InvestorPlace – Stock Market News, Stock Advice & Trading Tips
Allocating a reasonable portion of investment portfolios to stocks is an excellent way of building long-term wealth. Yet, researching thousands of stocks amid today’s extreme volatility and uncertainty can overwhelm a new investor.
As starters, beginners can consider buying shares of well-known, established companies they are familiar with instead of betting on speculative stocks. For example, legendary investor Warren Buffett would buy a stock only if he saw “what they’re going to look like 5, 10, 20 years from now.”
Meanwhile, investing in a diversified portfolio of index exchange-traded funds (ETFs) with low fees has also proven easy to generate reliable returns in the stock market.
With that information, here are five stocks and two ETFs to buy for those looking to start an investment portfolio now.
|QQQE||Direxion Nasdaq 100||$67.44|
|RSP||Invesco S&P 500||$139.82|
Stocks for Beginners: BP (BP)
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First on today’s list is London-based BP (NYSE:BP), one of the largest companies involved in the integrated energy business, including oil, gas, low carbon- and renewable energy.
BP’s first-quarter (Q1) results released in May presented a loss of $20.3 billion, mainly due to a $25.5 billion write-down from exiting Rosneft, a Russian oil and gas company.
During the quarter, the energy behemoth reduced its net debt to $27.5 billion and generated a surplus cash flow of $4.1 billion. Meanwhile, management plans to increase its quarterly share buybacks to $2.5 billion before the end of Q2 2022.
In June, BP agreed to acquire a 40.5% equity stake and operate the Asian Renewable Energy Hub in Western Australia. The project, at full scale, could be one of the world’s largest green hydrogen hubs.
Driven by the surge in oil prices, BP stock recenmtly was up more than 8% since January. In addition, the current price supported a dividend yield of 4.57%.
The 12-month median forecast for BP stands at $35.96. Forward price-to-earnings (P/E) and price-to-sales (P/S) ratios are 4.27x and 0.56x, respectively.
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Next is Coca-Cola (NYSE:KO), one of the largest nonalcoholic beverage companies with a product portfolio of 200 brands sold in more than 200 countries worldwide.
In mid-June, Brown-Forman Corporation (NYSE:BFA) (NYSE:BFB) and Coca-Cola announced a global relationship to launch the Jack & Coke cocktail as a branded, ready-to-drink pre-mixed cocktail option. The initial debut is planned for late 2022 in Mexico.
After hitting a 52-week high in late April, KO stock came under pressure. Yet, the shares were up 6.4% year-to-date (YTD). The current price supports a dividend yield of 2.8%.
Forward P/E and P/S metrics are 24.51x and 6.58x, respectively. Finally, the 12-month median forecast for Coca-Cola shares stands at $70.
Direxion NASDAQ-100 Equal Weighted Index ETF (QQQE)
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Our third pick for today is an ETF, namely the Direxion NASDAQ-100 Equal Weighted Index Shares (NYSEARCA:QQQE). This fund helps manage risks in investment portfolios by offering broader diversification and equal-weight exposure to the largest 100 non-financial securities listed on Nasdaq.
QQQE follows the Nasdaq 100 Equal Weighted Index, which is rebalanced quarterly. The ETF commenced operations in March 2012.
The index and the fund are heavily weighted toward information technology (50.3%). Next are consumer discretionary (17%), communications services (17%), health care (5.9%) and consumer staples (5.5%).
The top 10 stocks comprise roughly 10% of around $700 million in net assets. Cloud-native data specialist Datadog (NASDAQ:DDOG); independent identity provider Okta (NASDAQ:OKTA); security-as-a-service firm Zscaler (NASDAQ:ZS); Uruguay-based e-commerce name Mercadolibre (NASDAQ:MELI); and electric-vehicle company Lucid Group (NASDAQ:LCID) lead the names in the fund’s portfolio.
QQQE recently was down around 22% YTD and hit a 52-week low on June 16. By comparison, the Nasdaq 100 index has dropped 25.8% since January. Readers could put the fund on their radar screen to buy the dips of numerous good tech stocks for enhanced diversification.
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Italy-based global energy giant Eni (NYSE:E) is involved in exploring, generating, and distributing gas, liquid natural gas, oil refining and petrochemicals.
Management issued Q1 results on Apr. 29. Total revenues reached €32.5 billion, up 120% from the prior-year period. Adjusted EBIT soared 300% YOY to €5.2 billion. Adjusted earnings came in at 91 Euro a cents per diluted share. Cash and equivalents were €13.5 billion, up from €8.5 billion in Q1 last year. Free cash flow stood at €953 million.
On June 19, Eni was selected as the international partner for the world’s largest LNG project aiming to increase Qatar’s LNG export capacity from 77 to 110 million tons per annum.
Despite tailwinds in the energy sector, Eni stock recently was down over 25% from its March 2 peak and 12.6% since January. Yet, it was yielding a juicy dividend of 7.92%.
Shares are trading at 3.95 times forward earnings and 0.46 times sales value. The 12-month median forecast for Eni stock is $35.37.
Invesco S&P 500 Equal Weight ETF (RSP)
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The Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP) invests in all the stocks in the S&P 500 and weights them equally. As such, it offers an enticing option for diversified large-cap equity exposure.
The fund started trading in April 2003 and tracks the S&P 500 Equal Weight Index. It currently has a basket of 505 stocks, where around 44% are large-cap and 55.5% are mid-cap businesses.
In terms of sectoral allocations, we see information technology (15.3%), industrials (14%), financials (13.5%), health care (13.1%) and consumer discretionary (11.6%).
The top 10 holdings account for 2.5% of $29.8 billion in net assets. Leading names include Invesco Short-Term Investments Trust Government & Agency Portfolio Institutional (NASDAQ:AGPXX); FedEx (NYSE:FDX); self-managed real estate investment trust Duke Realty (NYSE:DRE); and two global biotechnology names Vertex Pharmaceuticals (NASDAQ:VRTX) and Moderna (NASDAQ:MRNA).
RSP recently was down more than 15% YTD and 8.5% over the past 12 months. The ETF hit a 52-week low on June 17.
Meanwhile, its forward P/E and trailing P/B ratios recently stood at 17.16x and 3.19x, respectively. Potential investors may consider researching the fund further.
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Global payment technologies company Visa (NYSE:V) connects consumers, businesses, banks and governments through its operations in more than 200 countries.
On Apr. 26, Visa released Q2 FY22 financials. Revenue increased 25% YOY to $7.2 billion. Non-GAAP net income was $3.8 billion or $1.79 per share, up 27% YOY and 30% YOY, respectively. Cash and equivalents stood at $12.3 billion at quarter end.
In late May, Visa announced a partnership with Fundbox, an embedded working capital platform. The partnership provides new payment capabilities for small businesses.
Visa stock recently was ndown 5.9% YTD and 14.0% over the past year. The dividend yield was 0.74%.
Forward P/E and P/S metrics are 23.09x and 15.62x, respectively. Meanwhile, analysts’ 12-month median price forecast for Visa stock stands at $270.
Walt Disney (DIS)
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Last but not least is Walt Disney (NYSE:DIS). The leading family entertainment and media company operates under several segments, including Disney Parks, Experiences and Products; Disney Media & Entertainment Distribution; and four content groups — Studios, General Entertainment, Sports, and International.
Management reported Q2 financial results on May 11. Revenues of $19.25 billion represented a growth of 23% YOY. Diluted EPS came in at $1.08, up 37% from $0.79 in the prior-year quarter. Free cash flow was $686 million.
The entertainment powerhouse added 7.9 million new streaming subscribers in Q2, hitting a total of 137.7 million.
In mid-June, Disney added Johnson & Wales University to its education investment and career development program Disney Aspire.
Despite higher-than-expected subscriber growth, DIS stock hit a 52-week low on June 22. It was down more than 37% YTD.
The shares recently traded at 16.58 times forward earnings and 2.23 times sales. Finally, the 12-month median forecast for Disney is $135.
On the date of publication, Tezcan Gecgil, Ph.D., did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.