,"The best stocks to buy for beginners are ones that don't require a PhD in finance to understand. There are plenty of great stocks that you can..."
Investing in stocks is a way to build wealth over the long term, and it's always a smart idea to look for cheap stocks to invest in. In that case, stocks that trade at a relatively low multiple of earnings with good growth may do better than the hypergrowth yet profitless tech stocks. The premise applies to investing as well. While relatively low-priced stocks haven't exactly kept up with growth stocks in recent years, they can still be good investments.
A balanced DGI portfolio should keep a mix of high-yield, low-growth stocks along with some high-growth but low-yield stocks. That said, how you allocate between the two can depend on your risk tolerance and investment goals. For instance, a portfolio with a large weighting of high-yield, low-growth stocks may be better suited for someone who is looking for steady income and is not as concerned with capital gains. On the other hand, a portfolio with a large weighting of high-growth, low-yield stocks may be better suited for someone who is looking for long-term growth and is less concerned with income.
One example of a low-priced yet high-growth stock is Tesla (NASDAQ:TSLA). The stock is trading at a relatively low multiple of earnings and has shown tremendous growth in recent years. However, it's also why the stock is risk to invest in for as long as the company continues to burn money. In the long run, management hopes that its technology, production, and sales will make up for the cash burn.
There are also stocks that are both low-priced and offer good dividend yields. These stocks are often referred to as DGI (dividend growth investing) stocks. Examples of DGI stocks include The Walt Disney Company (NYSE:DIS), BlackRock, Inc. (NYSE:BLK), NIKE, Inc. (NYSE:NKE), and other major companies. I invest in stocks through broad low-cost index funds that mirror the entire market, and I have held onto these funds for decades.
Investors who are looking for cheap stocks with good dividend yields should also consider small-cap stocks. Small-cap stocks have the potential to offer higher yields than larger companies, but they also tend to be more volatile. That means investors should be careful when investing in these stocks and should do their own research before investing. There might not be an opportunity to get them for much cheaper than now. To afford a dividend, companies must make consistent profits, have strong cash flow, and have smart management teams.
Morningstar recently published a list of 10 top stocks that have strong cash flow, good management teams, and are trading way below fair market value, making them the best stocks to invest in for 2021. These stocks include Plug Power (NASDAQ:PLUG), FuelCell Energy (NASDAQ:FCEL), and Zoom Video Communications (NASDAQ:ZM). Other stocks on the list include Teladoc Health (NYSE:TDOC), GenMark Diagnostics (NASDAQ:GNMK), and Chewy (NYSE:CHWY).
In addition to DGI stocks, investors who are looking for cheap stocks may also be interested in energy stocks. The energy industry has been hit hard by the pandemic, but there are still some stocks that may be worth investing in. In this article, we will be taking a look at 12 cheap energy stocks to buy. These stocks include Marathon Petroleum (NYSE:MPC), Valero Energy (NYSE:VLO), Phillips 66 (NYSE:PSX), and more.
Finally, investors who are new to investing should be aware that the best stocks to buy for beginners are ones that don't require a PhD in finance to understand. There are plenty of great stocks that you can start investing in without having to do too much research. These stocks include blue-chip stocks like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN).