Investing with a modest budget can yield positive results over time, and beginning with just $500 can be a good starting point. Additionally, investors who utilize investing a fixed amount of money at regular intervals, regardless of market conditions Dollar-Cost Averaging (DCA) typically involves making regular purchases within a budget of around $500.
Luckily, there are many affordable choices available in the market for investors working with such a budget. This will enable individuals to not just purchase shares in. Amazon ( AMZN 4.40% ) , Dutch Bros ( BROS 6.91% ) , and Realty Income ( O -0.75% ) …and also benefit from potentially profitable deals that could result in long-term gains. Now, let’s examine these three companies more closely.
1. Amazon
Investors may find it challenging to view Amazon as a good value for its price. Many investors have trouble seeing the attractiveness of stocks with a 40 price-to-earnings ratio. P/E) ratio as cheap.
On the contrary, some people may perceive this as inexpensive given that the stock is seldom traded at less than 50 times its earnings. market cap In the ballpark of $1.75 trillion, there are growth opportunities that are similar to those seen in much smaller companies.
Customers are most familiar with Amazon’s online sales platform, but this segment is probably the least lucrative. The primary source of revenue for the company is actually Amazon Web Services (AWS), its cloud computing division. income generated from regular business operations .
The company does not provide a detailed breakdown of the profits earned from its other operations. However, its subscription services, digital advertising, and third-party seller activities continue to show strong revenue growth in the double digits, which is a positive indicator for the performance of Amazon’s stock.
During the initial six months, there was an 11% increase in revenue to $291 billion. Additionally, controlling the rise in operating expenses resulted in a net income of $24 billion, showing a significant 141% growth compared to the previous period.
It is unlikely that Amazon will be able to maintain a three-digit increase in profits in the long run. However, the company’s rapidly expanding divisions and increasing earnings are expected to result in stock price appreciation in the future.
2. Dutch Bros
Dutch Bros has successfully carved out a place for itself in the rapidly expanding and fiercely competitive beverage industry. Their signature Dutch Classics, which are crafted from espresso and half and half, have played a key role in boosting the popularity of their drive-thru coffee outlets. In addition to this, Dutch Bros also entices customers with a variety of options such as teas, lemonades, energy drinks, and more.
In addition, it offers several unique benefits compared to. Starbucks Because it is a drive-thru, there are no expenses associated with maintaining indoor seating areas.
In addition, unlike Starbucks, it has not yet reached a point of oversaturation in the United States, indicating that there is still plenty of room for rapid expansion in the coming years. By June 30, it had 912 stores across 18 states, showing a growth of 158 stores in the last year.
The stores brought in $600 million in sales during the first half of 2024, showing a 34% increase compared to the same period in 2023. While Dutch Bros became profitable last year, its net earnings for the company were relatively low, reaching $19 million for the initial two quarters of 2024.
Therefore, The ratio of the price of a stock to its sales is known as the price-to-sales (P/S) ratio. Sales multiple could be a more precise indicator of worth compared to the price-to-earnings ratio. Presently, Dutch Bros is valued at 2.1 times its sales, which is lower than Starbucks, a company with slower growth, valued at 2.3 times its sales. This favorable comparison suggests promising prospects for Dutch Bros as it keeps growing.
3. Real estate investment trust known as Realty Income.
Realty Income specializes in renting out individual buildings to one tenant, usually popular businesses that cater to consumers. They operate as a real estate investment trust. REIT) It distributes a minimum of 90% of its operational net income as dividends to avoid being taxed on that income.
This has resulted in a monthly dividend that has consistently increased for the past three decades. Currently, it pays about $3.16 per share per year. dividend yield exceeding 5%.
Furthermore, these occupants are typically well-established companies. Walmart , Planet Fitness , and Wynn Resorts Realty Income has been able to maintain an occupancy rate of almost 99% across its around 15,500 properties by catering to a diverse range of clients.
Even though the stock faced challenges, the company’s revenue for the first six months of the year amounted to $2.6 billion, marking a 32% increase. The majority of this growth can be attributed to the acquisition of Spirit Realty, which was finalized during the year and expanded the company’s portfolio by approximately 15%.
However, a significant portion of its expansion occurred naturally, contributing to its enhancement. cash flow from operating activities The FFO income of a REIT, reflecting its available cash flow, rose to $1.7 billion, marking a 25% growth.
Despite making progress, the stock is currently trading at a multiple of approximately 15 times its FFO income. This valuation enables investors to purchase a increasing source of income at a fair cost.
