Investors who are just starting out may not have a lot of cash to put into the stock market at the moment. Inflation continues to make finances difficult for many households, and finding money to invest may not be a priority for some. But astute readers know the importance of getting started investing.
The good news is that many brokerages are easy to get started with even $100. Some allow you to buy fractional shares, which could be useful these days when it seems increasingly difficult to find stocks trading for less than $100 a share. Still, there’s something to be said about owning a full stake in a company’s stock. You’ll feel like a real shareholder.
To get you started, here are three easy stocks to buy right now for under $100.
Image source: Getty Images.
1.Paypal
PayPal (PYPL 0.38%) has seen a surge in business during the onset of the COVID-19 pandemic. However, the company faces some headwinds for further growth as consumer behavior normalizes.
In particular, branded checkout, which involves clicking a PayPal button on an e-commerce site instead of entering credit card details, has seen very slow growth. Total payments through branded checkout services increased only 6% year-over-year in the second quarter. This is notable because branded checkout profits are much higher than unbranded card processing, which currently accounts for the majority of PayPal’s total payment processing business.
But the impact of branded checkout delays on PayPal’s stock price may be overstated. Mizuho analyst Dan Dreb points out that only a few large merchants have grown sales faster than PayPal’s branded checkout, and that PayPal still captures a large share of sales. Suggests.
Additionally, PayPal has the built-in advantage of operating a two-sided network of sellers and consumers. Consumers trust PayPal and find it convenient, which draws merchants to the service. Customers who use PayPal consistently have higher checkout rates than customers who don’t use PayPal, which directly impacts sellers’ revenue. This should provide long-term sustainability even as competition intensifies.
The stock currently trades at about $81, less than 17 times forward earnings. With its strong position in the ever-growing e-commerce market, it is likely to see significant revenue growth over the long term. The network it has built should help protect its profits and at least ensure commensurate revenue growth going forward. Therefore, the current price is a great bargain.
2. Carmax
CarMax (KMX -0.80%) has faced a tough environment in recent years as interest rates have risen and remained high. Car dealers have had to contend with the fact that inflation and rising car loan interest rates are making it harder to afford new (or used) cars.
There are some signs that the company is starting to recover. Same-store sales increased 4.3% year-over-year last quarter, the highest growth since 2022. This was offset by a 4.6% decline in average selling prices. Importantly for investors, gross profit per vehicle has remained stable despite the price decline, which means higher gross profit margins. Gross margins contracted from 2021 to 2023 due to high acquisition costs, but continued recovery is encouraging.
CarMax’s financing arm is also facing a tough environment. An increase in loan loss provisions weighed on net income. As a result, profits reported by CarMax Auto Finance (CAF) decreased 14.4% in the last quarter. Management noted that this is an industry-wide challenge, but given that subprime lending does not represent a significant portion of CAF’s business, actual performance may lead to improved future reported earnings. There is.
Despite new challengers entering the market, CarMax’s business model has proven difficult to replicate. Challengers are more likely to gain share from traditional dealers because consumers often prefer a customer-friendly approach of simple pricing. As such, CarMax should be able to steadily grow its revenue over the long term, with gross margins returning to pre-pandemic levels over time as supply returns to normal.
Analysts expect a strong rebound in earnings next year, but the stock is trading at just 19 times consensus 2026 earnings at its current price of about $72. Investors should expect slow and steady earnings growth over the next year and beyond, but the price still looks very attractive.
3. Roku
Roku (ROKU 1.66%) is the leading connected TV platform in the US, accounting for 47% of time spent streaming, more than three times as much as its next largest competitor. It is also the number one selling TV operating system in Mexico and Canada. And engagement on the platform has only increased, with a 20% year-over-year increase quarter over quarter.
However, while Roku strives to keep device prices low in order to maximize the scale of its business, it feels that operating profits are being squeezed amid a difficult advertising environment. As a result, the business went from a net profit of $242 million in 2021 to a net loss of $710 million in 2023.
However, Roku appears to be turning a corner. Net loss has improved in 2024, and its core user metrics are strong. Last quarter, we added 2 million new users and increased engagement per household. Monetization is flat compared to last year, but it’s only a matter of time before it starts growing again. Management expects pivotal platform revenue growth to accelerate in 2025 as advertising demand recovers and new products expand ad inventory.
Roku’s long-term outlook remains solid as viewing time increasingly shifts from linear TV to streaming. Media companies are making deals to drive more users to their streaming services and give them more control over the user experience, audience data, and advertising. But Roku, with 47% of the market, is a key partner in all of this. Roku’s share should grow larger and larger over time as the pie grows.
Roku’s stock currently trades around $75, valuing the company at less than three times sales. This is at the lower end of historical multiples, despite expectations for strong sales acceleration and clear progress towards becoming massively profitable again.
