Congratulations on starting down the path toward becoming a stock investor!
There is an enormous amount of money to be made in the stock market, and millions of investors have created life-changing wealth by owning stocks.
You can, too.
One of the best ways to do so is to start with the stocks of strong, easy-to-understand businesses. This will make it easier for you to track the progress of your companies, which, in turn, will help you better determine when to buy and sell their stocks. Additionally, strong businesses tend to perform well over the long-term, even if you don't buy them at the most opportune time.
Here are five excellent stocks with simple business models that can help you begin your investing journey on the right foot.
Apple (AAPL 0.49%) is likely a company you're already quite familiar with. Its iPhones, iPads, and Macs are some of the most popular computing devices on the planet, with hundreds of millions sold around the world.
Yet despite Apple's massive size -- the total amount of its stock is currently valued at more than $1.3 trillion -- the technology titan has a relatively easy-to-understand business model. Quite simply, the more devices and digital content Apple sells, the more money it makes.
With its bountiful profits and massive cash reserves, Apple can serve as a bedrock stock for your investment portfolio. It also offers something not every stock does: a dividend, which is cash it pays to you, as a shareholder, every quarter. In addition to putting more cash in your pocket, this can help you remember one of the most important aspects of investing, which is that a stock represents partial ownership of a real business and a claim on its profits.
Chipotle (CMG 0.51%) is another well known and easy-to-understand business. The Mexican-themed restaurant chain grows its revenue by opening new stores and serving more customers at its existing locations. It's a powerful wealth-building formula that's helped Chipotle's stock rise nearly 20 times in value since it became a public company in 2006.
Something else that's great about a business like Chipotle is that you can visit its stores and sample its food. You can see for yourself if its restaurants are busy during lunch and dinner periods. You can also try out its new mobile app and drive-thru lanes and determine if they're increasing the number of times that you and your family eat at Chipotle. These insights can help to inform your understanding of the key drivers of Chipotle's business and stock price.
Ultimately, if you determine that Chipotle has a good chance of eventually reaching its goal of doubling its U.S. store count to 5,000 locations, then you'll likely agree that this fast-growing restaurant stock is a solid buy today.
Netflix (NFLX -1.13%) is becoming ubiquitous in the U.S. and across the world. The popular streaming service is now available in more than 190 countries, and it counts over 158 million people as paid subscribers.
It will be rather easy for you to track Netflix's progress. The streaming leader's success will come down to the number of subscriptions it sells and its average monthly subscription fees. You'll also want to keep an eye on how much Netflix is spending on content. By comparing its subscriber and revenue-per-user trends against its costs, you'll get a good idea of how Netflix is faring against its competition, and gain insights into its current and future profitability.
With the majority of these trends looking quite favorable, you may come to see Netflix's stock as a solid investment -- even after its already incredible ascent.
As we enter the New Year, millions of people will purchase gym memberships -- and a huge swath of them will sign up at one of Planet Fitness' (PLNT -0.96%) locations.
Planet Fitness put a new spin on the familiar concept of gyms with its low-cost memberships and "judgment-free" atmosphere. With plans starting at $10 per month, Planet Fitness provides an affordable and non-intimidating exercise experience to people of nearly all ages. It's an approach that's proven highly popular with gym-goers; Planet Fitness' membership base is more than 14 million people strong.
Planet Fitness' success is based on the simple premise of providing a pleasant customer experience at a reduced cost. And it's a formula that should continue to deliver strong returns to investors as the company expands its store count in the years ahead.
Like Planet Fitness, Grocery Outlet (GO 1.37%) is taking an innovative approach within an old industry. The grocery chain offers customers deep discounts on an ever-changing selection of goods. This treasure hunt-like shopping experience -- combined with savings of up to 70% compared to other retail chains -- helps to drive strong, repeat traffic to its stores. The hefty savings it provides to its customers are also a reason why Grocery Outlet tends to perform even better during recessions and other challenging economic times.
Grocery Outlet is still early into its growth cycle. The company envisions opening as many as 4,800 stores across the U.S., up from around 340 locations today. This expansion plan will likely play out over many years, and it gives Grocery Outlet the potential to increase its sales and profits at a solid clip for a long time. Its stock, therefore, could provide a powerful long-term growth element to your investment portfolio.