With about $500, you can accomplish a lot in the world of investing. Your gains probably won't happen overnight, but over the long term, you may significantly grow your wealth -- if you make the right choices today.
Now, the big question is: What's the right investment choice? That would be picking up companies with solid earnings track records and clear future growth prospects -- and scooping up these shares at a bargain price. That's actually easier than it sounds today, with some of the world's leaders in their fields trading below value. Let's take a look at two absurdly cheap stocks long-term investors should get in on right now. With $500 (or even less), you can buy shares of both.
1. Coca-Cola
Coca-Cola (KO 0.26%) is the world's largest non-alcoholic beverage company, selling drinks in more than 200 countries, but this leader still is growing. It's gained value share quarter after quarter in the non-alcoholic ready-to-drink market.
And much of this has to do with the company's brand strength, which also gives it the ability to hike prices and still keep customers coming back. In recent times, the company has lifted prices to combat inflationary pressures, and revenue and profit have continued to climb.
In the most recent quarter, Coca-Cola's case volume, total revenue, and earnings per share all advanced -- and the company now expects to deliver full-year revenue growth in the double digits. That's up from a single-digit growth estimate.
History has shown you can count on Coca-Cola's brand strength to keep customers coming back to its eponymous drink and its other popular products, such as Minute Maid juices and Dasani water. This has helped the company increase earnings over time, as you can see in the chart below. (The dip in earnings a few years ago was linked to the cost of re-franchising bottling operations.)
KO Revenue (Annual) data by YCharts
Investors also can count on passive income from Coca-Cola, which as a Dividend King has increased its payments for more than 50 consecutive years.
All of this makes Coca-Cola look dirt cheap at 21 times forward earnings estimates, close to its lowest point in three years.
2. Johnson & Johnson
Johnson & Johnson (JNJ 4.56%) has delivered earnings growth over time -- and now it may be heading into a whole new phase of growth. That's because the big pharma player recently spun off its consumer health business to focus resources on its higher-growth businesses of pharmaceuticals and medtech.
Though products like Band-Aid bandages and Aveeno skincare made J&J a household name, those sorts of products haven't necessarily led to revenue growth. So, the spinoff was a smart move for the healthcare giant. The operation also left J&J with more than $13 billion in proceeds that it could use to support growth by acquiring a program or company, for example.
Meanwhile, J&J's pharmaceuticals -- now called innovative medicine -- and medtech businesses posted revenue increases in the most recent quarter. Excluding the coronavirus vaccine, pharmaceuticals operational sales rose more than 8%, led by blockbusters such as immunology drug Stelara and oncology drug Darzalex.
As for medtech, J&J's most recent acquisition is paying off: Heart pump specialist Abiomed led gains in that business during the quarter.
Like Coca-Cola, J&J also is a Dividend King, suggesting dividend growth is important to the company. And that means you're likely to benefit from owning J&J by collecting passive income, no matter what the general market is doing.
Today, J&J is trading for about 15 times forward earnings estimates, which looks like a steal considering the company's track record, growth prospects after the recent spinoff, and promise of dividend growth.
