We recently published a list of 11 Best Beginner Stocks To Invest In Now. In this article, we are going to take a look at where Amazon.com, Inc. (NASDAQ:AMZN) stands against other best beginner stocks to invest in now.

The Downsides to Stocks Rallying Higher

Stocks in the United States are rallying high, but some strategists are eyeing a few risks. On December 5, Max Kettner, Chief Multi-Asset Strategist at HSBC, appeared in an interview on Yahoo Finance to discuss the market outlook heading into 2025. Kettner shared that investors and analysts alike hold extremely bullish expectations of the market in 2025. While that may likely be true, an extremely bullish market may pose a significant risk and have multiple downsides.

He stated that the market will likely see strong upsides on the earnings front, leading to higher yields, which will leave a question on the future of the cutting cycle and whether the Fed will have to commence a rate hike again. He emphasized that higher terminal rates will bring in bond volatility and impact nearly every risk asset in the market.

Speaking of positives, Kettner highlighted that the next few quarters exhibit pretty low growth expectations and earnings expectations for the S&P. He reiterated that with a much lower growth rate, the cutting cycle will be executed as planned. As for inflation, he highlighted the importance of super core inflation, also referred to as underlying inflation. He believes super core inflation is more likely to decline, especially in the first half of the year, adding that he is not as worried about inflation as he was almost three to four months ago.

Kettner stated that the next six to seven months will deliver a supportive market environment for equities in the S&P, especially for global equities. He also believes that the market will see a 12% to 13% upside in the next 12 months until the end of 2025. While Kettner remained inclined to tech stocks, he added that other sectors, such as industrials, will also see a “mini re-acceleration.”

He emphasized that the market rally will go beyond the S&P especially with the current “goldilocks” backdrop, high growth projections, and consensus expectations, benefiting other asset classes. Kettner shared that the ideal portfolio for investors will be tech stocks and a combination of stocks in other sectors, especially industrials and US banks. He added that these sectors are likely to benefit from regulatory changes and the current economic backdrop.

As economic and political turmoil encapsulates the market, some stocks have been performing consistently well over the years, positioned as solid investments, especially for new investors. That said, let’s take a look at the 11 best beginner stocks to invest in now.

Our Methodology

To come up with the 11 best beginner stocks to invest in now, we compiled a list of the top blue chip stocks. We then tracked the hedge fund sentiment of each stock and picked the most popular ones. Our list is in ascending order of the number of hedge fund holders as of Q3 2024, according to Insider Monkey’s database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Amazon.com, Inc. (NASDAQ:AMZN)

Number of Hedge Fund Holders: 286

Amazon.com, Inc. (NASDAQ:AMZN) ranks first on our list of the best beginner stocks to invest in right now. The technology company is an e-commerce giant that also provides streaming and data cloud services. The company launched its e-commerce platform in 1994 and is now close to capturing 40% of the market in the United States. In addition to its growing customer base, the company also has a strong cash flow situation. For the trailing 12 months ended September 30, Amazon.com, Inc. (NASDAQ:AMZN) generated $112.7 billion in operating cash flow, up by 57% from the trailing 12 months ended September 30, 2023. During the same period, the company increased its free cash flow to $47.7 billion, up from $21.4 billion in 2023.

For the fourth quarter of 2024, Amazon.com, Inc. (NASDAQ:AMZN) expects net sales to range between $181.5 billion and $188.5 billion, up by 7-11% year-over-year. Operating income, on the other hand, is expected to range between $16 billion and $20 billion, up from $13.2 billion during the fourth quarter of 2023. Overall, AMZN is seeing significant growth in AWS sales and its international segment, with sustained growth in its North America segment. At the end of Q3 2024, 286 hedge funds held stakes in AMZN, according to Insider Monkey’s database.

Diamond Hill Select Strategy stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2024 investor letter:

“Among our top individual contributors in Q2 were Amazon.com, Inc. (NASDAQ:AMZN), Texas Instruments and Mr. Cooper Group. Internet retail and cloud infrastructure company Amazon is benefiting from strong profitability, particularly in its Amazon Web Services (AWS) business. Shares also received a boost amid growing optimism around the demand for AWS as Amazon customers’ investments in generative AI projects continue growing.”

Overall, AMZN ranks 1st on our list of best beginner stocks to invest in now. While we acknowledge the potential of AMZN to grow, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AMZN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.