Want to know the most important thing to do when it comes to investing in stocks? I can sum it up with one word: Start. If you wait to begin investing, you could forego significant profits.
The good news is that you don’t need a lot of money to get started investing. Just a few hundred dollars will allow you to pick up several stocks with great growth potential. But which stocks should you consider buying? Here are my picks for the smartest stocks to buy with $500 right now (ranked by descending share price).
Innovative Industrial Properties
A sizzling market. Soaring profits. A juicy dividend. You get all that and more when you buy Innovative Industrial Properties (NYSE:IIPR). Sure, it will cost you roughly $200 of your initial $500. However, I think IIP is worth the price.
Don’t let IIP’s somewhat boring name belie the company’s exciting business. IIP is a real estate investment trust (REIT) that focuses on the medical-cannabis industry. It buys properties from medical-cannabis operators and then leases them back to the operators.
This has proven to be a highly lucrative business for IIP. Its revenue and earnings more than doubled year over year in the first quarter of 2021. IIP plows much of its profits into its dividend, which currently yields 2.8%.
The stock has soared more than 460% over the last three years. I think IIP will keep the momentum going with current medical-cannabis markets expanding and potentially more states legalizing medical cannabis in the future.
Bigger isn’t always better. However, I think that Apple (NASDAQ:AAPL) is a case where the axiom is applicable. The technology giant ranks as the biggest company in the world, based on market cap. And it’s a great stock to buy for investors without a huge amount of cash, thanks to its share price of less than $150.
Legendary investor Warren Buffett has praised Apple as “probably the best business I know in the world,” and he has a good point. The company’s iPhone ecosystem is a cash cow, and many of its customers are die-hard fans who wouldn’t consider switching to a rival.
The obvious question for a huge company like Apple, though, is whether or not it can continue to deliver strong growth. I think it can. The rollout of high-speed 5G wireless networks is fueling a surge in demand for the latest iPhone versions. That, in turn, has helped boost Apple’s sales for other products and services, including apps and EarPods.
Innovation will be the key to Apple’s fortunes going forward. Look for the company to launch a foldable iPhone within the next couple of years. Apple is also building its augmented reality (AR) capabilities, with CEO Tim Cook stating publicly that AR is “critically important” for the company’s future.
After buying one share each of Innovative Industrial Properties and Apple, you’ll have roughly $150 remaining from your initial $500. That’s enough to pick up one share of Pinterest (NYSE:PINS) and have money to spare. If the stock declines just a little bit, you could even buy a couple of shares.
You might think that Pinterest is valued at a sky-high premium, with shares trading at nearly 85 times expected earnings. However, it’s important to consider the company’s growth prospects.
Wall Street analysts expect revenue to jump nearly 54% in full-year 2021, with adjusted earnings soaring 117%. That growth rate will likely slow in 2022 to 43%, but we’re still talking about significant improvement.
Over the long run, Pinterest has tremendous opportunities to increase the monetization of its platform, especially in international markets. The company’s average revenue per user is still only a fraction of Facebook‘s, even though its platform is arguably better suited for targeted advertising.
In my view, there are few stocks as attractive as Pinterest for individuals looking to get started with investing.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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