You need money to make money with stocks. While there's no minimum you have to invest, $5,000 is a good figure I strive for as a minimum. It means you've got some decent skin in the game where you'll have plenty of incentive to ensure you're taking the time to pick a quality stock. And a 10% annual return on that type of investment amounts to $500. Those are dollar amounts that start to have an effect on your finances.
If you've got $5,000 to invest right now, there are some good growth stocks you should consider buying with that money, including UnitedHealth Group (UNH -1.28%) and Target (TGT -0.61%).
1. UnitedHealth Group
A health insurance company such as UnitedHealth Group might not strike you as much of a growth stock. But the reality is that this has been a top growth-oriented business to invest in for years. Over the past decade, the company has grown its top and bottom lines significantly.
UNH Net Income (Annual) data by YCharts
But for much of the year, the stock has struggled. UnitedHealth spooked investors when it said that surgeries were on the rise, as in a return to normal in the healthcare industry, there's finally been a release of pent-up demand for surgeries. That means higher costs for a health insurer such as UnitedHealth.
The stock was trading at a low up until last week when the company's results came in better than expected. Although costs were indeed up and the company's medical care ratio increased by more than a percentage point, UnitedHealth's operating earnings still rose by 13% year over year. It rallied on the news, but the healthcare stock remains within 10% of its 52-week low of $445.68. At 21 times trailing earnings, UnitedHealth provides good value for investors. In comparison, the average healthcare stock trades at a multiple of 24.
Acquisitions have played a big role in UnitedHealth's growth over the years, and with business still booming and doing well, it's unlikely that will change anytime soon. For long-term growth investors, UnitedHealth could be an underrated buy. It has proven to be an excellent investment to own, generating returns of 620% over the past decade -- and that's without factoring in its dividend.
2. Target
Big-box retailer Target was doing well for most of the year, but it faced some fallout in the early part of summer. The company received some backlash related to its LGBTQ+ merchandise, with some people responding negatively on social media and calling for boycotts.
The retailer may feel the effect of the controversy when it reports its earnings next month. But based on history, these are not the types of things that are likely to weigh down a stock in the long run.
Starbucks, for example, has more than recovered from the controversy it endured in 2018 when it faced calls for boycotts after two Black men were arrested at one of its stores in Philadelphia. In 2017, a United Airlines passenger was dragged off a flight in an incident that was captured on video and garnered lots of attention, and then, too, there were calls for boycotts. United Airlines stock would, however, end up rising in the years following the incident.
While Target's near-term outlook may look concerning due to negative press, I wouldn't be worried about the long-term trajectory of the business as a whole. The company has done exceptionally well over the past few years due to pandemic-induced demand. And while its growth rate may slow down, that's likely to have more to do with the high bar it set the past few years versus a boycott having any prolonged effect on its business.
TGT Net Income (Annual) data by YCharts
Earlier this year, the company announced that it would invest $100 million to add six new sorting centers for its packages by 2026, in a move that will help it compete against Amazon and Walmart and that will help improve delivery times.
Target remains focused on growth. While it may not be able to replicate the high growth it achieved in fiscal 2021 when its top line jumped by 20% in a single year, this is still a top growth stock to buy and hold. At 22 times trailing earnings, it's incredibly cheap compared to rival Walmart, where investors are paying 37 times profits for the retailer.
Buying Target while near its 52-week low could be an excellent move for long-term investors to make right now. As a bonus, the retail stock also provides investors with an above-average yield of 3.3%.
