Please ensure Javascript is enabled for purposes of website accessibility

3 Smartest Stocks to Buy With $500 Right Now

By Keith Speights - May 9, 2021 at 6:04AM

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

They'll enable you to profit from six unstoppable trends.

I think there are three steps to making a lot of money in the stock market. First, identify significant trends that are practically unstoppable. Second, buy the stocks of well-run companies that are leaders with those trends. Third, give those stocks ample time to deliver big returns (ideally, 10 years or more).

The good news is that you don't have to start out with a huge upfront investment to follow these steps. A few hundred dollars is all you need. Even better news: I'll point out some major trends along with some top stocks that should profit from those trends over the long run. Here are my picks for the three smartest stocks to buy with $500 right now.

Woman with finger to her mouth and drawings of light bulbs over her head with one colored orange

Image source: Getty Images.


Artificial intelligence. Augmented reality. Cloud computing. Gaming. Those are four of the biggest unstoppable trends today. And there's one stock you can buy for around $250 that will enable you to win from all of those trends -- Microsoft (MSFT -0.26%).

The tech giant is already a key leader in artificial intelligence. Microsoft is about to further establish its AI pedigree with its $19.7 billion acquisition of Nuance Communications. This deal will especially boost Microsoft's AI presence in healthcare.

Microsoft claims the No. 2 spot in the cloud market with a 20% market share, according to Synergy Research Group. The company's cloud business continues to grow briskly. Sales jumped 20% year over year in the first quarter to $13 billion.

Xbox remains immensely popular with gamers. Microsoft's Xbox-related revenue soared 30% in Q1. The company is also a top player in the augmented reality market, recently landing a $21.9 billion contract with the U.S. government to supply AR headsets to the military.

Very few stocks allow you to profit from as many major trends as Microsoft. It's practically a no-brainer pick, in my opinion. 

Teladoc Health

Virtual care stands out as another key trend that should have a tremendous future. Teladoc Health (TDOC -8.87%) is the clear leader in the virtual care market. Its share price is currently in the ballpark of $150 after a big pullback over the last few months.

Don't be too concerned about Teladoc's recent decline. Some investors are skittish with the company's growth rate tapering off. But slowing growth is completely understandable, in my view, after the spectacular surge in telehealth demand last year fueled by the COVID-19 pandemic.

Teladoc is only scratching the surface of its opportunity in the U.S. market. It has nearly as many potential users at current clients than it does members. The company's acquisition of Livongo gives it even more room to grow.

Global consulting firm McKinsey & Company estimates that the U.S. virtual care market could approach $250 billion after the pandemic ends. Teladoc expects to generate around $500 million in revenue this year -- only a tiny fraction of its addressable market.  

Brookfield Renewable Corporation

Increased demand for renewable energy looks like a trend that's as much of a sure thing as they come. There are several attractive renewable energy stocks that you can buy, but I think you won't go wrong with Brookfield Renewable Corporation (BEPC -0.44%). Even after investing in Microsoft and Teladoc, you'd still have enough of your initial $500 to buy a couple of shares of Brookfield Renewable with its share price at around $40.

Just how much of a sure thing is renewable energy? Countries around the world, including the U.S., have committed to significantly reducing their carbon emissions. So have major corporations. But for economies to grow, more energy will be required. The good news is that wind and solar are now the cheapest sources of bulk power generation.

Brookfield Renewable still makes a little over half of its total revenue from hydroelectric power. However, the company has a 27,000-megawatt development pipeline, most of which focuses on wind and solar. This pipeline, by the way, is more than double Brookfield Renewable's current 21,000 megawatts of installed capacity. 

There's also another plus with investing in Brookfield Renewable -- its dividend. The company's dividend yield currently stands at a little over 3%. Brookfield Renewable has increased its distribution by a compound annual growth rate of 6% since 2000. With this dividend plus strong growth prospects, Brookfield Renewable looks like a really smart stock to buy right now.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Keith Speights owns shares of Brookfield Renewable Corporation Inc., Microsoft, and Teladoc Health. The Motley Fool owns shares of and recommends Microsoft and Teladoc Health. The Motley Fool has a disclosure policy.

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

Brookfield Renewable Corporation Inc. Stock Quote
Brookfield Renewable Corporation Inc.
$40.98 (-0.44%) $0.18
Microsoft Corporation Stock Quote
Microsoft Corporation
$291.32 (-0.26%) $0.77
Nuance Communications, Inc. Stock Quote
Nuance Communications, Inc.
Teladoc Health, Inc. Stock Quote
Teladoc Health, Inc.
$35.95 (-8.87%) $-3.50

*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 08/17/2022.

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.