You don't need to have a ton of cash on hand to invest in the stock market. Even a relatively modest starting investment like $500, when put into the right companies, can help to build the foundation of a market-beating portfolio.
Whether you're a newbie investor who wants to start small or an experienced pro looking to put an extra few hundred dollars into the market this month, here are two fantastic stocks to put at the top of your buy list.
Image source: Getty Images.
1. Vertex Pharmaceuticals
The leader in cystic fibrosis (CF) therapeutics, Vertex Pharmaceuticals (VRTX 0.10%), is an established biotech stock with an admirable history of balance sheet growth and a strong competitive advantage in its industry. The company's blockbuster drug Trikafta is approved to treat more than 90% of individuals who have CF, and its three other approved drugs -- Symdeko, Orkambi, and Kalydeco -- account for a substantial share of the remaining existing CF therapeutics market.
Vertex Pharmaceuticals isn't content to rest on its laurels though. It has a robust product pipeline that includes CF drug candidates as well as treatments for conditions ranging from sickle cell disease, beta thalassemia, and Duchenne muscular dystrophy to type 1 diabetes and pain disorders. Some of these pipeline candidates are being developed as part of key partnerships with well-known companies like CRISPR Therapeutics and Moderna.
In addition to Vertex Pharmaceuticals' impressive lineup of current drugs and potential new ones, it boasts a strong balance sheet that is both cash-rich and also consistently generates notable revenue growth. For the latest quarter ended June 30, the company boosted revenues by 18% year over year. Moreover, Vertex grew its stockpile of cash, cash equivalents, and marketable securities to a comfortable $6.7 billion in the quarter. The company forecasts that it will deliver between $7.2 billion and $7.4 billion in revenue for 2021, which would represent an increase between 16% and 19% from its 2020 revenue.
Yet the stock has stalled of late. Shares of Vertex Pharmaceuticals are down by low double-digits year to date. This may be due to a decision the company made back in June to halt development of its potential treatment for the rare lung disease alpha-1 antitrypsin deficiency (AATD) rather than transitioning it into late-stage clinical studies.
As a result, long-term investors can pounce on the healthcare stock at a cheaper-than-usual valuation. Current analyst price targets give the stock a high upside of more than 65% at the time of this writing, so shares may not be trading at a discount for long.
2. Etsy
E-commerce is by far one of the fastest-growing industries to invest in right now, and the options available for buy-and-hold stock traders to capitalize on this trend are seemingly endless. One great stock from this sector is Etsy (ETSY -0.22%), and it's one that continues to deliver for investors time and time again with both a healthy balance sheet and share price increases.
Etsy generated top-line growth of 64% in the first six months of 2021 compared to the year-ago stretch, and its bottom line surged even higher at 122%. Over that same period, active sellers and active buyers on Etsy's platform grew by mid-double-digits. Although the company is continuing to expand rapidly and just made two major cash acquisitions (of online fashion resale platform Depop and Brazilian e-commerce platform Elo7), it finished the second quarter with $2.1 billion in cash and cash equivalents and only $407 million in debt due within the next year.
Shares of Etsy skyrocketed in 2020 as more and more consumers turned to online shopping during lockdowns and the e-commerce industry boomed at an unprecedented rate. Even as global economies have reopened, the hype around e-commerce isn't slowing down. Current projections estimate that the global e-commerce market will hit a valuation of nearly $67 trillion by the year 2030. Meanwhile, shares of Etsy are trading some 1,500% higher than just five years ago.
Etsy may see some slowdown in the coming quarters compared to its financial performance at the height of the pandemic, but the share price and balance sheet gains it's already clocked this year are proof that it has ample runway left to capitalize on long-term growth trends in the e-commerce space. And with its recently expanded family of brands that have now extended its footprint into the multi-billion-dollar fashion resale industry and the fast-growing Latin American e-commerce market, it looks like the sky's the limit for this unstoppable stock.
