That said, I can point out some stocks that might meet one or more of your specific needs right now. The companies below are fantastic long-term investments, found in very different corners of Wall Street. You need to decide which idea (or ideas) might be best for your specific situation.
So, I'll give you a high-growth stock, an ultra-robust value investment, a cash-generating dividend champion, and an exchange-traded fund (ETF) that tracks the index for maximum diversification. If you're a dynamic investor, always chasing the next get-rich-quick stock, I'll let you explore that unfortunate strategy elsewhere. This list is about investing, not gambling.
On that note, let's keep the good stuff going. Here are three great stocks and a low-cost ETF you can buy for less than 1,000 today.
Best Growth Stock: Roku ($ 53 per share)
After a market-wide pullback in growth stocks in 2022, there are many excellent options available today. However, nothing beats the combination of steep discounts and fully intact long-term growth prospects I see. Roku (ROKU 6.58%).
It all starts with a simple fact: digital streaming is the future of video-based entertainment.
In the long run, I expect broadcast and cable market share to be zero percent. Similarly, DVDs and Blu-ray discs will soon be as bizarrely outdated as VHS tapes or slide projectors. I can't name an overall winner in the digital content wars, and several major services and studios will likely share the streaming market.
But Roku investors don't really care if Netflix (NFLX -1.12%) bats Disney+ (DIS -0.15%) or vice versa. As long as all competitors support 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 entering saturated markets. Last week's fourth-quarter report featured this helpful chart, for example:
Image source: Netflix. Data from Nielsen, Kantar, and BARB. UK data measures viewing on TVs, smartphones, tablets, and laptops; other columns are for TV screens only.
Even the US market, the oldest and most mature streaming platform in the world, is still dominated by traditional TV channels. The rest of the world has a lot of catching up to do.
Therefore, Roku and its streaming service partners are targeting a massive global market, where sales and profits could multiply many times over. Roku is the undisputed leader in service-agnostic media player hardware and software in North America, setting the tone for the rest of the world. The company's international expansion has just begun, once again presenting a huge opportunity for long-term growth.
At the same time, many Roku investors saw a few quarters of slower-than-topline growth last year and concluded that the growth story was over. As a result, Roku shares are trading 65% lower than the last 52 weeks and 89% below their all-time highs from the summer of 2021.
This mismatch between bearish market sentiment and optimistic business outlook is so wrong that I'm not sure whether to laugh or cry. Until further notice, I'll continue to buy more Roku shares, provided there are irrational price cuts. I'll be laughing all the way to the bank in a few years as the long-term growth thesis plays out.
If you just wanted my best idea on the market today, Roku is it.
Best Value Stock: Alphabet (US$$ $99 per share)
I love the low discount on Roku stock, but not every investor is looking for a long-term growth investment in an area of dramatic short-term market turbulence. If you're more interested in solid value creation with a smoother service than recent price drops, I suggest checking it out. Alphabet (GOOG 1,56%) (GOOGL 1,90%) Instead.
You know Alphabet as the parent company of Google, an unparalleled ATM powered by online search and advertising services. Currently, the stock is trading more than 30% below its November 2021 high, pressured by economic concerns and increased potential competition from ChatGPT and other AI tools.
If Roku is the safest growth story I know, Alphabet is the most obvious long-term survivor in the market.
This company was literally designed to be at the forefront and lead every technological revolution from the front. Alphabet is quietly preparing a plethora of alternative business ideas to take over when web-based search and advertising are gone. The most successful option so far has been Google Cloud Services, which generated 10% of Alphabet's total sales in the third quarter of 2022. Ten or twenty years from now, we may have forgotten the Google brand. Meanwhile, we'll depend on Waymo's self-driving car service every day, and Verily Life Sciences may have found the proverbial cure for cancer, all under the Alphabet umbrella.
This company will outlive us all, helping investors build lasting wealth along the way. Alphabet's $1.2 trillion market cap is the third-largest player in the stock market today, based on modest valuations of 19 times earnings and 4.5 times sales. Alphabet's guaranteed longevity makes its stock a dream for value investors.
Best Income Investment: American Tower ($ 221 per share)
If you're just looking for a reliable, dividend-paying stock whose quarterly payments are fueled by solid cash flows, my top recommendation is Cellular Tower Operator and Carrier. American Tower (AMT -0.11%).
Wireless communications aren't just here to stay, they're becoming increasingly important over time. As a result, American Tower's services are expected to be in high demand for decades to come. The company's revenue streams are incredibly robust thanks to its multi-year customer contracts.
American Tower leads its growing market to tremendous year-to-date sales and profit growth. However, another line item continues to grow much faster. Quarterly dividends have increased 500% over the past decade, showing no signs of slowing down:
AMT Dividend Given by Y Charts
Let's say you purchased some shares of American Tower a decade ago, when the stock price was $1.80 and it offered an annual dividend of $0.90 per share. This policy supported a modest dividend yield of $1.11 at the time.
Today, shares purchased in 2013 qualify for annual dividend payments of $1.69 per share. If you reinvested your dividend checks in more American Tower shares over the years, you'd also own $221 more shares than you started with. The effective return on your original investment is $8.71 today.
I see no reason why American Tower shouldn't continue to increase its cash payouts going forward, setting it up for even larger quarterly revenue streams in the long run. Meanwhile, the stock price has returned to where it was in the summer of 2019. Picking up some cheap stocks today should serve your income-generating portfolio well, as cash earnings and dividend payments continue to rise.
Best Index ETF: Vanguard S&P 500 ETF (US$ 372 per share)
Finally, some investors don't want to pick individual stocks, while others reserve a portion of their portfolio for funds that track one of the major stock market indexes. This is the ticket to instant diversification, protecting you against the risk of a particular stock delivering disappointing returns. Exchange-traded funds tied to a broad index are perfect for this task, as their highly automated operation results in extremely low management fees. This way, your returns will closely match the market index you choose, leaving more money in your portfolio.
There are many respectable options, but I keep coming back to Vanguard S&P 500 ETFs (VOO 0.28%). This exchange-traded fund mirrors the popular S&P 500 (^GSPC 0.25%) market index with a management fee of just 0.03%. For every 1,000TP4T in returns this ETF generates for you, Vanguard's fund managers will keep 0.003TP4T (one-third of a cent) to cover their costs. In other words, the management service is essentially free.
It's nice to beat the market and all, but there's nothing wrong with simply combining the wealth-building gains of the S&P 500 with zero stock-picking research and no management fees.
Suzanne Frey, an Alphabet executive, is a member of The Motley Fool's board of directors. Anders Bylund holds positions in Alphabet, American Tower, Netflix, Roku, Vanguard S&P 500 ETFs, and Walt Disney. The Motley Fool holds positions in and recommends Alphabet, American Tower, Netflix, Roku, Vanguard S&P 500 ETFs, and Walt Disney. The Motley Fool recommends the following options: US$ 145 January 2024 long calls on Walt Disney and US$ 155 January 2024 short calls on Walt Disney. The Motley Fool has a disclosure policy.
