As a new investor, you might be asking some questions like where to begin, which stocks to invest in, etc. In this article, we will be discussing some of the stocks you need to build your portfolio. There might be other stocks out there, but as a new investor in the stock market, it is advisable to start with these stocks because they have what it takes to build your portfolio. Remember that stock investments are long-term projects, so these stocks are not for the short run. When you talk about powerful growth in the future, these are the stocks you should consider.
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So, without wasting any more time, let us go straight into business.
These are the great stocks for your portfolio:
Apple (NASDAQ: AAPL)
This company needs little or no introduction to the stock market. It has become one of the most recognized brands in the world. Their products have become synonymous with style, elegance, and beauty. Apple has had fine accomplishments in the past. These include the development of one of the world’s first personal computers in the consumer market – the development of one of the best-selling, mass-market smartphones, and the revolution of portable music players with the invention of iPods.
They have built a record of excellence in their operations and also have enough cash on their balance sheet (around 193 billion dollars) to venture into other value-creating investments. This gives investors a lot of confidence in Apple stocks, and therefore should be one of the components of a good portfolio. Smartphones are, however, reaching saturation at this point, so Apple is planning to diversify. Now, they are going into the market of streaming television, which is a great opportunity for them. With their large product user base, they will have little or no problems succeeding in that market.
Facebook (NASDAQ: FB)
Change is coming massively to the world of advertising. This change is driven by the movement of the world towards digital advertising and the outbreak of the pandemic. The pandemic made a terrible impact on everyone, but it was worse on traditional media, which is hindered when it comes to the creation of content. However, it may have been bad for traditional media, but it was great for Facebook.
This is because Facebook gets its contents from users for free. Facebook ads are selling in real-time, with billions of users as targets, from whom the company gets enormous data. There are advertisers also who play their own part in painting a picture of how little money invested in ads got them into the business. In this age, where data and metrics are the new obsession, this is good news for Facebook. The interesting thing is, none of this can be achieved in traditional media. So, it can be assumed that as advertising dollars dry up, Facebook gains paradoxically.
The numbers on Facebook financial reports say it all. Revenues have been going higher and higher, margins have appreciated, which has led to almost double their net income. There might have been a huge decline in demand for a short period, but things have started to go back to normal. This is a huge win for Facebook, and traditional media companies seem to be bearing the brunt of it. Economic crises can change things in favor of some, right?
Netflix (NASDAQ: NFLX)
The pandemic outbreak was a nightmare for most businesses. However, some companies managed to make the most out of the lockdown crisis, and Netflix is one of them. However, it is fair to note that they were doing well even before the pandemic outbreak. The company runs on the model of using the internet for entertainment. It has grown its streaming business to greater heights around the world in the last decade. With a user-friendly interface and a wide variety of video content available, Netflix has something to offer just about anybody.
It has a knack for finding superb storytellers and strengthening the bonds between people with these stories. Some investors might think Netflix is too big to continue expanding. It might come as a surprise to them that Netflix has not hit the two hundred million subscribers’ milestone yet. This simply means that there is enough room for improvement. So, if you are serious about building a strong portfolio, try Netflix.
Mastercard (NYSE: MA)
Let us start with this fact. In 2019, Mastercard handled over six trillion dollars’ worth of payment. This was a thirteen percent increase from the previous year, 2018. This increase in payment brought them almost seventeen billion dollars in revenue. Changes are beginning to occur in the payment space. In fact, global digital payments have surpassed cash payments in recent times, and electronic payments have now taken different forms, including debit, credit, and mobile forms.
Yet, even with all these changes, Mastercard has managed to adapt and still retain its relevance in the payment business. Mastercard CEO Ajay Banga has led the company to greater heights since assuming the position in 2010. This progress will see him become executive chairman in the near future. Also, the current chief product officer, Michael Miebach, is set to assume the role of CEO. These changes have been met with optimism as they have both held leadership roles across different positions in the company. So, with an enviable profit margin and a strong presence in the ever-evolving payment space, it is a no=brainer to add Mastercard stocks to your portfolio.
Appian (NASDAQ: APPN)
The fact that this company describes itself as a low-code automation platform does not make them a low-tech company. In fact, it makes them quite the opposite. Appian has helped many companies design, build, and also implement custom applications for their businesses through visual interfaces. They have also done so in highly efficient ways. Even though this may sound far-fetched, Appian has built applications that are being used by over five hundred government and commercial clients in different industries. These industries include life sciences, financial services, energy, media, government departments, transportation, manufacturing, and communication.
Appian charges on a subscription model that is based on the number of users who utilize or access its applications. They also collect maintenance fees on these applications. Client retention rates are now a little over ninety-five percent, and they intend to increase the spending over the years, with revenue retention rates going above a hundred and ten percent annually for the last three years. CEO and founder of Appian, Matt Calkins, is an ambition-driven person who continues to set targets for the company. One of his realistic targets is cutting the time to make an app by half every two years. The company is still flying under the radar presently, but with the high retention rates, growing demand, and the ambition-driven founder, there is hope for greater returns for the company in the long run.
Idexx Laboratories (NASDAQ: IDXX)
This company excels at helping friends live healthier and longer lives. They are in the business of selling state-of-the-art instruments for diagnosis to veterinary clinics all over the world. The veterinary clinics then use these products to test urine and blood samples for different applications and get the results faster than when they are sent to remote labs. The results of tests are obtained very quickly with these instruments, making vets more efficient in their care for animals. The company also sells reagents used for the tests, making it another source of income.
Idexx Laboratories has good relations with their consumers and have continued to expand over time. Every pet owner loves their pets, and there is every tendency that they have given the utmost care, no matter the economic times we may be in. One great thing about this company is that it is generally resistant to a recession and would be a great addition to a portfolio for the long term.
Amazon.com (NASDAQ: AMZN)
This particular stock has as many options as any other company in the stock market. It started as an internet bookseller but has now turned into a leader in the world of eCommerce. Now, it makes over seven percent of its revenue from Prime subscriptions and about thirteen percent (and a huge chunk of its profits) from its extended services, Amazon Web Services.
Jeff Bezos wrote in his letter to the investors in Amazon sometime in 2020 that he still stands on his word in a letter he wrote to them in 2018. In the letter, he confirmed that every day is “Day 1” for the company. Amazon also has other plans to expand, which include cashier-less grocery stores, a business that is carbon neutral, and thousands of electric delivery vans by the end of 2040. With the way Amazon is going about its business, who knows what the future holds?
They have a mission to be the company with the best customer-centricity and also that unrivaled drive to be innovative (even with a possibility for failure). Investors are actually looking forward to what the company will have for them in a decade or two. So, if you are an investor with Amazon, sit tight and enjoy the ride.
The Trade Desk (NASDAQ: TTD)
A rapid transformation is going on in the advertising industry, and Trade Desk is leading the pack. This company controls a platform that collects data and adapts to any ads campaigns in real-time to increase the efficiency of ad buying across every device. These decisions are data-driven, leading to ads with better targets, and it is redefining the advertising industry. The advertising industry itself is growing by more than twenty percent annually and can boast of an income of almost seven hundred billion dollars.
Trade Desk is like a middleman that never holds inventory but can serve more than eight hundred clients with data to make some good decisions with their budgets. Since retention rates have been steady at about ninety-five percent annually for some time now, clients tend to be increasing their spending with time. Since Trade Desk is a growing firm in an expanding industry, it is expected that they will continue to deliver strong performances financially in the coming years, making it a prospect for your portfolio.
Intuit (NASDAQ: INTU)
If you invested in this company since the global economic crisis, you should be all smiles by now. This is because your investment would probably have grown by over six hundred percent. This is relatively a lot higher than the S&P 500 gain of only a hundred and thirty percent in the same period. This kind of performance is never overlooked, and that is why it should be part of your portfolio as an investor. The company is known for providing one of the most predictable needs any individual or business has, help with tax preparations. It supports all its clients with a wide range of financial solutions, ranging from accounting to tax preps. They do this through offerings like QuickBooks, Mint, TurboTax, to mention but a few. Looking at their growth trajectory, it would be concluded that they are not done growing.
To highlight this fact, they have recently acquired Credit Karma for almost two billion dollars. This acquisition came with the advantage of increasing its total addressable market. It also increased opportunities to sell different products to different customers. This continued expansion, combined with a solid balance sheet and a high dividend yield of 0.92%, makes Intuit a company worth having in your portfolio.
Microsoft (NASDAQ: MSFT)
This is a multinational company that is associated with technology. It specializes in the development, manufacture, licensing, supporting, and sale of computer software, personal computers, consumer electronics, and other related services. It is best known for its software products which include Microsoft Windows, Microsoft Office suite, Edge web, and Internet Explorer browsers. It is ranked top five amongst the biggest companies associated with information technology in the United States. The other four are Google, Amazon, Apple, and Facebook.
Earlier displaced by Apple as the most valuable publicly traded company in the world sometime in 2010, Microsoft reclaimed the spot in 2019. With a market cap of more than a trillion dollars, they have the third-highest brand valuation globally. With all this information, it is fair that they should be considered in your starter stock portfolio.
PayPal Holdings Inc. (NASDAQ: PYPL)
This company is American-based and is one of the leading companies when it comes to online payments systems. In most countries that support online money transfers, PayPal is there to serve as an electronic outlet to traditional payment methods. It also operates as a processor for payment to auction sites, online vendors, and other users. It only charges a little fee to grant these money transaction benefits. With a revenue of over seventeen billion dollars and the fact that online payment systems are pushing traditional methods out of the way, you should consider having PayPal as one of your starter stocks.
Google LLC (NASDAQ: GOOGLE)
Google is one of the most popular companies in the world today. When it comes to internet searches and digging up information, Google is the place to be. It is a multinational technology company based in the United States. It specializes in internet-related products and services. Examples of these products and services include a highly optimized search engine, hardware, software, online advertising technologies, and cloud computing. In fact, it is one of the top five information technology companies in the world. The others are Facebook, Microsoft, Apple, and Amazon. The rapid growth of the company has initiated a chain of products, partnerships, and acquisitions. It has even ventured into services that are designed for productivity and work. It also leads in the development of Android operating systems and browsers. At one point, it was the most valued brand in the world.
With such a long list of products, annual revenue of over one hundred and eighty billion dollars, and the potential for continued development, it would be a shame not to have them on your list.
Shopify (NYSE: SHOP)
Online stores are becoming the order of the day. With so many online business people coming up every day, Shopify is gaining more and more popularity. This is because online merchants are banking on them to help sell their goods and services. The chief technology officer of the company commented recently that the company is beginning to handle Black Friday level traffic on a daily basis. According to his projections, it won’t be long till the traffic doubles or even triples.
This is just a projection, so they are not saying it is going to double immediately. However, their sales reports have shown positive numbers in the form of gross merchandise volume. This goes to show that revenue growth will keep increasing. Speculators and expert analysts believe that the company has all it takes to reach a hundred billion dollars market cap in the near future. It is also a richly valued stock, so investors who have the patience to invest and wait a little while would be rewarded handsomely.
Visa Inc. (NYSE: V)
This is another multinational financial services corporation based in the United States. Just like PayPal, it also facilitates electronic transfers all over the world through its Visa-branded cards (debit, credit, and prepaid). Today, it is one of the most valuable companies. The company does not issue cards, set rates, or set fees for the consumers. All they do is provide financial institutions with their branded products which the financial institutions, in turn, pass to the consumers for money transactions.
It is the second-largest online card payment organization in the world, behind UnionPay, based on the number of cards issued and the value of card payments that were transacted. UnionPay is only ahead of Visa because of the large domestic market in China, but Visa is still regarded as the most dominant in the rest of the world. It has over nineteen thousand employees, a revenue of about twenty-three billion, and is still proving its dominance. It is no wonder Visa Inc. makes this list.
Some people may have questions, and one of the most frequently asked questions is, how are starter stocks selected?
One characteristic of starter stocks is they differ from year to year. A list of starter stocks for 2020 may not be good for 2021. However, there is no need to worry because all of the stocks mentioned here are poised for the long term, and they are still some of the best stocks around, even if they are no longer labeled as starter stocks. So, if a stock was a former starter stock and is still a good buy, feel free to go with it as you would the starter stocks. And if you are not ready to buy yet, no problem. The stock market is here to stay, so you can buy it whenever you are able. If any of these stocks is your favorite, then keep a watchful eye out for it.
So, to be a winner in the stock market, follow these rules:
- Buy more stocks when the time is right and invest for the long term: Experience in the stock market reveals that the more stocks you add to your portfolio and the longer you hold onto them, the better your chances of being a great long-term investor. The stocks you buy should be held for at least three to five years to increase your chances of a better profit.
- Make new additions to your portfolio regularly: You may need to have some cash available with you so you can invest in other stocks without having to sell existing stock. It helps minimize the impact of the stock market volatility, and it also makes you capitalize on market declines to make huge returns. So, with your cash, you can make your purchases.
Some mistakes you should not make as an investor are:
- Aiming for short-term gains.
- Try to avoid too many options in your first year.
- Do not use borrowed money to invest in stocks.
- Do not expect everything to always go as planned.
- Do not go all-in when investing.
- Do not keep less than ten stocks in your portfolio.
- Do not just buy stocks because they are cheap.
In conclusion, investments involve taking risks, but you can always reduce the risks by making the right choices. Invest in the stocks listed as a beginner, follow the guides for investments, and avoid the mistakes below. You will become a better investor in the future.
Recommended books for further reading:
- Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week
- The Barefoot Investor: The Only Money Guide You’ll Ever Need
- Investing QuickStart Guide: The Simplified Beginner’s Guide to Successfully Navigating the Stock Market, Growing Your Wealth & Creating a Secure Financial Future
- Investing Demystified: How to create the best investment portfolio whatever your risk level
- The Five Rules Successful Stock Investing: Morningstar’s Guide to Building Wealth and Winning in the Market