You don’t need to have tens or hundreds of thousands of dollars to invest in the stock market. In fact, you can start your investment journey with a much more modest amount of money. A larger initial investment can build your portfolio more quickly. But the secret to investing successfully is not necessarily how much you invest, but where and when you invest.
If you have $ 1,000 to invest in the stock market, here are three incredible companies to build a winning portfolio. Let’s start.
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1. Shopify
If e-commerce is the future of shopping, then Shopify (NYSE: SHOP) you’ve already taken a sizable piece of that pie. Shopify is the second largest e-commerce platform in the U.S., with 20% of the market, according to a 2020 study conducted by Oberlo. This is no small feat, as Statista estimates predict that the U.S. e-commerce market will reach a record $ 476.5 billion in sales by 2024.
E-commerce is one of the few sectors that has remained largely untouched by the bad fiscal winds of the coronavirus pandemic. Shopify’s financial performance is an excellent example of the continued success of this industry, despite the broader problems in the market. The company reported revenue growth of 47% year-over-year during the first quarter. As the pandemic progressed and the number of people buying online skyrocketed, Shopify’s revenue increased accordingly. In the second and third quarters, the company’s revenue grew 97% and 96% over the previous year.
“More entrepreneurs are signing up for Shopify so they can put their ideas into practice quickly and easily,” said CFO Amy Shapero in the company’s third quarter report. “We continue to evolve our global trading operating system to make it easier for merchants to connect and start selling, being discovered and bringing their products to buyers, providing a pleasant shopping experience.”
Shopify managed to accumulate significant liquidity this year. At the close of the third quarter, the company had $ 3.1 billion in cash and cash equivalents, while at the end of last year it had less than $ 700 million in cash. As for long-term liabilities, Shopify owes $ 915.1 million. Since the company does not pay dividends, it can continue to increase its impressive cash reserves and reduce its existing debt.
Shopify’s price hikes were a product of its insane popularity with investors in 2020, but the company was generating incredible returns long before the pandemic began. Looking at the company’s financial performance in recent years, it reported revenue growth of 73% year-over-year in 2017, 59% in 2018 and 47% in 2019.
Shopify shares have a premium – about $ 1,240 each and 789 times more than earnings. But thanks to the fractional investment, you can buy Shopify without paying the price of an entire share. With analysts projecting that the company will increase its annual earnings by more than 100% over the next five years, it is not an imaginative effort that Shopify’s price could rise further, even if the market drops again. Investing in this fantastic growth stock would be an extremely smart move during the transition to the new year.
2. Pfizer
Pfizer (NYSE: PFE) made a lot of headlines recently, and for good reason. Investors and the world applauded on December 11, when the company’s COVID-19 vaccine, developed with BioNTech (NASDAQ: BNTX), became the first coronavirus vaccine to receive emergency use authorization from the US Food and Drug Administration. This historic news was preceded by the UK granting a temporary vaccine authorization for emergency use on 2 December and followed by the European Commission granting a conditional marketing authorization for the vaccine on 21 December.
The Pfizer-BioNTech vaccine, whose provisional data has shown to be 95% effective, is still being studied in a global phase 3 trial involving more than 44,000 participants. Management said additional safety data is available, while the company is also planning studies of the vaccine in more sensitive populations, including younger children and pregnant women.
The vaccine will cost approximately $ 39 per course of treatment, which involves a first dose followed by a second dose three weeks later. Pfizer and BioNTech have already signed vaccine supply contracts with several countries earlier this year, including an agreement to supply 40 million doses of vaccine to the UK, up to 300 million doses to the EU and up to 600 million doses to the US next year and beyond.
Investors certainly should expect an increase in Pfizer’s revenue in the new year attributable to its COVID-19 vaccine, but it has much more to offer besides this achievement. As one of the largest pharmaceutical companies in the world, Pfizer has a broad product portfolio to support future growth. Although the company’s revenue fell 8% during the first nine months of 2020 compared to the same period last year, its biopharmaceutical division grew 6% in this period.
Pfizer also recently completed the merger of its subsidiary Upjohn with generic drug maker Mylan, the product being a new company called Viatris (NASDAQ: VTRS). Management previously said that the goal of the new combined company would be “to drive a sustainable, diverse and differentiated portfolio of prescription drugs, complex generics, over-the-counter and biosimilar products.” Viatris is expected to be a major game changer for Pfizer’s revenue in the coming years. This, combined with Pfizer’s existing portfolio (which now includes its COVID-19 vaccine) and a broad line of 92 products, can help the company recover from any short-term impact it experiences due to the pandemic.
There is a final reason to attract investors to Pfizer, which is its hefty dividend. With a yield of approximately 4.2%, the company’s dividend is well above the average stock in the S&P 500. Pfizer is not a company to choose for rapid growth, but if it’s the long-term value and dividends you’re looking for, these stocks should be on your shopping list.
3. PayPal
PayPalin (NASDAQ: PYPL) The business model as an online payment system is ideal for sustainable growth in the pandemic era and beyond. The company’s valuation potential was also evident before this year’s market storm. PayPal increased its revenue by 15% last year, and the company reported 18% year-over-year revenue growth in 2018.
PayPal continued to impress investors in each of the three quarters reported in 2020. The company recorded double-digit net revenue growth in each of these quarters compared to the previous year’s periods – 13% in the first quarter and 25% in the subsequent two quarters. The third quarter in particular was one of record growth for PayPal, in which it reported that its revenue and total payment volume increased at the highest rate in the company’s history. At the latest count, the company had 361 million active accounts on its platform, with 4 billion transactions taking place on PayPal during the third quarter alone.
PayPal is also in a great position in terms of debt to cash. The company has about $ 18 billion in cash and cash equivalents, as opposed to a much lesser debt of $ 9 billion. Management expects the company’s revenue for 2020 to grow between 20% and 21% over last year. Analysts also project that the company will continue to achieve this approximate level of earnings growth each year for the next five-year period. If you are looking for a winning growth stock that does not expose you to many risks, PayPal will certainly cut to a well-rounded long-term investment portfolio.