The best stocks to invest $1,000 in today will vary from person to person. I don't know your financial needs, your preferred style of investing, or what industries you're best equipped to follow and understand. So there is no simple one-size-fits-all slam dunk answer to that question.
That being said, I can show you some stocks that may fit one or more of your specific needs right now. The companies below are all fantastic long-term investments, found in very different corners of Wall Street. You must decide which idea (or ideas) might be best for your unique situation.
So I'll give you one high-octane growth stock, one ultra-robust value investment, one cash-generating dividend champion, and one index-tracking exchange-traded fund (ETF) for the ultimate in diversification. If you're a momentum investor, always chasing the next get-rich-quick penny stock, I'll let you explore that unfortunate strategy elsewhere. This list is all about investing, not gambling.
On that note, let's get on with the good stuff. Here are three great stocks and one low-cost ETF that you can buy for less than $1,000 today.
The best growth stock: Roku ($53 per share)
After a marketwide retreat from growth stocks in 2022, plenty of great picks are available today. Still, nothing beats the combination of deep discounts and fully intact long-term growth prospects that I see in Roku (ROKU 5.41%).
It starts with one simple fact: Digital streaming is the future of video-based entertainment.
In the long run, I expect the market share of broadcast and cable TV to land at zero percent. Likewise, DVD and Blu-ray disks will soon be as quaintly dated as VHS tapes or slide projectors. I can't call a global winner in the digital content wars, and several large services and studios will likely share the streaming market.
But Roku investors don't really care whether Netflix (NFLX 4.17%) beats Disney+ (DIS 1.54%) or the other way around. As long as every competitor supports the Roku media player platform, all that matters is the continued growth of the streaming market as a whole.
Netflix likes to remind investors how much further it can grow before running into saturated markets. Last week's fourth-quarter report featured this helpful chart, for example:
Image source: Netflix. Data from Nielsen, Kantar, and BARB. UK figures measure viewing on TV, smartphone, tablet, and laptop; other columns concern TV screens only.
Even the U.S. market, which is the world's oldest and most mature streaming forum, is still dominated by old-school TV channels. The rest of the world has a lot of catching up to do.
So Roku and its streaming-service partners are addressing a massive worldwide marketplace where sales and profits can multiply many times over. Roku is the clear leader in service-neutral media player hardware and software in North America, which sets the tone for the rest of the world. The company's international expansion has only just begun, once again outlining a tremendous opportunity for long-term growth.
At the same time, many Roku investors saw a couple of quarters with slower top-line growth last year and jumped to the conclusion that the growth story is over. So Roku shares are trading 65% lower over the last 52 weeks and 89% below the all-time highs from the summer of 2021.
This mismatch between bearish market perception and bullish business prospects is so wrong, I'm not sure whether I should laugh or cry. Until further notice, I keep buying more Roku shares as long as the unreasonable price cuts are available. I'll laugh all the way to the bank in a few years as the long-term growth thesis plays out.
If you only wanted my single best idea in today's market, Roku is it.
The best value stock: Alphabet ($99 per share)
I love the bargain-bin discount on Roku shares, but not every investor is looking for a long-term growth investment in a patch of dramatic short-term market turbulence. If you're more interested in rock-solid value creation with a milder service of recent price cuts, I suggest checking out Alphabet (GOOG 1.25%) (GOOGL 1.27%) instead.
You know Alphabet as the parent company of Google -- a peerless cash machine built on online search and advertising services. The stock currently trades more than 30% below its peak price from November 2021, weighed down by economic concerns and the rise of potential competition from ChatGPT and other artificial intelligence tools.
If Roku is the safest growth story I know, Alphabet is the most obvious long-term survivor on the market.
This company was literally designed to roll with the punches and lead every technology revolution from the front line. Alphabet is quietly grooming a multitude of alternative business ideas to take the baton when web-based search and advertising has run its course. The most helpful option so far has been the Google Cloud service, which generated 10% of Alphabet's total sales in the third quarter of 2022. Ten or twenty years from now, we may have forgotten about the Google brand. At the same time, we'll depend on the Waymo self-driving car service every day and Verily Life Sciences may have found the proverbial cure for cancer -- all under Alphabet's business umbrella.
This company will outlive us all, helping investors build lasting wealth along the way. Alphabet's $1.2 trillion market cat is the third largest stock market footprint today, based on the modest valuation ratios of 19 times earnings and 4.5 times sales. Alphabet's assured longevity makes its stock a value investor's dream.
The best income investment: American Tower ($221 per share)
If you're just looking for a reliable dividend-paying stock, whose quarterly payouts are powered by robust cash flows, my best recommendation is cell tower manager and operator American Tower (AMT 1.09%).
Wireless communications are not only here to stay, but growing more important over time. As a result, American Tower's services should be in high demand for decades to come. The company's revenue streams are incredibly robust due to its clients' multi-year contracts.
American Tower rides its thriving market to tremendous growth in sales and profits over the year. One other line item keeps rising much faster, though. Quarterly dividends have risen by 500% in the last decade, showing no sign of a slowdown:
AMT Dividend data by YCharts
Let's say you picked up some American Tower shares ten years ago, when the stock was priced at $80 and offered an annual dividend payout of $0.90 per share. That policy supported a modest dividend yield of 1.1% at the time.
Today, the shares you bought in 2013 qualify for annual dividend payments of $5.69 per share. If you reinvested your dividend checks in more American Tower shares over the years, you'll also have 22% more shares than you started with. The effective yield on your original investment works out to 8.7% today.
I see no reason why American Tower shouldn't continue to boost its cash-sharing payouts in the future, setting you up for even greater quarterly income streams in the long run. Meanwhile, the stock price is back where it was in the summer of 2019. Grabbing a few shares on the cheap today should serve your income-generating portfolio well as the cash profits and dividend payments keep rising.
The best index ETF: Vanguard S&P 500 ETF ($372 per share)
Finally, some investors don't want to pick individual stocks while others reserve a portion of their portfolio for funds tracking one of the major stock market indexes. This is the ticket to instant diversification, shielding you from the risk of any particular stock posting disappointing returns. Exchange-traded funds locked to a broad index are perfect for this task, since their highly automated operation results in extremely low management fees. This way, your returns will closely resemble your chosen market index, leaving more money in your wallet.
There are many respectable choices, but I keep returning to the Vanguard S&P 500 ETF (VOO 1.26%). This exchange-traded fund mirrors the popular S&P 500 (^GSPC 1.20%) market index with management fees of just 0.03%. For every $1,000 of returns this ETF generates for you, Vanguard's fund managers will keep $0.003 (one-third of a cent) to cover their costs. In other words, the management service is essentially free of charge.
It's cool to beat the market and all, but there is nothing wrong with simply matching the wealth-building gains of the S&P 500 index with zero stock-picking research and no management fees to speak of.
