5 Best Stocks Under $100 To Buy Now

If you’re new to investing and don’t have a lot of money to start with, will you be missing out on the best stocks? No —there are plenty of options for you. Stocks priced under $100 can be a great way to get started without spending too much.

But just which stocks have share prices below $100? In this article, we’ll list 5 of them. These stocks can help you diversify your portfolio and potentially earn high returns.

 

Why You Should Consider Investing in Stocks Under $100

Accessibility and Diversification

There are several reasons why stocks less than $100 are most attractive. First of all, from the viewpoint of minimum capital outlay, this group of stocks is relatively low-cost, especially for new investors or for those with less overall capital to invest. Such access will allow the investor to spread his money over various companies, offering less risk through diversification. Most of these stocks come from firms with large growth opportunities that may make outstanding returns over time.

There’s a reason why even the largest companies engage in ‘stock splits‘, because whether a company is capped at $100 million or $100 billion, having a very high share price can be an impediment to new investors buying in. Berkshire Hathaway has a share price of over US$652,000 – you need a lot of money to even buy one share! But even if you had that money, you could own a lot more of a company with a lower share price.

 

Building a Strong Foundation

One of the most efficient ways to ensure a diversified portfolio, tap growth opportunities, and achieve long-term financial goals is through investing in stocks under $100. Such lower-priced stocks offer a good platform for your investment when you want to get started with the market and grow with experience and confidence in the stock market.

 

5 Best Stocks Under $100

Pfizer (NYSE: PFE)

Pfizer might be an appealing choice—trading at approximately $29.97 per share—for those investors who seek to buy stocks under $100. The company has indeed underperformed in the last year due to falling COVID-19 product sales, but with a yield of around 5.6%, there’s certainly enough to attract investors. More importantly, what is attractive about this company concerning its future growth is the aggressive reinvestment that went into developing new drugs and expanding its product line following the COVID-19 windfall; additionally, there is the planned $43 billion buyout of Seagen.

Pfizer’s financial health remains robust, with a gross margin of 68.87% and significant operating and free cash flow. The company’s ability to generate $8.6 billion in operating cash flow over the trailing 12 months indicates strong financial stability, making it a reliable investment for the long term.

Chewy (NYSE: CHWY)

Chewy, currently trading for approximately $25.51 per share, has set itself up to be one of the important operators in the pet industry. Although down around 35% from last year, the stock is actually up double digits since the beginning of the year. The company’s growth in revenue rests on the rising U.S. pet market, which has ballooned into a $144 billion valuation in 2023 and likely will grow 7% compound annually from 2023 to 2027.

Chewy’s financial performance has been impressive, with the company reporting a net income of $67 million in the first quarter of 2024, marking a 193% increase from the previous year. This growth is indicative of Chewy’s successful transition to profitability, supported by diverse revenue streams, including consumables and healthcare products, which account for 85% of its sales.

Chewy’s strategic initiatives, such as its telehealth business, online pharmacy, and newly launched vet practice, further enhance its growth prospects. These ventures position Chewy to capture a larger share of the pet care market, making it a promising stock for investors seeking growth opportunities in the near term​.

Walmart (NYSE: WMT)

Walmart, currently trading at approximately $70 per share, remains a retail bellwether. The stock has done quite well lately, up 20% year to date and generating record first-quarter revenue of $161 billion. Walmart continued to invest in e-commerce and delivered a 22% increase in U.S. e-commerce sales and a 24% rise in its advertising business in the first quarter of 2024. These growth areas are crucial for Walmart as it adapts to the changing retail landscape and consumer preferences. The company’s strong financial position and ongoing investments in technology and logistics ensure high-quality cash flows and sustained profitability.

Stride (NYSE: LRN)

Stride, currently trading at approximately $68.58 per share, is an online education provider with a market capitalisation of $3 billion that you just can’t miss. The business will be well-positioned for long-term growth in virtual learning and career services against the backdrop of growth in e-learning. With the U.S. online education market set to grow further to $144.3 billion by FY29, there is a bankable case for investment in Stride shares based on strong growth ambitions and sound financials. Stride’s financial health is robust, with the company exceeding earnings expectations in the third quarter of 2024. It reported revenue of $504.9 million, surpassing analysts’ estimates and reflecting a notable increase from the previous year. The company’s cash and cash equivalents also increased, further strengthening its balance sheet.

AstraZeneca (NASDAQ: AZN)

AstraZeneca (NASDAQ: AZN) has consistently demonstrated its status as a robust investment in the stock market. AstraZeneca reported significant financial growth in the first quarter of 2024, highlighting its potential for sustained profitability. The company’s total revenue surged by 19% year-over-year to $12.7 billion, driven primarily by a 17% increase in product sales. This impressive revenue growth was mirrored by a 13% increase in core earnings per share (EPS), reaching $2.06. The net income for the quarter was robust, with reported EPS at $1.41, representing a 21% increase compared to the prior year.

This financial performance underscores AstraZeneca’s ability to thrive even in a bear market. One of the most compelling aspects of AstraZeneca’s portfolio is its oncology division, which saw a 26% increase in revenue, reaching $5.1 billion. Key drugs such as Tagrisso, Imfinzi, and Lynparza continue to drive sales. Despite market volatility, AstraZeneca stands out among cheap stocks. Its strong financial performance, diversified portfolio, and strategic acquisitions make it a reliable pick for investors. AstraZeneca’s commitment to innovation and growth promises continued value for shareholders in the coming years.

Things to Keep in Mind When Buying Stocks Below $100

While purchasing stocks for less than $100, one needs to consider various critical factors to formulate good investments and maximise the possible returns in the security market. Knowing these factors will help an investor identify the correct stocks to buy:

Financial Health

When investing in less than $100 stock, it is important to evaluate a company’s financial health. One needs to examine what is going on with key financial indicators, such as revenue, net income, and profit margins. Those companies with strong financials could surf through the periods of economic downturn better and climb up the ladder of long-term growth. For instance, take a pointer of the net income reported for the fourth quarter or the first quarter over the previous year for an indication of the stability and potential of the company.

Growth Potential

Probably the most important factor in successful investing is identifying companies with tremendous growth potential. Wall Street expects businesses operating in industries with plenty of room for expansion, or those offering new and innovative products and services, to perform well. This potential is often reflected in their share price, which may show substantive growth over the next few years, making them good stocks to buy. Consider firms that have traditionally reported growing revenues and positive forward prospects. Notice the average return and how the company operates. For a limited time, look at how the positions are traded, how they scale their operations, and any publications or notices regarding their performance.

Dividend Yield

Besides providing regular income, dividend-paying stocks indicate financial stability. Companies with a consistent record of paying out dividends, even during a market decline, are normally considered more reliable investments. The reported steady dividends can be pinpointed as great stocks with both growth and income potential. When evaluating these securities, it’s crucial to differ between those with occasional payments and those with consistent dividends. Publications often highlight three stocks that maintain their dividend payments, making them good subjects for subscription and long-term trade.

Analyst Ratings

One of the major tools to gauge a stock’s potential is Wall Street analysts opinions and price targets. Positive ratings by analysts can be excellent indicators of future performance. To predict the expected performance of stocks, examine analyst ratings, as they can guide investors to make more informed decisions. Look at company reported strong earnings and also having received high ratings, it becomes a subject of interest for consumers. Publications often highlight these stocks, making them a bargain for potential sale.

Risk Tolerance

The investor must assess their risk tolerance in stock investing, especially when choosing those with stock prices below $100. These stocks can be relatively volatile in comparison with their higher-priced security counterparts. It will be necessary to have a clear understanding of one’s risk profile and investment goals to guide the selection of appropriate investments. This could be in the form of preferential conservative investments with relatively lower risk or a high-risk investor stepping out for bigger returns.

 

Keeping Up with Various Market Caps

Remember that a company’s share price is only a function of its market capitalisation and the number of shares on issue. A company worth $100m may have a higher share price than a $100bn company by mere virtue of the former company having a far lower number of shares on issue. This is an extreme example, although hopefully you can get what we’re trying to say here.

Having a portfolio with a mix of market capitalisations—small-cap, mid-cap, and large-cap stock—will allow for the balancing of risk and reward potential. Small-cap stocks often include penny stocks, which are very highly growth-oriented but at higher volatility. Mid-cap stocks present a middle path that greets the goals of growth and stability. Large-cap stocks are normally those established companies that ensure consistent performance and dividends.

 

How to Successfully Invest in Stocks Below $100

1. Implement dollar-cost averaging by investing a fixed amount at regular intervals, regardless of stock market behaviour. This allows you to buy more cheap stocks when prices are low and fewer when prices are high, optimising your investments over time.
2. Set realistic expectations for your investments, understanding that not all stocks will be winners. Regularly review your portfolio to ensure it aligns with your investment plans and risk tolerance, considering fluctuations from quarterly earnings reports and market trends.
3. Stay informed about business news, company earnings, and overall market trends to make timely decisions on when to buy, hold, or sell stocks. Utilise modern investing tools like online brokers and trading platforms that offer low-cost trades and valuable research tools to stay ahead in your investments.
4. If you don’t have the money for professional financial advice, leverage robo-advisors for automated investment portfolio management driven by algorithms, especially beneficial for beginners or those who prefer a hands-off approach. Robo-advisors help manage investments efficiently, ensuring your portfolio is optimiwed for growth opportunities.
5. Regularly track and adjust your portfolio based on its performance over the past year and your near-term outlook. Whether dealing with penny stocks or more stable investments, adjusting strategies to navigate bear markets effectively is key to long-term success.

By combining these strategies, you can make informed decisions and optimise your investments in stocks under $100, ensuring a well-rounded and resilient portfolio.

 

Common Mistakes to Avoid in Buying Stocks Below $100

1. Avoid chasing after penny stocks, as they are highly speculative and risky. Over-investing in these stocks can lead to significant losses.
2. Do not rush to invest in a stock just because its price is low. Always check the fundamentals of the company, including its growth prospects and financial health, before making a decision.
3. Avoid neglecting diversification. Do not put all your money into a single stock or sector, no matter how promising it may seem. Diversifying your investments helps manage risk and improve potential returns.
4. Pay attention to trading fees and commissions. These costs can significantly reduce your returns, especially when dealing with low-priced stocks.
5. Regularly review and adjust your portfolio to ensure it aligns with your investment goals and risk tolerance, taking into account market trends and company performance.

 

Conclusion

If you want just to start building a portfolio, have some diversification, or simply tap into some potential growth opportunities, then stocks below $100 could just be one of the best ways to do so. You can achieve your financial goals by understanding the stock market, carefully selecting your investments, and implementing sound strategies.

Keep in mind that successful investing requires an ongoing learning curve, with patience and a long-term view. However, in the case of investing in the stock market, keep learning and adjust your strategy from time to time in light of new information and changing market conditions. With prudence and well-thought-out decisions, stocks less than $100 will always be handy in your journey to build wealth.

 

 

What are the Best Stocks to invest in right now?

Check our buy/sell tips

Frequently Asked Questions on Investing in Stocks Under $ 100

• What are the best stocks under $100 to buy today?

  Top picks include Pfizer at around $28 per share with a high dividend yield, Chewy at $26 per share riding the pet industry boom, and Walmart at $64.71 with strong e-commerce growth. These stocks offer budget-friendly entry points and the potential for portfolio diversification.

• How do penny stocks compare to other stocks under $100?

  Penny stocks, trading for less than $5 per share, offer high reward potential due to their volatility but come with greater risk compared to other stocks under $100. Stocks like Pfizer, Chewy, and Walmart are generally safer bets with stable earnings and growth prospects.

• What should investors focus on when choosing cheap stocks?

  Investors should focus on the financial health of the company, including revenue, net income, and profit margins. Also, consider dividend yield, market conditions, and analyst opinions to ensure a balanced mix of growth and income potential.