You don’t need deep pockets to start investing or to add to your current positions. Many brokers are now offering fractional stock investments, making it easier than ever to invest small sums of money.
If you’re looking for some smart stocks that have the potential to maximize $200 in earnings potential, then think about what Apple (NASDAQ:AAPL), Costco Wholesale (NASDAQ: COST), and Ordinary Holdings (NASDAQ:UPST) have to offer.
Apple: This tech giant still has room for growth
Some investors are tempted to ignore Apple, believing the company is past its prime. But these investors are missing a few key ingredients that make Apple a very smart stock to invest $200 in.
First, let’s look at the company’s fantastic growth from its services business. Apple’s services include everything from sales in its App Store to its premium subscriptions (Apple One, Apple News+, AppleTV+ Apple Music, etc.), and business is currently booming. In fiscal 2021, Apple’s services revenue grew 27% year over year. Equally impressive is the fact that this business has gross margins of around 70%.
As impressive as the company’s services growth has been, it’s not Apple’s only growth opportunity. The company has been rumored to be building its own augmented reality (AR) device.
This pursuit could end up being very lucrative as the tech world begins to turn its attention to the metaverse, a digital world where people can play things like play games, shop, and attend virtual events via digital avatars. Some estimates put Apple’s AR device shipments at 22 million by 2030, with the potential for the company’s extended reality devices to account for up to 20% of the company’s sales in less than 20 years.
All of this suggests that $200 in Apple’s stock could be invested, and could be very well spent for years to come.
Costco: It’s going well no matter what’s happening with the economy
Maybe tech stocks aren’t your thing. I get it. Keeping up with the latest technology trends can be a lot of work. If that’s the case for you, then Costco stock could be interesting.
Costco is a warehouse-style retailer that makes some of its money selling a wide range of products at a discounted price, but it makes most of its money from selling annual memberships to individuals and businesses for the privilege of shopping in its stores. Membership reached 61.7 million at the end of 2021 – 13% more than two years ago. The company’s overall membership growth has been a boon to Costco’s bottom line, with net income up 25% in fiscal 2021.
It also appears that Costco is on track to sustain this trend in membership growth. Costco added an additional 800,000 members in the most recent quarter (reported December 9).
Growing members is one thing, but for Costco to really make money from its membership, it needs to make sure those members stay Come back Year for year. The good news is that Costco’s renewal rate in the US and Canada was a very impressive 91.6% last quarter.
Investors should also keep in mind that Costo is one of those unique companies that has the opportunity to do well no matter what happens to the economy. When things are going well, the company has many great items to offer to its customers. And when the economy is bad, many of its members turn to the wholesaler to find cheap deals on household products and groceries.
All of this has made Costco a hassle-free investment for many people. For that reason, investing a few hundred dollars in Costco stock could be a wise move.
Upstart Holdings has a huge market to grow into
The other stocks on this list are more stable investments, but if you really want that $200 to potentially grow as fast as possible, then consider investing in a growth stock like Upstart. If you’re unfamiliar with Upstart, this fast-growing company uses artificial intelligence (AI) to help customers connect with lenders for personal loans and auto-refinance loans.
An AI-powered lender may sound strange at first, but the company is successfully tapping into a few very big markets. Upstart’s management estimates that the company’s total addressable market is $81 billion for personal loans and a staggering $672 billion for auto loans.
To capitalize on these tremendous opportunities, Upstart’s AI looks beyond traditional data points to match people with lenders to help more customers obtain credit while reducing credit risk for banks. The company says it has 75% fewer defaults at the same approval rates as major US banks.
Upstart makes money primarily from banks, which pay it referral and lending fees. As a result, 92% of its revenue comes from institutions, a very stable source of revenue.
The company has been a smashing success so far, with revenue up 250% year over year and net income up 201% in its most recent quarter.
You should be aware that investing your $200 in Upstart will likely come with an extra dose of stock price volatility compared to buying Apple or Costco stock, but it also has the potential to grow that sum of money much faster.
This article represents the opinion of the author, who may disagree with the “official” endorsement position of a Motley Fool premium advisory service. We are colourful! Challenging an investment thesis — including one of our own — helps us all think critically about investing and make decisions that help us be smarter, happier, and wealthier.