fund Holders: 81
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest semiconductor foundry, making semiconductor chips for customers such as Apple, NVIDIA, AMD and Qualcomm, among others. The growing demand of semiconductor-powered smart devices will keep the Taiwanese firm in the investors’ spotlight for a long time to come. The company recently announced that it expects a sales bump of 30% in 2022, as burgeoning demand for its semiconductor chips stands undeterred in the face of global economic uncertainty. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) also plans to spend upwards of $40 billion to expand its manufacturing capacity in 2023.
In April, Morgan Stanley analyst Charlie Chan named Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) a “catalyst driven idea,” expecting the firm’s Q2 guidance to beat consensus estimates despite concerns regarding semiconductor inventory correction. The analyst maintained an ‘Overweight’ rating on the company shares along with a price target of NT$780.
At the end of Q1 2022, 81 hedge funds were bullish on Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), showing a positive trend from the previous quarter where 72 hedge funds were long on the company shares. The combined value of Q1 hedge fund holdings stood at $10.15 billion.
Investment firm Polen Global talked about the future prospects and market position of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q1 2022 investor letter. Here’s what the fund said:
“Taiwan Semiconductor (also known as TSMC) is the world’s leading semiconductor foundry, manufacturing 10,761 different products using 272 distinct technologies for 499 different customers. In our experience, fierce competition, the challenge of keeping pace with new developments, and heavy capital requirements tend to make high returns in technology hardware businesses tough to maintain. TSMC, however, in our opinion, is an exception to the rule. For over 20 years, the company has delivered approximately 20% returns on internally invested capital despite elevated competitive intensity and rapidly evolving chipmaking technology. The company enjoys somewhat of a duopoly with Samsung in producing leading-edge nodes; the fastest and most powerful chips used in the most advanced technology. We expect TSMC to uphold its leading market position over the next decade as a result of its business moats which include technological leadership, an execution-focused corporate culture, as well as its established customer relationships.
Although all investments carry risks, some of TSMC’s risks are more company specific. As semiconductors become increasingly critical, countries and leaders are beginning to focus more on ensuring a steady domestic supply. Will the semiconductor industry have to prioritize national interests over shareholder returns? Will China act forcefully to secure access to TSMC’s leading-edge nodes? These risks are hard to quantify but must be weighed against the long-term investment opportunity the company offers. We believe TSMC will continue to compound earnings growth at rates in the high teens for at least the next five years and has potential to make a favorable investment.”
7. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 83
Advanced Micro Devices, Inc. (NASDAQ:AMD) deals in the provision of microprocessors, motherboard chipsets, graphic cards and embedded processors for PCs, workstations, smartphones, servers and embedded system applications. As a worldwide leader in a consistently growing semiconductor industry, buying Advanced Micro Devices, Inc. (NASDAQ:AMD) stock is not going to be an unwise bet for any beginner. In the last 12 months, the stock has gained 21.14% as of June 9.
On May 17, Piper Sandler analyst Harsh Kumar upgraded Advanced Micro Devices, Inc. (NASDAQ:AMD) to ‘Overweight’ from ‘Neutral’ with a price target of $140, up from $98. He notes that the firm’s mid-to-long-term catalysts remain intact amid strong semi-custom and server trends, and commercial PC growth offsetting consumer PC weakness. He urged investors to “buy good companies when they are down,” and take advantage of AMD’s recent share price weakness.
Advanced Micro Devices, Inc. (NASDAQ:AMD) was a popular stock among investors in the first quarter. A total of 83 hedge funds were long on the company shares, showing growing investor confidence over the previous quarter where 69 hedge funds held positions in the firm. Fisher Asset Management upped its Advanced Micro Devices, Inc. (NASDAQ:AMD) stake by 23% in the first quarter, becoming its largest shareholder with a $2.66 billion position.
Investment firm Carillon Tower Advisers mentioned a few stocks in its Q4 2021 investor letter, and Advanced Micro Devices, Inc. (NASDAQ:AMD) was one of them. It said:
“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
6. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 83
Exxon Mobil Corporation (NYSE:XOM) is one of the largest energy companies in the world, and also ranks as one of the best beginner stocks to buy. The company with an oil, natural gas and petrochemicals portfolio spread around the world has raised its dividend yield for 39 years in a row, and offers a 3.44% yield as of June 9. It has also gained an impressive 61.05% in the year to date.
On June 7, Evercore ISI analyst Stephen Richardson upgraded Exxon Mobil Corporation (NYSE:XOM) to ‘Outperform’ from ‘In Line’ with a price target of $120, up from $88. Richardson thinks that the path to doubling earnings is “achievable,” and sees the stock trading at a greater than 20% discount to historical levels. He forecasts Exxon Mobil Corporation (NYSE:XOM) to have an industry-best ROCE (return on capital employed) target of 15% by 2025 and 17% by 2027.
Investors were seen piling into Exxon Mobil Corporation (NYSE:XOM). 83 hedge funds owned positions in the company at the close of the first quarter, as compared to 71 hedge funds in the previous quarter.
Goehring & Rozencwajg Associates, an investment firm, talked Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter. Here’s what the fund said:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publicly expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
Those starting off on their investment journeys can go for stocks such as General Motors Company (NYSE:GM), NVIDIA Corporation (NASDAQ:NVDA), and Amazon.com, Inc. (NASDAQ:AMZN), as well as Exxon Mobil Corporation (NYSE:XOM).
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