With $1,000, you can do a lot to build a good stock portfolio that meets your personal financial planning needs.
Different people will have different ideas about the best stocks to buy with $1,000 today. I don’t know what your financial needs are, how you like to invest, or which industries you can follow and understand best. So there is no easy, clear-cut answer that works for everyone.
So, I can show you some stocks that might meet at least one of your needs right now. All of the companies on this list are great long-term investments and can be found in different parts of Wall Street. You have to figure out which idea (or ideas) might work best for you.
To ensure maximum diversity, I will provide you with one high-powered growth stock, one rock-solid value investment, one dividend champion, and one index-tracking exchange-traded fund. If you’re a momentum investor who is always looking for the next penny stock that will make you rich quickly, I’ll let you look into that bad strategy somewhere else. This list is all about how to make money, not how to gamble.
Let’s go past that and into the meat of the discussion. For less than $1,000, you can get into these four excellent stocks and one cheap exchange-traded fund (ETF).
Roku ($53 per share) is the best stock for growth.
After the market as a whole moved away from growth stocks in 2022, there are a lot of great choices today. Still, nothing beats Roku’s (ROKU 6.58%) combination of deep discounts and strong long-term growth prospects.
It starts with a simple fact: digital streaming is the future of video-based entertainment.
In the long run, I think that both broadcast and cable TV will have a market share of 0%. Like VHS tapes and slide projectors, DVD and Blu-ray disks will soon seem as old-fashioned as they do now. I can’t pick a global winner in the digital content wars, and it’s likely that the streaming market will be shared by a number of big services and studios.
But Roku investors don’t really care if Netflix beats Disney+ or the other way around. As long as all of the competitors use the Roku media player platform, all that matters is that the streaming market as a whole keeps growing.
Even in the U.S., which has the oldest and most developed streaming market in the world, old-fashioned TV channels are still the most popular. The rest of the world has a long way to go before it can keep up.
So Roku and its partners in streaming services are going after a huge worldwide market where sales and profits can grow a lot. Roku is the clear leader in hardware and software for service-neutral media players in North America. This sets the standard for the rest of the world. The company has only just started to expand into other countries, which again shows a huge opportunity for long-term growth.
At the same time, many Roku investors jumped to the conclusion that the growth story is over after a couple of quarters of slower top-line growth last year. So Roku shares are 65% lower than they were 52 weeks ago and 89% lower than they were in the summer of 2021 when they were at their all-time high.
This mismatch between a bearish view of the market and a bullish view of business is so wrong that I don’t know whether to laugh or cry. As long as the incredibly low prices persist, I’ll keep buying additional Roku shares. When the long-term growth thesis comes true in a few years, I’ll be laughing all the way to the bank.
Roku is my best idea for the market right now if you only want one.
Alphabet ($99 per share) is the best-value stock.
I love the huge discount on Roku shares, but not every investor is looking for a long-term growth investment in a time of dramatic short-term market turbulence. Alphabet (GOOG 1.56%) (GOOGL 1.90%) is a better choice if you want rock-solid value creation with a more subtle effect of recent price cuts.
Alphabet is the company that owns Google, which is an unbeatable money-making machine built on online search and advertising services. The stock is trading for more than 30% less than its highest price in November 2021. This is because of worries about the economy and the rise of potential competition from ChatGPT and other AI tools.
If Roku is the safest company I know to grow, then Alphabet is the clearest long-term winner on the market.
This company was built to be flexible and to be at the front of every technological revolution. Alphabet is quietly preparing a number of other business ideas to take over when online search and advertising have run their course. So far, the Google Cloud service has been the most helpful option. In the third quarter of 2022, it made up 10% of Alphabet’s total sales. In ten or twenty years, we might not remember the Google brand. At the same time, we’ll use Waymo’s self-driving car service every day, and Verily Life Sciences may have found the proverbial cure for cancer. Both of these businesses fall under Alphabet’s business umbrella.
This company will be around long after we are all dead, and it will help investors build wealth that will last. Based on modest valuation ratios of 19 times earnings and 4.5 times sales, Alphabet’s $1.2 trillion market cap is the third largest stock market footprint right now. Alphabet’s stock is a value investor’s dream because it is sure to last a long time.
American Tower ($221 per share) is the best investment for making money.
If you just want a reliable dividend-paying stock, American Tower (AMT -0.11%), which manages and operates cell towers, is my top pick. Its quarterly payouts are supported by strong cash flows.
The use of wireless technologies in communication is not only here to stay but will only increase in significance over time. Because of this, the services of American Tower should be in high demand for many years to come. Due to its clients’ multi-year contracts, the company has a lot of ways to make money.
American Tower’s sales and profits have grown a lot over the past year thanks to its thriving market. One other line item, though, keeps going up much more quickly. In the last ten years, quarterly dividends have gone up by 500% and don’t seem to be slowing down:
Let’s say you bought some shares of American Tower ten years ago when the stock was worth $80, and the dividend was $0.90 per share per year. At the time, that policy led to a small dividend yield of 1.1%.
You bought shares in 2013 that are now eligible for an annual dividend of $5.69 per share. If you used your dividend checks to buy more American Tower shares over time, you’d have 22% more shares than you started with. Today, the return on your original investment is worth 8.7%.
I don’t see any reason why American Tower shouldn’t keep raising its cash-sharing payouts in the future. This would set you up for even more money each quarter in the long run. The stock price, on the other hand, is back to where it was in the summer of 2019. If you can buy a few shares at a low price now, they should do well in your income-generating portfolio as cash profits and dividends keep going up.
Vanguard S&P 500 ETF ($372 per share) is the best index ETF.
Lastly, some investors don’t want to pick individual stocks, while others set aside a part of their portfolio for funds that track one of the major stock market indexes. This gives you instant diversification and protects you from the risk that a single stock will give you bad returns. Exchange-traded funds that are locked to a broad index are perfect for this job because they are so automated that their management costs are very low. This way, your returns will be close to the returns of the market index you choose, leaving you with more money.
Even though there are many good options, I keep going back to the Vanguard S&P 500 ETF (VOO 0.28%). This exchange-traded fund looks just like the popular S&P 500 market index, and it only costs 0.03% to manage. Vanguard’s fund managers will keep $0.003 (one-third of a cent) of every $1,000 in returns that this ETF brings you. This is to cover their costs. In other words, the service of management is mostly free. Even though it’s fun to beat the market, there’s nothing wrong with just matching the wealth-building gains of the S&P 500 index without any stock-picking research or management fees.
