If your investment budget is limited to $100, fear not; there are excellent stocks you can buy in that price range. Additionally, it can help to remember that most brokerages allow you to purchase fractional shares of companies. In that way, you are not limited to stocks with market prices below $100. For instance, with $100, you can buy 10% of a stock selling at $1,000 per share.
Still, if you are specifically looking for growth stocks under $100 to buy, you came to the right place. Here are two of my favorites in that category.
Image source: Getty Images.
As of this writing, Pinterest (PINS -0.52%) is selling at a market price of $26 per share. That's down 70% from its high of over $80 per share reached in March 2021. The image-based social media app thrived at the pandemic onset when millions of folks were spending most of their time at home. Of course, that meant people were doing more of the things you usually do at home, including cooking, reorganizing, and gardening. To gain inspiration for these activities, people visited Pinterest where creators post recipes, design hacks, and gardening tips. As a result, Pinterest peaked at 478 million monthly active users in the first quarter of 2021.
Now that economies are reopening, and people are spending less time doing the things that entice them to visit Pinterest for inspiration, users are logging on less frequently. Pinterest has shed monthly active users for three consecutive quarters and 45 million in total from the peak. Pinterest is free to join and use. It makes money by showing advertisements to those browsing its app, so user engagement is vital to its success. That said, despite its roller-coaster ride up and down, Pinterest is very much a growth stock.
Between 2017 and 2021, it grew revenue from $473 million to $2.6 billion. Furthermore, the current monthly active users of 431 million are nearly 100 million higher than in the fourth quarter of 2019, the last quarter before the outbreak. There is undoubtedly a risk that Pinterest keeps losing users in the near term as economies reopen, but the potential is worth the risk at its substantially lower price.
Chegg
Chegg (CHGG -0.29%) is another low-priced stock selling at $31.89 per share as of this writing. The education technology company's stock is down 72% from its high. Chegg's primary customer is the college student. At the pandemic onset, millions of students were sent home for remote learning. Away from on-campus resources like the writing center, and one-on-one visits with professors during office hours, students desired more help with their curriculum. Chegg thrived, as a result, signing up millions of new subscribers.
Like Pinterest, Chegg is experiencing a headwind as economies reopen. Though its services are helpful even for students learning on campus, fewer students are registering to take college courses, and those who are registering are taking fewer courses. The result is a lessened need for Chegg's services in the near term. It's important to note this is a short-term problem caused by students' decreased enthusiasm for taking courses on campus while a potentially deadly virus is in circulation.
What's more, Chegg was growing subscribers and revenue even before the outbreak and will likely continue doing so for several years more. Indeed, from 2016 to 2019, Chegg grew sales from $254 million to $411 million. The company is working on an initiative to offer country-specific pricing, which will make its service more affordable in lower-income countries.
Fortunately for investors, the near-term headwinds created an opportunity to buy shares of Chegg at a price-to-free cash flow of 28, near the lowest in the last five years.
To wrap things up, if you're an investor with only $100 to invest in the stock market, Pinterest and Chegg are two excellent growth stocks you can buy without going outside your budget.
