When we’re just starting out investing, the price of stocks can put many people off – particularly younger investors.
Even though the dollar price of a stock is actually meaningless (it’s the percentage gains that count when tracking performance), the barriers to accessibility are still there for investors who are only able to buy whole shares.
For example, if you had US$5,000 to invest and wanted to put money into Amazon.com Inc (NASDAQ: AMZN), over half of that amount would go towards purchasing one share of the e-commerce and cloud computing giant.
It most recently cost US$3,226 per share. It’s easy to see how a number this big can put people off. So, for investors wanting to put small sums of money to work in the US stock market, here are five great stocks that all cost under US$100.
1. NextEra Energy Partners
Operating in the clean energy and renewables space is NextEra Energy Partners LP (NYSE: NEP). The company is actually a subsidiary of the world’s largest renewable energy company, NextEra Energy Inc (NYSE: NEE).
NextEra Energy Partners is effectively a company that owns renewable power assets like solar and wind farms.
Since its massive parent has access to lots of projects, it passes it down to NextEra Energy Partners – which then leases these out electricity providers.
What’s great about this model is the consistent cash flows that the company sees as the average contract length with its customers is around 15 years.
Possessing a 3.5% dividend yield, and costing around US$75 per share, it isn’t the highest-yielding stock around but it has managed to triple it dividend in less than six years.
I’ve spoken about social commerce and media platform Pinterest Inc (NYSE: PINS) before but what makes this company so great is its product market fit.
As social media users move away from the likes of Facebook Inc (NASDAQ: FB) and Facebook-owned Instagram, Pinterest is set to be one of the key beneficiaries of this trend.
The platform, which uses imagery to help advertisers and merchants reach customers, has been growing strongly. In its most recent quarter, monthly active users (MAUs) was up at 459 million – an increase of 39% year-on-year.
As more and more people in the US, and internationally, spend time on Pinterest’s platform, the average revenue per user (ARPU) should also expand.
Shares cost around US$80 and are up around five-fold over the past year. However, it still has a market cap of only US$50 billion today compared to Facebook’s US$880 billion.
3. Unity Software
In the Covid-19 era, the importance of online gaming has become apparent. Behind the scenes of those in-game experiences is Unity Software Inc (NYSE: U).
The company provides the software for gaming developers to help create their fantasy worlds. In fact, Unity counts over 2.8 billion monthly active users (MAUs) – basically gamers who are playing in worlds that have been created using Unity’s software.
That’s an astounding number yet Unity is just getting started. It is also looking at expanding its fast-growing computer-aided design (CAD) business which can be used in everything from construction to building design.
Not only that but it’s also eyeing the emerging world of virtual reality (VR) and augmented reality (AR), both exciting and nascent industries that are in their infancies.
Having had an awesome run after going public last year, shares are actually over 40% below its all-time high.
Costing around US$100 per share, Unity is an interesting stock for younger investors to hold for the long term.
Disclaimer: ProsperUs Head of Content Tim Phillips owns shares Pinterest Inc and Unity Software Inc.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.