So -- you've got $500 in your pocket and you're looking to invest in some stocks. Great! There's no need to wait until you have several thousand dollars to do so. (Just be sure you're ready to invest -- with an emergency fund in place and no high-interest credit card debt to pay off.)
There are various ways you can go about investing your $500 -- or whatever sum you have ready. You might plow it all into one stock -- but if that's the only stock you own, or one of only a few, you'll have a lot of eggs in very few baskets. You might split it across a handful of stocks, instead. You could look for five priced around $100 each, but that's not a great way to pick stocks. Instead, see if your brokerage lets you buy fractions of shares. If it does, you can end up buying 1.5 share of one stock, 8.7 shares of another, 0.3 of yet another, and so on.
Here are five stocks you might want to consider for berths in your portfolio. See which ones interest you.
1. Nike
Nike (NKE 0.19%) need little introduction. It's an athletic-wear titan, recently sporting a market value of $156 billion. In fiscal 2023, Nike reported revenue up 10% year over year to $51 billion -- which is an impressive growth rate for such a huge company. Its net income, though, was down 16%. Like many other businesses these days, it's facing challenges such as inflation and soft demand -- both in the U.S. and in places such as China. Its stock has been falling in the past few months, and was recently down 22% from its 52-week high.
That's enough to make the stock worth a look. Its forward price-to-earnings (P/E) ratio was recently 28, well below its five-year average of 34, and pays a dividend that recently yielded 1.3%. Its dividend is a grower, too -- averaging annual increases of 11% over the past five years. Meanwhile, the company is having some strategic success, such as in its direct-to-consumer channel.
If you're investing for the long term and you have faith in Nike's ability to keep growing globally, give it some consideration.
2. ASML Holding
We're living in an increasingly technological world, and semiconductor chips are a key to that. Enter ASML Holding N.V. (ASML 2.04%), a major player in semiconductor equipment, with a recent market value topping $260 billion. The company specializes in supplying software, hardware, and services such as lithography to the semiconductor industry.
ASML posted solid results in its second quarter, with both revenue and earnings topping expectations. Management offered projections that were less than ebullient, though, in part because of uncertainty regarding sales from China and a delayed expected economic recovery. The company's stock was recently down some 13% from its 52-week high.
ASML's future remains quite promising, though, and its stock seems roughly fairly valued -- and management is far from bearish, with a press release noting: "ASML expects 2023 net sales growth toward 30% compared to 2022" and mentioning that a "strong backlog of around 38 billion euros provides us with a good basis to navigate these short-term uncertainties."
3. PayPal
PayPal (PYPL 2.90%) is a major fintech player -- but it's one that has struggled recently, with shares recently down by 36% from its 52-week high.
The company operates one of the biggest online payment systems around, featuring around 435 million active merchant and consumer accounts, $1.36 trillion in total payment volume, and 22 billion transactions -- as of the end of 2022. In its second quarter, it reported total payment volume up 11% year over year, total revenue growing by 7%, and 6.1 billion payment transactions, up 10%. The company is clearly growing. It's about more than just the PayPal business, too, as the company is also home to Venmo, Zettle, Braintree Payments, Xoom, Hyperwallet, Honey, and Paidy (among other businesses).
PayPal's stock is looking attractive, with its recent forward P/E ratio of 13 well below its five-year average of 35, and its recent price-to-sales ratio of 2.5 also well below the five-year average of 8. The company also has a new CEO who appears to be a good fit.
4. Verizon Communications
Telecom titan Verizon Communications (VZ 1.17%), with a recent market value of $145 billion, has been performing well lately, but its shares are down around 20% from its 52-week high, in part because of worries about liabilities it may face tied to lead-covered cables.
While there is some cause for concern, there's also a lot to like about Verizon -- such as its whopping dividend that was recently yielding 7.5%. Its second quarter report featured "the third consecutive quarter that Verizon reported more than 400,000 broadband net additions" and the "eighth consecutive quarter that Verizon Business reported more than 125,000 postpaid phone net additions."
The stock's recent forward P/E of 7.9 is below the five-year average of 10.8, and its price-to-sales ratio of 1.1 is considerably below the five-year average of 1.6. This isn't a buy-it-and-forget-it stock (few stocks would qualify for such a status), but it can be worth considering for a long-term portfolio as long as you keep an eye on it. The fat dividend yield can generate a lot of income.
5. The Vanguard S&P 500 ETF
Another solid option for investing your $500 is to instantly distribute it across the S&P 500 index of 500 of America's biggest companies -- by simply investing it in the low-fee Vanguard S&P 500 ETF (VOO 1.00%).
Not everyone has the energy, time, or skills to effectively invest in individual stocks, and there's no shame in just opting for a low-fee index fund. Index funds can be powerful growers over many years.
So think about how you want to invest your $500 -- or whatever sum you have ready to deploy. Consider these five possibilities and know that there are many other out there, too.
