In the article titled “Investing $1000 if you want to start from scratch,” we will study how should you invest $1000 today in stocks. We all know that investing is a simple approach and it can help yield strong results over time. However, for some investors, investing appears to be a complex task, especially if that investor turns on the TV and starts watching the financial podcasts or news. That being said, it’s important to know that it is not as complicated as it appears. Investing can bear fruit in the long term and that’s why it’s always a good idea to have long term approach and to focus on businesses which are supported by strong management and high-quality products. When considering long-term approach, it is very important to ignore short-term volatilities and hold on to businesses in which you have confidence.
Next, the investor should think whether he/she wants to go for passive or active approach. Each approach has its own merits and demerits. For investors, who are new and who believe that they don’t have time to monitor their investment holdings, passive approach will be an apt one. Therefore, they should consider buying index funds, such as Vanguard 500 Index Fund Admiral Shares. Index funds offer low-cost way to diversify holdings and have exposure to S&P 500. This is an index of 500 largest companies in the United States. Rather than investing that entire $1,000 on the very first day, investors should go for dollar-cost averaging. They should consider periodic investments over several months. This refers to putting a particular amount into index fund, for instance, on the first of every month. This will help investors to take advantage of entry at multiple price points, supporting returns. If you want to invest $1000 in stocks, you are probably looking for active approach.
The active approach
While choosing the passive route is a worthwhile option for several people, some investors can choose to go for active approach. These are the ones who can properly analyze stocks to invest in and have time to research and continuously follow for any recent updates.
If you want to invest $1000 in stocks, you should go for well-established companies like Amazon.com, Inc. and Visa, Inc.
1) Amazon.com, Inc.
Amazon.com, Inc. has been categorised as a leading online retailer and one of the highest-grossing e-commerce aggregators. In 2Q, its net sales went up by 11% to $134.4 billion in comparison to $121.2 billion in 2Q22. If we exclude $0.3 billion unfavorable impact from year-over-year changes in foreign exchange rates, net sales saw an increase of 11% against 2Q22. This growth was supported by higher sales in North America segment (sales up 11% year-over-year to $82.5 billion) and International segment (sales increasing 10% year-over-year to $29.7 billion).
Operating income of the company in 2Q grew to reach $7.7 billion compared with $3.3 billion in second quarter 2022. North America segment was a leading contributor to this increase as operating income from this segment reached $3.2 billion in comparison to operating loss of $0.6 billion in 2Q22.
Operating cash flow saw a significant increase of 74% to $61.8 billion on TTM basis in comparison to $35.6 billion for the trailing twelve months ended June 30, 2022. Free cash flow saw an improvement as there was an inflow of $7.9 billion for the trailing twelve months in comparison to an outflow of $23.5 billion for the trailing twelve months ended June 30, 2022.
For 3Q23, the company expects net sales of between $138.0 billion and $143.0 billion, or to grow in the range of 9% and 13% in comparison to 3Q22. This guidance expects favorable impact of ~120 basis points from foreign exchange rates. Operating income of the company is expected in the range of $5.5 billion and $8.5 billion in comparison to $2.5 billion in 3Q22.
While half of the funds should be invested in Amazon, the other can be invested in Visa, Inc.
2) Visa, Inc.
Visa, Inc. is the leading payment processor in the world, with market cap of ~$447.3 billion. Visa, Inc. and Conferma Pay announced extension of strategic collaboration targeted at enhancing Visa Commercial Pay, which is a suite of B2B payment solutions, to help improve cashflow for businesses and eliminate manual processes which are outdated.
The company reported its fiscal 3Q23 results, with net revenues of $8.1 billion, exhibiting 12% increase, or 13% on constant-dollar basis. Its payments volume and processed transaction growth remained relatively stable and cross-border volume growth was strong. It saw strong consumer spending, supporting growth in payments volume and processed transactions. The company’s cross-border volume was a tailwind, supported by travel growth due to recovery and summer tourism.
GAAP net income of the company in 3Q came in at $4.2 billion or $2.00 per share, exhibiting rise of 22% and 25%, respectively, in comparison to prior year’s results. Present year’s results consisted special item of $456 million for litigation provision related to interchange multidistrict litigation case, net gains of $85 million due to equity investments and $65 million due to amortization of acquired intangible assets and costs related to acquisition.
Growth in net revenues of the company stemmed from year-over-year growth in payments volume, cross-border volume and processed transactions. Payments volume for 3 months ended March 31, 2023, on which fiscal 3Q service revenues are recognized, went up by 10% in comparison to prior year on constant-dollar basis.
On June 28, 2023, the company announced it signed definitive agreement to acquire Pismo, which is the cloud-native issuer processing and core banking platform, for cash consideration of $1 billion. Transaction remains subject to customary closing conditions, including applicable regulatory reviews and approvals. The company expects this transaction to close by the end of 2023.
Total processed transactions of the company, that represent transactions processed by Visa, for 3 months ended June 30, 2023, came in at 54.0 billion, exhibiting 10% growth over the previous year.
Therefore, if you want to invest $1000 in stocks, make sure the investment is diversified between well-managed companies.
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