Demitri Kalogeropoulos, The Motley Fool
·3 min read
Patient investors can generate excellent returns in the stock market whether they're making large initial investments or tiny ones. If you have the budget, though, you'll get higher absolute returns with bigger stock purchases from both dividends and capital appreciation.
Putting $50,000 into a few top stocks, for example, could help a large, diversified portfolio grow more quickly. Pick the right investments, and you can add stability and significant passive income to the mix, as well. With that goal in mind, here are some excellent stock buys right now.
Software for growth
Microsoft (NASDAQ: MSFT) has already made many millionaires over the past several decades, but don't let the high valuation scare you away from this growth stock. Its last earnings update demonstrated that the software titan is nowhere near hitting a limit on its global business. Sales jumped 16% last quarter, translating into $10 billion of extra second-quarter revenue.
These impressive gains came despite sluggish demand in some parts of the business, especially tech-device sales. That diversification is hard to find in the tech world and helps Microsoft stand out from its more focused peers.
That said, you'll still get exposure to big growth avenues like artificial intelligence (AI), cloud services, and digital entertainment. But with a Microsoft investment, this access will arrive in a highly profitable package. The company's profit margin sits at 32% of sales today, compared to 20% for tech peer Adobe.
Retailing for income
For some passive income, consider a significant position in Walmart (NYSE: WMT). The leading retailer is growing sales today mainly by attracting more shoppers to its stores.
That rising traffic level means its strategy of price leadership is working well, even as consumers shift spending back toward more discretionary purchases. In fact, management said in late February that the chain is winning market share among higher-income households.
Walmart has a bright earnings outlook for 2024 and beyond. That's partly due to its slim inventory holdings but also thanks to high demand in areas like digital advertising.
Its operating profit margin is climbing above the 3% of sales that investors have seen for years from this business, and it seems likely that the retailer will keep adding to those gains in 2024 and beyond. In the meantime, a $15,000 investment in Walmart would deliver more than $200 of annual income that could be directed toward automatic stock reinvestments to amplify your long-term returns.
Streaming video for value
Investors seeking value might prefer a stock that's trading far below its recent highs, like Roku (NASDAQ: ROKU). The streaming video giant is going through some challenges, to be sure. Its user growth rate has slowed for three consecutive years, declining to 14% in 2023.
That deceleration joined forces with a shrinking advertising market to create weak sales trends. Roku's revenue was up just 11% last year, and operating losses were significant .
The company is attracting plenty of engagement, though, through its 100 billion hours of streaming time last year or its market share growth in the smart-TV device industry. Roku's advertising sales stand to accelerate in the coming years as more spending moves to that channel from broadcast television.
Risk-averse investors might want to watch Roku stock for a few quarters to see more concrete evidence of a return to profitability. But bigger returns will be available to those who buy the stock during this period of elevated pessimism about Roku's business.
Where to invest $1,000 right now
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Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Adobe, Microsoft, Roku, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The Best Stocks to Invest $50,000 in Right Now was originally published by The Motley Fool
