In this article, we discuss 14 best beginner stocks to buy now. If you want to see more stocks in this selection, check out 5 Best Beginner Stocks to Buy Now.
As per Goldman Sachs, the stock market will experience relatively less pain next year compared to 2022 but there will be no gains, as enterprises post slow earnings growth through the rest of 2023. Assuming the Federal Reserve can manage a soft landing, Wall Street analysts forecast that earnings per share in the S&P 500 would be flat at $224 in 2023, and the index would drop by 2% to 3,900 over the next six months. However, a hard economic landing is entirely possible, with analysts expecting that earnings per share would decline 11% to $200 in that scenario, and the S&P 500 would plummet 21% to 3150.
In an economic backdrop consisting of slow growth, reduced inflation, and new monetary policies, Morgan Stanley predicts that 2023 will bring upside for bonds, defensive equities, and emerging markets. Andrew Sheets, Chief Cross-Asset Strategist for Morgan Stanley Research, said on November 22:
“For markets, this presents a very different backdrop than 2022, which was marked by resilient growth, high inflation and hawkish policy. Overall, 2023 will be a good year for income investing.”
People who are just starting out their investment journeys are often unsure where to put their money in such a volatile environment. Some of the best beginner stocks to monitor include PayPal Holdings, Inc. (NASDAQ:PYPL), Amazon.com, Inc. (NASDAQ:AMZN), and UnitedHealth Group Incorporated (NYSE:UNH).
Our Methodology
The best stocks for beginner investors are usually safer stocks that pay dividends so that these investors aren’t discouraged by large losses that are experienced more frequently by smaller-cap risky stocks that also offer potentially higher returns. Every investor’s dream is to uncover safe stocks that can deliver large returns. At Insider Monkey we focus on the stocks that are favored by hedge funds and our monthly newsletter’s stock picks managed to outperform the S&P 500 Index funds by 74 percentage points over the last 5.5 years. Beginner investors can subscribe to our free daily newsletter to read about some of the stocks hedge funds are piling into.
For this article we selected stocks which are defensive in nature, offer strong market visibility, can thrive in the rising rates environment, have resilient dividend profiles, and display a longstanding history of surviving turbulent market environments. We have also considered some stocks priced under $100 for beginner investors with limited money. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022.
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Best Beginner Stocks to Buy Now
14. Archer-Daniels-Midland Company (NYSE:ADM)
Number of Hedge Fund Holders: 37
Archer-Daniels-Midland Company (NYSE:ADM) is an Illinois-based company that procures, transports, processes, and commercializes agricultural commodities, products, and ingredients in the United States, Switzerland, Cayman Islands, Brazil, Mexico, the United Kingdom, and internationally. On November 2, Archer-Daniels-Midland Company (NYSE:ADM) declared a quarterly dividend of $0.40 per share, in line with previous. The dividend is payable on December 7, to shareholders of record on November 16.
Baird analyst Ben Kallo on October 26 raised the price target on Archer-Daniels-Midland Company (NYSE:ADM) to $98 from $94 and maintained an Outperform rating on the shares. The analyst said he remains a buyer as underlying demand continues to be resilient while Archer-Daniels-Midland Company (NYSE:ADM) navigates a mixed supply chain and exchange rate environment. He also said management continues to add value to shareholders through share repurchases and strategic M&A, setting up a robust long-term outlook.
According to Insider Monkey’s data, 37 hedge funds were bullish on Archer-Daniels-Midland Company (NYSE:ADM) at the end of September 2022, compared to 42 funds in the prior quarter. Tom Gayner’s Markel Gayner Asset Management is the largest position holder in the company, with 1.4 million shares worth $117.7 million.
Like PayPal Holdings, Inc. (NASDAQ:PYPL), Amazon.com, Inc. (NASDAQ:AMZN), and UnitedHealth Group Incorporated (NYSE:UNH), Archer-Daniels-Midland Company (NYSE:ADM) is one of the best stocks for a beginner investment portfolio.
Here is what Diamond Hill Long-Short Fund has to say about Archer-Daniels-Midland Company (NYSE:ADM) in its Q1 2022 investor letter:
“ADM is a leading agricultural processor that also operates a global nutrition business focused on the development of ingredients and flavors for food and beverages, supplements and more. The company’s recent operating results have benefited (unfortunately) from the war in Ukraine as grain prices and agricultural markets globally experienced strong price increases. ADM is positioned well to benefit from the volatility due to its stable North American agricultural base.”
13. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 39
Shell plc (NYSE:SHEL), the British energy and petrochemical company, is one of the best beginner stocks to invest in. On November 28, Shell plc (NYSE:SHEL) announced that it has agreed to acquire Danish biogas producer Nature Energy Biogas from Davidson Kempner Capital Management for approximately $2 billion. After acquiring Europe’s biggest producer of renewable natural gas, Shell plc (NYSE:SHEL) will expand its established customer base across several sectors and boost its transition to net-zero emissions.
On November 11, Piper Sandler analyst Ryan Todd raised the price target on Shell plc (NYSE:SHEL) to $71 from $65 and kept an Overweight rating on the shares. The Q3 results were incrementally bullish for the integrated oil 2023 macro outlook, the analyst wrote in a research note.
Among the hedge funds tracked by Insider Monkey, Shell plc (NYSE:SHEL) was part of 39 public stock portfolios at the end of September 2022, and Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 20.7 million shares worth $1 billion.
Here is what Harding Loevner International Equity Fund has to say about Shell plc (NYSE:SHEL) in its Q1 2022 investor letter:
“While risks of unforeseen consequences arising from the Ukraine conflict are high, on this front we are cautiously optimistic that China will work hard to maintain its neutrality in a credible way, as it is a huge beneficiary of trade with the rest of the world, especially the rich developed nations. We think it likely that China, along with India, will continue to buy oil and gas from Russia (just as Europe, at least for now, plans to keep its gas pipelines open), and do not expect that fact to alter China’s trade relations with the West much. Nevertheless, we must contemplate that our optimism is misplaced on the importance of membership in the global network of exchange. If our central and optimistic case—admittedly an educated guess—is wrong, then we’d need to greatly modify our views of which companies in our opportunity set will face new barriers to profitable growth, and which might stand to benefit, relatively, from a further receding of globalization. (Global trade, after all, has never matched the peak share of GDP it reached in 2008, before the Global Financial Crisis.) We’d expect such a world to be less efficient, as the cold logic of comparative advantage is demoted as a determinant of which goods or services are produced and where. That would lead to a less prosperous world, since exploiting comparative advantage is a cornerstone of wealth creation. If regional blocs began to raise limits on the movement of capital as well as goods, we’d need to parse which of our multinational companies were at risk of declining sales from increasingly hostile, siloed countries. Royal Dutch Shell (NYSE:SHEL) has found its Siberian oil and gas joint venture assets stranded by the combination of sanctions and the public opprobrium of Russia’s actions.”
12. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 52
Morgan Stanley (NYSE:MS) is a New York-based financial holding company that provides financial products and services to enterprises, governments, financial institutions, and individuals in the Americas, Europe, the Middle East, Africa, and Asia. On November 9, Morgan Stanley (NYSE:MS) ventured back into the global exchange traded fund marketplace with the launch of the Innovator Equity Managed Floor ETF (NYSE:SFLR). SFLR is a new fund that offers a 0.89% expense ratio, 256 portfolio holdings, and seeks to provide actively managed floors that attempt to limit losses to 10% each year.
On October 17, Citi analyst Keith Horowitz maintained a Buy recommendation on Morgan Stanley (NYSE:MS) but trimmed the price target on the shares to $90 from $97. The bank had a “slight miss” in Q3 2022 as the business model works best in upward trending markets, but posting a 15% ROTCE in tight market conditions “speaks to the durability of the revenue stream,” the analyst told investors in a research note.
According to Insider Monkey’s data, 52 hedge funds were bullish on Morgan Stanley (NYSE:MS) at the end of Q3 2022, compared to 58 funds in the last quarter. Boykin Curry’s Eagle Capital Management is a significant stakeholder of the company, with 12.6 million shares worth $996.4 million.
Here is what Madison Dividend Income Fund has to say about Morgan Stanley (NYSE:MS) in its Q3 2022 investor letter:
“This quarter we are highlighting Morgan Stanley (NYSE:MS) as a relative yield example in the Financial sector. MS is a leading investment bank and wealth management firm with approximately $5 trillion of client assets under management. It merged Citigroup’s Smith Barney business into its own wealth management business after the 2008…
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