10 Cheap Stocks for Beginner Investors

Cheap Stocks

As a beginning investor, you may be in a state of analysis paralysis — there’s too much information and you’re scared to make a wrong choice. It’s only your financial future at stake. But we’ve done the research and named our Top 10 Cheap Stocks for Beginner Investors.

Product FAQ

1. What Are Cheap Stocks?

2. Why Invest In Cheap Stocks?

3. Where Can You Buy Them?

How We Reviewed

The following cheap stocks were reviewed based on company leadership, whether they are industry leaders, their long-term growth potential, and the stock’s valuation.

Overall Price Range of These Cheap Stocks

The overall price of the stocks we evaluated varied. None of these picks would be considered penny stocks. None were priced under a $100 either. In fact, the prices ranged from just over $100 to more than $1,500.

What We Reviewed

  • Alphabet
  • Berkshire Hathaway
  • Amazon.com
  • Chevron
  • Apple
  • Microsoft
  • Disney
  • PepsiCo
  • Facebook
  • 3M
  • Comparison Table

    Product Name

    Company Logo

    website

    Alphabet (NASDAQ: GOOGL, GOOG)

    alphabet logo

    Berkshire Hatha​way (NYSE: BRK.A, BRK.B)

    berkshire hathaway logo

    Amazon.com (NASDAQ:AMZN)

    Amazon inc. logo

    Chevron (NYSE: CVX)

    chevron logo

    Apple (NASDAQ:AAPL)

    apple logo

    Microsoft (NASDAQ:MSFT)

    mslogo

    Disney  NYSE:DIS)

    Walt Disney logo

    PepsiCo (NYSE: PEP)

    pepsico logo

    Facebook (NASDAQ: FB)


    fb logo

    3M (NYSE: MMM)

    3m logo

    alphabet logo

    Features

    Alphabet, the parent of Google, is a highly profitable advertising-based business. In fact, 86 percent of Alphabet's total revenue was from advertising revenue. With an 86.3 percent of the search engine global market share, Google is a leader in its core business. In 2015, Google reincorporated itself as Alphabet, a holding company.

    The stock is projected to grow its earnings per share by 16.1 percent in the next five years according to analysts and have a 161 percent return during that same time period. Keep in mind, these are projections and nothing on Wall Street is a sure thing. Google isn’t Alphabet’s only company. Others include the Android mobile operating system, Pixel smartphones, Google Home, YouTube, and Nest products.

    Pros

    • Strong growth outlook
    • A leader in its core business
    • Continually adding new products and adding value

    Cons

    • Price
    • The shift to voice search, which Amazon dominates
    • Encroaching call for regulation

    Price

    This stock can be purchased for around $$$ a share.


    berkshire hathaway logo

    Features

    Berkshire Hathaway, with CEO of almost 50 years Warren Buffet, has a portfolio of well-managed and diverse businesses. Insurance is its bread and butter, but it also owns Wells Fargo and interest in American Express, Coca-Cola and IBM.

    Headquartered in Omaha, Nebraska, the company was founded in 1889 and has 377,000 employees because its mix of businesses is in the US. The strength of the economy is boosting its stocks to new, yet still undervalued, highs. Second-quarter operating earnings, which were up 67 percent, to $6.9 billion.

    Pros

    • Longevity
    • Diversity
    • Invested in/ owns biggest brands in America

    Cons

    • Warren Buffet’s future as CEO uncertain
    • Requires long-term investment window

    Price

    This product can be purchased in class B shares for around $200 each. Class A shares are around $$$.


    Amazon inc. logo

    Features

    A leader in the e-commerce space, Amazon would be a fine choice to have in your stock portfolio. In 2017, online sales accounted for only 10.2 percent of retail sales worldwide, so there is a ton of growth potential there.

    Amazon Web Services, Amazon’s cloud-computing service, generates a lot of cash for the company. As we mentioned earlier, Amazon’s Echo and its voice-recognition technology is a leader in that area. Then there’s Amazon Prime, a membership service for $119 a year, that gives members two-day shipping, free movies, and music.

    Amazon stock is expensive and this list is about cheap stocks. However, because of the market’s faith in founder-CEO Jeff Bezos' and the sky-high potential for growth, this stock isn’t getting much cheaper.

    Pros

    • Founder/CEO runs the company
    • E-commerce sector has mega growth potential
    • Amazon continues to lead the industry

    Cons

    • Pricey stock
    • Jeff Bezos won’t live forever
    • The company may be overvalued

    Price

    This stock is trading at about $$$ a share.


    chevron logo

    Features

    Investors who are looking for recurring dividend income from rising oil prices should consider this company. Chevron Corp's shares have risen in recent months, in tandem with oil prices. But the stock is no overvalued. And analysts think the dividend will likely continue to grow. An investment in CVX yields 3.6 percent.

    A world leader in energy, Chevron offers a robust dividend payout. Today’s $4.48 annualized payout per share equals 3.38 percent dividend yield. On the flipside, the volatility of the energy sector can be a bit unnerving. Boom, bust, boom again?

    Pros

    • Energy demand and output improving
    • Nice dividends
    • Potential growth

    Cons

    • Volatile sector
    • Climate change lawsuits

    Price

    This product can be purchased for $$.


    apple logo

    Features

    The sweetheart of Wall Street analysts and for good reason. Apple generated an astounding $229 billion in revenue last year and had $48 billion in profit. Even if you are new to investing, you should have an inkling that Apple is a solid investment. Apple has mastered the content experience across multiple devices.

    It’s like your iPhone and MacBook talk to each other. If you’re an Apple fanatic, then you know how incredibly convenient this is. Then there’s the App Store, iTunes, Apple Pay, and Apple Music all create a cohesive Apple experience.

    Consumers spent nearly $40 billion on App Store purchases in 2017. Apple Music and Apple Pay also supply a revenue stream to the company. Since 2012 Apple has given $234 billion to shareholders as dividends and stock buybacks. That number in 2019 is projected to be $300 billion.

    Pros

    • A strong ecosystem of products
    • Strong dividends
    • One trillion market cap

    Cons

    • The company is not debt free like it used to be
    • No new game-changing product
    • Legal woes

    Price

    This Apple stock can be purchased for about $$.


    mslogo

    Features

    Satya Nadella took over as CEO in 2014 and the company began improving its Windows operating system. It also concentrated on selling its Office software as a subscription service, and cloud computing services. Microsoft is a solid stock for the first-time investor.

    Microsoft is a player in the long-term cloud computing trend. Azure, Microsoft’s foray into the space, is the largest public cloud computing company, second only to  Amazon. Microsoft has about 20 percent of the cloud computing market, an increase  of about 4 percent over last year.16% last year. Alphabet has just 12 percent of the market.

    Pros

    • Cloud business growth
    • Strong focus on software subscriptions
    • Solid company

    Cons

    • Valuation

    Price

    This stock is priced at about $ a share.


    Walt Disney logo

    Features

    Disney may not be a stock star like it used to be, but it is still a solid pick when it comes to investing in cheap stocks. It has a merchandising machine that is unmatched by any other company. It starts with its motion pictures and then pushes out all kinds of merchandise on its TV networks and theme parks.

    If they need to sell more products, they just come up with a blockbuster, or better yet a sequel or prequel to one of its current hits. Though the stock has lagged in recent years, in the past 10 years Disney shares have climbed 260 percent.

    Pros

    • Merchandizing machine
    • Strong growth over the long-term
    • Plans to diversify with streaming service

    Cons

    • Media section faltering
    • Lagging growth in past three years
    • Slow growth

    Price

    This stock can be purchased for about $$.


    pepsico logo

    Features

    PepsiCo dates back more than 50 years, and it also owns other familiar brand names — Frito-Lay, Doritos, Quaker, and Pepsi. Recently it announced plans to purchase SodaStream, the at-home beverage maker for $3.2 billion. This is a new way PrpsiCo can reach customers. With 70 percent of shoppers estimated to buy groceries online by 2025, it may be a smart move.

    This stock has had its ups and downs this 2018. PepsiCo raised its dividend by 15 percent and shares now yield 3.3 percent. The company is a leader in the food and beverage industry with much of its growth on the global market.

    Pros

    • A leader in food and beverage space
    • Purchase of SodaStream
    • Snack food is popular

    Cons

    • Changing health trends
    • It’s losing brand loyalty among 18-34 years old

    Price

    This stock can be purchased for $$ per share.


    fb logo

    Features

    Facebook makes 97 percent to 99 percent of its revenue from advertising and the company continues to grow revenue and earnings. Daily active users of Facebook increased 13 percent year-over-year, to 2.2 billion. Facebook is making moves to take part in the video streaming space from YouTube. They have a strong presence with 500 million viewers watching 100 million hours of video on Facebook each day. Facebook is a leader in the social media space with 1 out of every 5 people on the planet having a Facebook account.

    Facebook also is a rapid growth company profits last year passed $1 billion, at $1.56 billion, an increase from $701 million. FB stock posted an EPS of $2.28 last year, but by 2018 this is expected to top $5.50.

    Pros

    • Strong growth
    • A leader in social media
    • Strong revenues

    Cons

    • Valuation high
    • SnapChat strong competitor
    • Sharing is on the decline

    Price

    Facebook stock can be purchased for about $$ per share.


    3m logo

    Features

    3M is a rarity: a “dividend aristocrat” or company that increases annual dividends annually for at least 25 years. The company manufactures tape, library systems, elastic bandages, Post-it notes, and Scotch-Brite cleaning supplies. Exciting, right? What is tantalizing for investors are those dividends.

    The Minnesota-based 3M has strong financials, in five business segments – industrial, safety and graphics, healthcare, electronics and energy, and consumer. Its competition is eating its dust.

    Pros

    • Strong balance sheet
    • Weak competition
    • Room for growth

    Cons

    • At the mercy of the economy
    • Long-term debt

    Price

    3M stock can be purchased for around $$ per share.


    The Verdict

    As far as cheap stocks for beginner investors go, there are a few options that stand out. Alphabet and Amazon are great investments due to their quest for world domination. There seems to be no end in sight for these giants. Although they may be competitors for growth in the artificial intelligence space, they seem to be the leaders in the future.

    Add to that Amazon’s bid to get everyone shopping for everything online, there doesn’t seem to be a space that the e-commerce trend can’t touch. Bad news for brick and mortar, good news for you.

    As the cheap stocks go, we have to go with 3M.

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