Looking to start investing in stocks? Today’s market may be a great entry point! Yes, the novel coronavirus may have battered down stock prices. But that’s exactly the kind of environment ripe with opportunities. So, what should you keep an eye out for when you start looking for the best stocks to buy?
Think large, stable companies. “Blue Chips,” if you will. But don’t think you’re limited to “old school” industries when I use that term. Even high-quality growth stocks such as major tech companies fit this criteria. In today’s market, “flight to quality” is the key. And these are exactly the kinds of stocks beginner investors should consider when building their first portfolio.
Taking a look at major names, these five stand out as some of the best stocks for beginners to buy. Across multiple industries, these offer stable earnings, solid dividend yields and high potential for their shares to go higher long term:
- Alphabet (NASDAQ:GOOG NASDAQ:GOOGL)
- AT&T (NYSE:T)
- Microsoft (NASDAQ:MSFT)
- Proctor and Gamble (NYSE:PG)
- Visa (NYSE:V)
So, let’s dive in and see why beginner investors should consider these some of the best stocks to buy.
Alphabet (GOOG, GOOGL)
The parent company of Google and YouTube, I like to call Alphabet a “NASDAQ blue chip.” Why? Firstly, the company offers a high economic moat. What’s that? That’s a strong competitive advantage that results in high margins and big potential to withstand competition long-term.
Secondly, GOOG stock offers solid long-term growth. Even as its flagship search business matures, the business continues to grow as advertising moves from traditional methods (print ads, television commercials) over to the internet (search advertising). But, that’s not to say the company doesn’t have other needle-movers in the works. Through its “Other Bets” operating unit, the company has made potentially lucrative investments in areas like self-driving cars (Waymo) and artificial intelligence (Deepmind).
However, despite these positives, shares have yet to rebound to past price levels ($1532.11 per share). Today, you can buy Alphabet for around $1,260 per share. In other words, the stock looks fairly cheap considering its growth prospects.
Additionally, GOOG stock trades at a forward price-earnings ratio (P/E) of 22. But, considering the company’s earnings are expected to climb nearly 20% between 2020 and 2021, that’s a wonderful valuation. In short, this tech giant is a great stock for beginners looking to build a solid long-term portfolio.
Telecom stocks are a great place for beginners to invest. They typically offer high dividend yields, as well as earnings stability. These types of stocks aren’t going to set the world on fire. But for low-volatility returns, they could be a great vehicle to invest your money. And that’s especially the case for AT&T.
For dividend investors, T stock may be one of the stronger blue-chip buys in terms of yield. The current dividend yield is around 6.9% — and in today’s low interest environment, that makes shares a fantastic dividend play.
But, there’s more to AT&T than its cash-cow phone and internet businesses. As our own Louis Navellier discussed April 3, the company is diversified in the content business as well, thanks to their purchase of TimeWarner.
Buying TimeWarner helped to bolster their viability, as big tech names like Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX) make big inroads into entertainment distribution.
Also, as InvestorPlace’s Laura Hoy wrote March 30, there’s the 5G catalyst as well. Simply put, T stock offers investors a solid combination of value, yield and potential upside gains thanks to several growth catalysts. With shares trading for around $30 per share (down from above $39.55 per share earlier this year), this stock remains a solid buy for those starting out investing in stocks.
The past few years have shown that Microsoft is no “has-been” tech stock. But instead, it’s belongs in the same company of “FAANG stocks” of Amazon, Apple, Facebook (NASDAQ:FB), and Netflix. Thanks to the impressive growth of is Azure cloud computing business, the company is far from being a tech dinosaur.
But that’s not all! Cloud-based platforms like Teams and Microsoft 365 could help deliver additional growth going forward. Granted, shares remain pricey, even after the stock dipped from past highs. Shares currently trade at a forward P/E of 26.5. Considering that’s much higher than Alphabet’s forward P/E, you may be concerned you’re paying a premium price for lower levels of growth (Microsoft’s earnings are expected to climb around 10% over the next fiscal year).
However, that doesn’t rule out MSFT stock as a great long-term buy-and-hold. With $134 billion in cash on its balance sheet, the company has plenty in its war chest to move the share price higher. Whether it be from game-changing acquisitions, or via stock buybacks or dividends, this stable cash cow remains one of the best stocks for those starting out investing.
Don’t expect epic moves higher like we saw in 2019. But, as markets rebound from the coronavirus, shares offer minimal downside risk, with the high potential to rebound from their current price (around $175 per share), back up to past highs (around $190 per share).
Proctor and Gamble (PG)
After talking about names like GOOG stock and MSFT stock, it may seem like tech stocks are the way to go for beginner investors. Far from it, though! High quality consumer products names like Proctor and Gamble stock should be on your buy list, as well.
The makers of Tide detergent, Gillette razors, and other venerable household brands, PG stock is what you call a “defensive stock.” In other words, it’s a stock considered a safe harbor during an economic downturn.
This could mean shares remain stable, relative to other stocks, which could trade wildly as uncertainty muddles near-term prospects. But the specter of recession shouldn’t be your only reason to consider Proctor and Gamble shares.
As a long-term play, buying it now on the pullback could result in even stronger returns for this low-risk opportunity. Also, consider the stock’s stock’s strengths as a dividend play. The company has raised its dividend 63 years in a row.
Offering stability, strength and yield, consider defensive PG stock one of the best stocks for those just beginning to invest.
Consider Visa the stock where “old school” converges with the “new school.” By “new school”, I’m referring to the evolution of payments from the traditional model to the new model employed by fintech giants such as PayPal (NASDAQ:PYPL).
But, don’t expect V stock to lose out as technology changes the game for financial transactions. With their recent purchase of Plaid, the payment processing giant now has one foot firmly planted on the right side of technological change.
Yet, Visa’s legacy business is no slouch itself. The cash cow credit card processing business is a de-facto oligopoly, with rival MasterCard (NYSE:MA) its primary competitor. Add in high profit margins, and it’s no joke that this company has a strong economic moat.
In short, this stock offers both stability and growth potential. As our own Matt McCall wrote earlier this month, V stock offers two pathways to long-term growth. Namely, via the long-term trend of payments moving to cashless transactions. But also, the company’s exposure to what he considers the future of payments “megatrend.”
One of the best stocks out there for beginner investors, keep this one top of mind when building your first portfolio.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016. As of this writing, he did not hold a position in any of the aforementioned securities.