Best Stocks To Buy Now: The S&P 500 has continued its strong performance from 2023 into the first quarter of 2024, posting solid gains. Concerns about inflation, high interest rates, and a potential economic slowdown are diminishing. Remarkably, the S&P 500 has achieved consecutive quarters of 10% gains, a feat accomplished only eight times since 1950. Additionally, in January, the S&P 500 reached a new all-time high for the first time in two years.
As we move into the second quarter of 2024, investors remain optimistic about the market and the economy maintaining their positive trajectory. Despite this optimism, the New York Fed's recession probability model still predicts a 58.3% chance of a U.S. recession within the next 12 months. In this volatile and unpredictable market environment, Bank of America has recently compiled a list of their top stock picks, which we profile below.
The 9 Best Stocks To Buy Now
| Company (Ticker) | Forward P/E Ratio |
|---|---|
| Spotify Technology S.A. (SPOT) | 20.9 |
| The Progressive Corporation (PGR) | 8.6 |
| Alphabet, Inc. (GOOG, GOOGL) | 13.2 |
| Intuitive Surgical, Inc. (ISRG) | 52.2 |
| Tapestry, Inc. (TPR) | 12.3 |
| TopBuild Corp. (BLD) | 18.2 |
| Citigroup, Inc. (C) | 50.8 |
| The Kraft Heinz Company (KHC) | 8.7 |
| Fidelity National Information Services, Inc. (FIS) | 18.4 |
Methodology
At the start of each quarter, Bank of America releases a curated list of its top stock picks, driven by thorough fundamental analysis conducted by its equity analyst team.
For every stock on the list, analysts identify specific catalysts expected to materialize before the quarter's end. These catalysts are unique to each stock and are likely to impact its performance positively.
All listed stocks are actively covered by Bank of America analysts and typically remain on the list for the entire quarter, unless there is a change in coverage or the analyst's recommendation.
The top 10 U.S. stock ideas from Bank of America feature a mix of long and short positions. However, the list in this profile focuses exclusively on the firm's long ideas.
How To Start Investing in Stocks Today (Best Stocks To Buy Now )
If you're wondering how to begin investing in stocks today, the essential first step is understanding the fundamentals of investing itself.
To get started, you need to develop an investment plan, which involves answering three key questions:
- What are your financial goals?
- How much time do you have to achieve these goals?
- How much risk are you comfortable taking with your investments?
This third question determines your risk tolerance, which can be low, moderate, or high. Your risk tolerance will help guide how much of your portfolio you allocate to assets like stocks.
Investment values fluctuate over time. Stocks, for instance, typically experience greater volatility compared to bonds or cash.
What To Look For When Buying Stocks
When buying stocks (Best Stocks To Buy Now), it's essential to do your research and consider the factors that can impact the performance of every company. Here's what you need to watch out for:
- Fundamentals. Start by researching the company's financial statements, such as their revenue, earnings, profit margins and debt-to-equity ratio. Figures like these help you determine the company's overall financial health and whether its stock is a worthwhile investment.
- Industry trends. Understand trends in the company's industry. Research reports, news and analyst predictions like the ones outlined above to get a better sense of where the industry is heading.
- Management. The experience and track record of a company's management team can significantly impact its success. Look at their history of decision-making, leadership and overall strategy.
- Competitive advantage. Look for companies with a competitive advantage over their peers, such as strong brand recognition or unique intellectual property. This can give them an edge in the market and help the stock sustain appreciation and dividend payouts over time.
- Valuation. Assess whether the stock is overvalued or undervalued compared to similar companies in the industry. You can use metrics like price-to-earnings ratio, price-to-sales ratio and the price-to-book ratio to help determine the stock's valuation.
- Dividend yield. Always look for stocks that offer a decent dividend yield, since over time dividend payments can make up for a significant part of your return on investment.
- Risks. Every investment comes with risks, and you need to assess the risks associated with the stock you might be purchasing. Look at factors like the company's debt level, overall industry volatility and geopolitical risks that could impact the company's performance.
Different Ways To Invest in Stocks (Best Stocks To Buy Now)
There are many different ways to invest in stocks. Some of the most common include:
- Investing directly in individual stocks on the stock market.
- Indirectly investing via traditional mutual funds and ETFs.
- Indirectly investing via closed-end funds.
- Investing indirectly through investment pools known as collective investment funds, which are often run by banks and trust companies and are primarily part of a workplace retirement plan or stock bonus plan.
- Investing indirectly through so-called derivatives, which are financial contracts—such as futures contracts—with values based on underlying assets.
Alternatives To Investing in the Stock Market
If your top priority is indeed growth of principal, there are alternative investments to the stock market. These kinds of investments include:
- Hedge funds
- Private real estate
- Collectibles
- Private equity
- Cryptocurrencies
- Private debt and venture debt
- Derivatives
- Commodities, such as oil, precious metals and agricultural products.
According to Alison Staloch, CFO of Fundrise, alternative investments usually exhibit two main characteristics. First, their returns often do not correlate with those of publicly traded markets; they tend to perform differently from the exchanges. Second, the assets within these investments are not traded on public markets.
Staloch adds, “The best young private companies often experience much faster growth before they go public.” (Best Stocks To Buy Now)
How do stocks perform when interest rates are high?
It's tough to generalize, but high interest rates make it more expensive for companies to borrow money, which can negatively impact their earnings and profitability. In addition, higher interest rates can also make bonds and other fixed-income investments more attractive to investors, drawing money away from the stock market.
However, it's important to note that the relationship between interest rates and the stock market can be complex and there are many other factors that can impact stock performance, such as the overall economic environment, company-specific factors, and investor sentiment.
(Best Stocks To Buy Now)
How do I pick the right stock?
The key to successful stock picking is simply to buy low and sell high. However, there are many ways to accomplish this goal. One way is to anticipate which stocks will increase their earnings.
Anticipating earnings increases is the goal of conventional stock picking in both fundamental analysis and technical analysis.
So, how can you pick the right stocks? David Blaylock, director of advice and compliance for RIA firm Origin, says, “Look for stock in companies that you understand enough to know whether they are headed for bigger future profits. And headed that way within your investment time frame.”
(Best Stocks To Buy Now)
Do I need a broker to buy stocks?
You need a broker to buy stocks. A broker is a licensed professional who can buy and sell stocks on your behalf. It's important to research and compare different brokers to find the one that best suits your needs, investment goals and price preference.
(Best Stocks To Buy Now)