The 3 Best Stocks to Invest $500 in Right Now
The bear has been ruthless, as stocks continue to grind lower. Eventually, though, the bear market will end and a new uptrend will begin. Since no one can accurately predict a bottom, even small investors should consider putting some money to work at today’s deflated prices. So, I’ve put together a list of the best stocks to invest $500 in.
I focused on companies with strong brands that will help them weather the current economic downturn. Additionally, the companies must be growing earnings and sales. Finally, all of these stocks have declined more than the broader market this year, which means they could see outsized moves to the upside as well.
If you have $500 to invest, you could take an equal-weighted approach, dividing the capital into thirds and investing an equal amount in each of the three names. Or you could buy an equal number of shares of each, which based on current prices, would be about four shares of each.
Whatever allocation strategy you choose, here are the best stocks to invest $500 in.
| AMD | Advanced Micro Devices | $61.47 |
| TTD | The Trade Desk | $57.84 |
| OLPX | Olaplex | $4.30 |
Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ:AMD) is a leading U.S. semiconductor maker. The chip sector has been hammered this year due to falling demand and continued supply chain snags. While Advanced Micro Devices seemed to succumb to these pressures later than some of its peers, shares have plummeted 57% so far in 2022.
In early October, the company warned investors it would miss guidance for the third quarter when it reports on Nov. 1. Management blamed the miss on significantly weaker PC demand, lowering its sales guidance to around $5.6 billion from a previous range of $6.5 billion to $6.9 billion.
While Advanced Micro Devices is feeling the pressure right now, keep in mind that the world runs on semiconductors. From graphics to gaming to data centers to supercomputing and so much more, AMD’s chips help power them all.
Bernstein analyst Stacy Rasgon just lowered his price target on AMD stock to $95 from $135, citing falling PC demand. Yet, keep in mind that his new target is still 55% above the current price. What’s more, in his note to clients, Rasgon wrote: “Unlike issues with their larger competitor [Intel (NASDAQ:INTC)], AMD’s problems do not appear to be structural. We suspect the company will continue to take material share in the [data center] segment as they take advantage of Intel’s stumbles… the long-term story still looks favorable.”
Admittedly, AMD stock could go lower from here. However, the company is growing revenue and earnings, and shares look undervalued at just 12.1 times forward earnings. To me, AMD looks like a great opportunity.
The Trade Desk (TTD)
Next up on my list of the best stocks to invest $500 in is The Trade Desk (NASDAQ:TTD), which operates an ad-buying platform that specializes in real-time programmatic marketing. This growth stock darling has seen its value cut in half since hitting an all-time high above $114 in November 2021. Yet, shares still trade well above their pre-pandemic levels.
TTD stock has rallied off its summer lows, including a 36% single-day jump following the release of the company’s second-quarter results. Revenue was up 35% year over year, while adjusted EBITDA rose 18%.
SeekingAlpha contributor Albert Lin notes that while the economic downtrend is likely to lead companies to lower their advertising budgets, The Trade Desk is benefitting from increasing competition among streaming companies and the move toward connected TVs.
Analysts expect The Trade Desk to grow revenue between 24% and 33% a year through 2025, while earnings per share are forecast to steadily increase during that time. That’s a train I want to be on when the bear market finally ends and the bull market begins.
The company is expected to report third-quarter results early next month. If it misses estimates, its possible shares could be punished. A retest of its 52-week low around $40 would make them a screaming deal. Yet, with a binary event like earnings, it’s equally possible shares see a post-earnings rally as they did in August.
The bottom line here is that TTD stock is a long-term growth play worthy of your investment dollars.
Olaplex (OLPX)
Olaplex (NASDAQ:OLPX) is by far the riskiest name on today’s list of the best stocks to invest $500 in. Shares of the hair care products manufacturer are down a whopping 85% year to date and are in penny stock territory.
This includes a 57% single-day plunge last week after management slashed its full-year guidance and COO Tiffany Walden resigned. Yet, even with its lowered forecast, the company is still predicting revenue growth of 18% in 2022 at the midpoint of its range and adjusted net income of $303 million to $307 million. Analsysts are predicting earnings per share will be 7.5% higher this year.
Olaplex is a speculative play, to be sure. It was ranked the hottest hair care brand in 2021 by shopping site Cosmetify and has a number of endorsements from celeberities. The company went public in September 2021 with a valuation of more than $14 billion. It’s been mostly downhill since then as investors soured on growth stocks and the company grappled with questions about how exactly it works and some critical reviews.
OLPX stock hit an all-time low of $3.80 this week. I’d love to wait for shares to trade in the $2 range before getting long, but we may have to settle for the $3 range. Currently trading at less than 10 times trailing earnings, I think this stock could be a long-term winner when investors become interested in growth stocks again.
On the date of publication, Bret Kenwell held a long position in TTD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
