Please ensure Javascript is enabled for purposes of website accessibility

5 Stocks to Start Investing in 2020

By Joe Tenebruso - Updated May 27, 2020 at 8:01AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

These top businesses can form the foundation of your investment portfolio.

Congratulations on beginning your journey as an investor!

You can earn a fortune in the stock market, and one of the best ways to do so is to invest your money in high-quality businesses. Moreover, owning and studying great businesses can help you learn important investing lessons, which, in turn, can help you make even more money in the future.

Here are five excellent companies that can form the foundation of your stock portfolio.

Someone about to push a button labeled "2020 start"

Image source: Getty Images.


If you want to learn about what it takes to succeed as a retailer, there's no better company to study than Costco Wholesale (COST 0.26%). The discount warehouse chain excels at creating a fun, treasure hunt-style shopping experience for its members, with an ever-changing selection of high-quality merchandise. Costco is also beloved by bargain shoppers for its low prices.

Moreover, Costco's membership model is a thing of beauty. The profits Costco makes from selling membership plans allow it to sell its wares only slightly above cost. These low prices produce savings for customers, which entices more people to become members. It's a powerful virtuous cycle -- one that should continue to fuel gains for Costco and its investors in the years ahead.


Netflix (NFLX -0.69%) can teach you the beauty of simplicity. Even as a $185 billion enterprise, the streaming video leader has a relatively simple business model. It licenses and produces movies and TV shows, and it sells subscriptions that allow people to stream these shows on their TVs and mobile devices.

The more subscriptions Netflix sells, the more content it can buy, which makes its streaming services more valuable to users and helps Netflix sell more subscriptions. This growth flywheel has swelled Netflix's paid membership count to more than 180 million subscribers -- and it should help the streaming leader gain tens of millions more customers in the coming years. 


One of the most important investment lessons you can learn is just how profitable it can be to invest in the companies that are best positioned to profit from global megatrends. The trend away from cash and toward digital forms of payment is one such profit opportunity -- and Visa (V 0.70%) stands to profit from this powerful trend perhaps more than any other company.

Visa operates the largest credit and debit card network in the world. It makes money each time someone uses one of the 3.3 billion cards on its platform. Visa is enormously profitable, and it uses its bountiful free cash flow to steadily expand its digital payment empire, such as its recent $5.3 billion acquisition of financial technology company Plaid. With most of the world's transactions still conducted via cash, Visa has long runways for growth still ahead.

Waste Management

When it comes to investing, boring can be beautiful. Garbage collection may not be the most exciting industry, but that hasn't stopped Waste Management (WM 1.59%) from turning trash into treasure for its investors.

The garbage king owns and operates a vast collection of landfills, transfer stations, and recycling centers. Together, they form a wide competitive moat around its business. Strict regulations and homeowner opposition make it difficult to build new waste facilities in Waste Management's markets, thereby making it difficult for would-be competitors to displace it from its trash throne. That makes Waste Management one of the safest stocks around -- and a great option for beginner investors.


Apple (AAPL 1.30%) needs little introduction. Hundreds of millions of the technology titan's iPhones, iPads, and Macs are in use all around the world. Together, they form a combined base of more than 1.5 billion devices to which Apple sells an expanding array of high-margin services. 

Apple can teach you the value of high switching costs. Its tightly integrated ecosystem of best-in-class devices and popular services -- such as Apple Music, iCloud, and Apple Pay -- help to lock in users. Once people become Apple customers, they tend to stick around, and each new Apple service they use and integrate into their lives makes it less likely they'll switch to a competitor. In turn, Apple is able to generate hefty profits year after year -- to the tune of $55 billion in 2019. 

Better still, with more than $90 billion in net cash on its fortress-like balance sheet, Apple is a financial powerhouse. These enormous cash reserves, combined with its strong recurring profits, make Apple an excellent foundational stock for your initial investment portfolio.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$139.23 (1.30%) $1.79
Netflix, Inc. Stock Quote
Netflix, Inc.
$178.36 (-0.69%) $-1.24
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$469.84 (0.26%) $1.23
Waste Management, Inc. Stock Quote
Waste Management, Inc.
$151.25 (1.59%) $2.37
Visa Inc. Stock Quote
Visa Inc.
$199.50 (0.70%) $1.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.