7 best stocks to buy with $1,000:
- Microsoft Corp. (MSFT)
- Alphabet Inc. (GOOG, GOOGL)
- Amazon.com Inc. (AMZN)
- Berkshire Hathaway Inc. (BRK.A, BRK.B)
- Meta Platforms Inc. (META)
- JPMorgan Chase & Co. (JPM)
- Bank of America Corp. (BAC)
Here are the seven best ways to invest $1,000.
If you have an extra $1,000 in a savings or checking account, the best way to earn income on that money is to invest in the stock market. If you’re new to investing, buying a low-cost, diversified S&P 500 exchange-traded fund, such as the SPDR S&P 500 ETF Trust (ticker: SPY ), is a relatively low-risk place to start. However, if you want to start building your own stock portfolio from scratch, here are the seven best blue-chip stocks to buy with $1,000 that have “buy” ratings from the Morningstar analyst team.
Microsoft Corporation (MSFT)
Microsoft is the world’s largest software company and the owner of the Windows operating system, the Office business software suite, and the Azure cloud computing service. Morningstar analyst Dan Romanoff says Azure will be the core of Microsoft’s business in the 2020s. He says Azure’s 45% growth rate is already a $45 billion business in fiscal 2022. Microsoft has had tremendous success in transitioning its Office customers from a licensing model to a subscription model and selling higher-priced products, he says. Finally, Microsoft is well-positioned for cloud-based online gaming. Morningstar has a “buy” rating and a $352 fair value estimate for MSFT stock, which closed at $287.02 on Aug. 11.
Alphabet Inc. (GOOG, GOOGL)
Alphabet is one of the largest companies in the world and is the parent company of Google and YouTube. Analyst Ali Mogharabi said Alphabet’s second-quarter earnings were disappointing, but the company’s search advertising and cloud services growth numbers were encouraging. Mogharabi says Alphabet is taking steps to control costs, is generating impressive cash flow from its advertising business and has its cloud services business on a path to profitability. Additionally, Alphabet has plenty of cash for additional investments and tuck-in acquisitions, he says. Morningstar has a “buy” rating and a $169 fair value estimate for GOOGL stock, which closed at $118.84 on Aug. 11.
Amazon.com Inc. (AMZN)
Amazon is the market leader in e-commerce and cloud services. Romanoff says Amazon’s second-quarter earnings showed investors that its online retail business is recovering. In addition, Amazon Prime membership fees and third-party seller fees boosted Amazon’s gross revenue and margins, while AWS cloud services revenue and advertising revenue increased 33% and 18%, respectively, year-over-year. Romanoff says Amazon benefits from several size and scale advantages. AWS, advertising and subscriptions will be Amazon’s key growth drivers over the next five years, he says. Morningstar has a “buy” rating and a $192 fair value estimate for AMZN stock, which closed at $140.64 on Aug. 11.
Berkshire Hathaway Inc. (BRK.A, BRK.B)
Berkshire Hathaway is a holding company with a diversified portfolio of public and private companies managed by Wall Street legend Warren Buffett. If you only have $1,000 to put into the stock market, you can essentially buy shares of Berkshire stock and put Buffett in charge of your portfolio. Analyst Gregory Warren has taken a hit on Berkshire’s stock in 2022, but its diversification and low-risk profile make Berkshire an excellent defensive investment during periods of economic uncertainty. Morningstar has a “Buy” rating and a $357 fair value estimate for the BRK.B stock, which closed at $296.47 on Aug. 11.
Meta Platforms Inc. (META)
Meta Platforms is the market leader in social media and online advertising and owns Facebook, Instagram and other popular platforms. Meta shares are down more than 49% year to date since Facebook reported its first decline in daily active users in February. Meta reported its first quarter of negative revenue growth in the second quarter and guided for negative revenue growth in the third quarter. Despite all the near-term challenges, says Mogharabi, Meta’s 2022 weakness is a long-term buying opportunity. Morningstar has a “buy” rating and a $346 fair value estimate for META stock, which closed at $177.49 on Aug. 11.
JPMorgan Chase & Co. (JPM)
JPMorgan Chase is one of the largest banks and financial services companies in the world. Analyst Eric Compton says JP Morgan is arguably the U.S. bank. He says the bank’s diversification, scale, and risk management create a tremendous competitive advantage. Compton says JPMorgan is one of the best-managed banks in the market. JP Morgan is the largest U.S. Not only is it a credit card issuer, but it is also one of the largest merchant acquirers. Additionally, its investment bank generates extraordinary amounts of fee income. Morningstar has a “buy” rating and a $149 fair value estimate for JPM stock, which closed at $120.14 on Aug. 11.
Bank of America Corporation (BAC)
Bank of America is one of the largest diversified US banks and financial holding companies. The bank’s holdings have relatively high sensitivity to interest rates, suggesting the Federal Reserve may increase its net interest margins substantially in the near term. However, Bank of America shares are down 25% in 2022 on concerns that aggressive rate hikes will trigger a recession and slow loan growth. Compton says the bank will continue to gain market share given its comprehensive retail and commercial offerings. Morningstar has a “buy” rating and a $40 fair value estimate for BAC stock, which closed at $35.91 on Aug. 11.