The smartest stocks to buy with $200 right now
Mall investors have been reluctant to add positions or buy new stocks given the market uncertainty at this time. Interest rate hikes raise concerns, but the larger question is about inflation and the effect of Russia’s invasion of Ukraine. Will it lead to a recession?
These are all legitimate concerns. But the other thing to remember is that there are stocks of some very good companies that are currently undervalued due to the correction. It’s also important to keep in mind that while they may not necessarily generate returns in the short term, due to uncertainties, there are good buys right now that you’ll be glad you bought in the long run.
If you’ve been hesitant to get back in the water and want to dip your toe in, here are two great stocks to buy right now with $200.
In case you haven’t heard, Amazon (NASDAQ: AMZN)the e-commerce giant, is making a 20 to 1 stock split June 3. This means that Amazon’s very high stock price, which is currently above $3,200, will be reduced by a factor of 20 after the stock split. This is done, among other things, to make the stock more accessible to people who don’t have the capital to shell out $3,200 per share.
So if you are a shareholder before the May 27 deadline, you will see the share price reduced to around $160 per share, but you will now have 20 shares for one share at the current (soon to be old) price. If you own two shares, you will get 40 shares at that price of $160, and so on.
But the thing is, you don’t have to wait until June 3 to get Amazon at the lower stock price. You can invest in one of the largest companies in the world with any dollar amount via invest in fractional shares. Fractional stock investing is a service offered by most brokerages where you can buy fractional shares by dollar amount. So right now you could invest $160 in Amazon, and that would buy you one-twentieth of a share. But after the stock split in June, you would own a full stock of Amazon for that $160. If you increased it to an investment of $500, you would have about three full shares.
Amazon is the world’s largest online retailer and has been a profit beast for the past few years. Its earnings have grown from just over $1 per share 10 years ago to around $64 per share at the end of 2021. The share price has posted an average annual return of around 32% over the course of of the last 10 years.
Although it may take a hit when the first quarter 2022 results are released in April, as my colleague Sean Williams points outthis is due to an investment last year in the electric vehicle manufacturer Rivian and not its own operational performance, which should be solid for years to come. There hasn’t been such a good opportunity to own Amazon stock in a long time.
2. JPMorgan Chase
We are growing from the largest online retailer to the largest bank in the United States, JPMorgan Chase (NYSE: JPM). It’s a fantastic time to buy shares of this company for several reasons. First, the stock is very cheap right now, with a price-to-earnings ratio of around 8 — the lowest it’s been in 10 years, other than a drop when the pandemic hit in March 2020. .
Second, the stock price is expected to rise over the next 12 months, with a consensus price target of $175 per share, up from $139 per share currently, an increase of approximately 26%. The main reason is interest rate hikes.
The stock is up about 7% in the past five days through March 21 ahead of the Federal Reserve’s first interest rate hike since 2018, which took place on March 16. This is just the start of what most economists expect to be multiple rate hikes. , not only this year, but until 2022, to combat rising inflation.
While many growth stocks don’t perform as well in rising rate environments — because it’s more expensive to borrow money to invest and grow — bank stocks thrive when interest rates rise. This is because they can charge higher interest on their loans, which increases their net interest income. Also, lending is expected to grow in the mid-10s as more borrowers are expected to put their money to work in a growing economy. JPMorgan Chase Chief Financial Officer Jeremy Barnum said on the call for fourth quarter results net interest income is expected to increase by about $5.5 billion in 2022 to $50 billion.
JPMorgan Chase was trading at around $139 per share as of March 21, so a $200 investment would only buy you one full share, while a little more would get you two shares.
But it’s a market leader like Amazon that has tailwinds that should drive its stock price higher. And you could add to that initial investment each month knowing that the bluest blue chip company is one of the most stable in the world and should continue to grow in the years to come.
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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. David Kovalesky has no position in the stocks mentioned. The Motley Fool owns and recommends Amazon. The Motley Fool has a disclosure policy.
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