Almost 4,000 stocks exist in the primary investable universe. With such a large spectrum of choices, how can individual investors be expected to make informed decisions and consistently profit?
Better yet, what are the top stocks to invest in?
Successful investing consists of finding good risk/reward ideas and having the vision to allow those ideas to mature into profits.
We will discuss what makes a good stock investment, ways to identify real companies with real goods and services, and how one can expect to profit from these investments. Some of the companies listed may sound familiar, others foreign. The important part is finding a company that matches risk profiles and ideologies of the individual investor. This article will provide a number of different leads for investors. Hopefully this is only the beginning of a long and profitable investing career for the reader.
Top Stocks To Buy Now
Amazon.com, Inc. (AMZN: NASD) engages in the retail sale of consumer products and subscriptions in North America and internationally. It operates through the North America, International, and Amazon Web Services (AWS) segments. AMZN is one of the few companies to originate during the dotcom era, and grow into a mature and diversified superpower. Undoubtedly investors have come in contact with the company at some point; they touch so much of the market, whether it is in the retail environment or entertainment space.
This company is truly an amazing story, being founded in only 1994 it has grown to the largest internet retailer in the world by market capitalization. It surpassed Walmart as the most valuable retailer by market capitalization, and is among the top 5 most valuable companies in the world. Demand for this company still exits, showing an increase in share price by over 60% over the past year. The company shows insider ownership over 15%, showing investors that those who run the company are firmly invested in its success. It is in their best interest to see the company stock price appreciate rather than fail. The company has low debt levels also which allow it to be flexible with new projects; new projects tend to lead to increased profits for investors. It is one way that management creates value. Shown below is an example of how a past project for AMZN created long term value for shareholders.
One can note the growth of their new project at the time, labeled AWS. AMZN is a top stock to invest in today due to its market share and ability to create new and sustainable trends.
International Business Machines Corportation (IBM: NYSE) provides information technology (IT) products and services worldwide. Its Cognitive Solutions segment includes Watson, a cognitive computing platform that interacts in natural language, processes big data, and learns from interactions with people and computers. Founded in 1911, this technology company has seen its industry experience dramatic change many times over. Despite a constantly changing business environment, it continues to produce goods that the market values. IBM is more than a company; it is more of a legacy, with past employees boasting five Nobel Prizes and six Turing Awards.
Renowned investor Warren Buffet made IBM the first technology investment for his firm Berkshire Hathaway. This is important to note because it speaks to the grass roots of this tech firm, it is not a speculative here today, gone tomorrow investment. IBM gives a juicy dividend yield well over 3%, reassuring investors that capital return plans are important at the company. At current levels, IBM has a price-earnings ratio (P/E) of just over 13, making it a deeply discounted stock relative to the rest of the market. Value investors salivate at the opportunity to buy such a diversified technology company at such a low valuation, making this company a top stock investment today.
Verizon Communications Inc. (VZ: NYSE) provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. This company has a hold on a large majority of market share. There are only one or two major competitors to the firm, which makes it attractive niche company. Niche is not to mean small in this case, as VZ has a market capitalization over $200 billion. The company shows an outstanding return on equity (ROE) of over 60%, well above industry average. ROE measures a firm’s profit relative to the money shareholders have invested.
Another reason this is top stock to invest in is its dividend yield of over 4%. With 10 year notes just breaking 2%, VZ is noticeably more lucrative for those wishing to generate long term value. This company’s P/E ratio is around 13, making it “on sale” relative to the stock market as a whole. Buying stock in this company is viewed as a stable investment, as telecom companies tend to be less volatile than other sectors of the market. It is important for investors to understand their own risk profiles- some need extremely volatile names to make investing worth their while, still others rely on stable dividend plays.
Which Of These Top Stocks Today Is Right For You?
This article has laid the groundwork for top investment stocks in the market today. Retail, tech, and telecom were discussed, although closer look will reveal that all three companies have crossed paths at one point. For example, AMZN experimented with a cell phone of its own, which is seen as move into the telecom space. These stocks are some of the best on the market today; however, it is of the utmost importance that one understands what he owns. One may assume that the more stocks he owns the more risk he is assuming. This can be true or false in investing. Owning a large number of tech stocks means that one will be rewarded handsomely when tech is strong, and will experience serious drawdowns when tech is weak. Alternatively, if one were to own all the stocks discussed in this article, he will be diversified. Diversification is important when investing for the long term because over time, stocks tend to appreciate, but not all at the same time. So when one of these companies is underperforming, chances are the others are not and visa-versa.