Investing 1K Wisely: Top 3 Stocks to Snatch While They're Discounted
Diving into the world of investing with a mere $1,000 might feel like peanuts when considering high-priced stocks. But hold on, because most brokerages have made it possible to buy fractional shares of companies at zero commission. So, even with a modest investing budget, you can gradually build positions in your preferred stocks.
Now, take a cue from the sage of Omaha, Warren Buffett. Remember his famous words, "Whether we're talking about stocks or socks, I like buying quality merchandise when it's discounted." With that in mind, here are three value stocks worth your consideration:
- Alibaba (BABA)
Alibaba, the China-based e-commerce and cloud infrastructure giant, is currently trading at a significant discount. Despite the company's robust business model and financial stability, it's only 11 times forward earnings. The stock's price drop can be attributed to regulatory issues, a crackdown on its e-commerce marketplace, and competitive challenges.
However, recent reports suggest a recovery on the horizon. Alibaba's revenue actually increased by 8% in its last fiscal year, signaling a positive future. Its expansion into overseas e-commerce markets, growth in logistics, and the stabilization of its domestic businesses are driving this recovery. The company also managed to repurchase $12.5 billion of shares and approved its first annual dividend, making it an attractive proposition for value investors.
- Vici Properties (VICI)
Vici Properties is a real estate investment trust (REIT) that owns casinos and entertainment properties across the U.S. and Canada. Its strong lease agreements with major tenants like Caesar's Entertainment and MGM Resorts ensure a steady income stream.
As an REIT, Vici is required to pay out at least 90% of its taxable earnings to investors, making it a reliable option for income-focused investors. Despite rising interest rates and a decline in the appeal of its dividends, Vici remains an attractive long-term income play due to its solid cash flow, 5.5% forward dividend yield, and commitment to its net-lease business model.
- Kraft Heinz (KHC)
Kraft Heinz, the conglomerate behind famous brands like Kraft, Heinz, and Philadelphia, has struggled in the past due to a slowdown in consumer preferences and cost-cutting strategies. However, under new leadership, Kraft Heinz has turned the corner.
The company's 2023 organic sales rose 3% and adjusted EPS grew 7%. For 2024, it expects a 0-2% organic sales growth and a 1-3% adjusted EPS increase. The stock's current price/earnings ratio of 12 suggests it's still undervalued. With an attractive forward dividend yield of 4.4%, Kraft Heinz remains a reliable blue-chip investment option.
In conclusion, these value stocks offer a chance to capitalize on market downturns and potentially reward you with robust returns. Remember, the key to success in value investing lies in identifying undervalued companies with strong fundamentals, just like Warren Buffett advises: buy discounted quality merchandise and wait for it to appreciate as the market catches up. Happy investing!
Based on Warren Buffett's advice, it's essential to continually seek undervalued companies with strong fundamentals for long-term investing. By investing in these value stocks, you can potentially profit from market downturns and secure robust returns.
With a modest investment budget, you can start building positions in high-quality stocks, such as Alibaba (BABA), which is currently trading at a significant discount despite its robust business model and financial stability.
