Consider the best way to invest $1,000 for your situation.
If you have an extra $1,000 sitting in a savings or checking account, one of the best ways to earn a return on that money is to invest in the stock market. If you’re new to investing, buying a low-cost, diversified S&P 500 exchange-traded fund, such as the SPDR S&P 500 ETF Trust (ticker: SPY), is a relatively low-risk place to start. If you’d rather begin building your own stock portfolio from scratch, however, here are seven of the best blue-chip stocks to buy that have “buy” ratings from the Bank of America analyst team.
Microsoft Corp. (MSFT)
Microsoft is the world’s largest software company and is well known for its Windows operating system, Office professional software suite and Azure cloud services business. Analyst Brad Sills says Microsoft is positioned to resume double-digit revenue growth in the next three to five years, after its year-over-year growth slowed to just 1.9% in its fiscal year 2023 second quarter. Sills says continued adoption of Azure cloud infrastructure and Office 365 will be growth drivers for Microsoft, and he anticipates steady margin expansion in the long term. Bank of America has a “buy” rating and $300 price target for MSFT stock, which closed at $251.11 on March 2.
Alphabet is one of the world’s largest online search and advertising companies and is the parent company of Google and YouTube. Analyst Justin Post says Alphabet’s fourth-quarter numbers were soft and competitor Microsoft’s ChatGPT artificial intelligence investment has grabbed a lot of headlines in recent months. But Alphabet has been investing in AI for years, and it will likely be a long-term AI technology winner, Post says. In the near term, Alphabet is taking steps to manage costs and return excess cash flow to investors via buybacks. Bank of America has a “buy” rating and $125 price target for GOOGL stock, which closed at $92 on March 2.
Amazon.com Inc. (AMZN)
Amazon is the market leader in e-commerce and cloud services. Post says the company’s fourth-quarter performance was better than its headline numbers suggested because of one-time charges. Amazon Web Services’ revenue growth decelerated by 7% in the quarter, however, and Post says the cloud computing subsidiary is highly exposed to slowdowns in overall tech sector spending. He projects AWS revenue growth will slow to just 11% in 2023 but says the long-term bull thesis on cloud services is “bent and not broken.” Meanwhile, Amazon continues to gain retail sector market share. Bank of America has a “buy” rating and $135 price target for AMZN stock, which closed at $92.13 on March 2.
Nvidia Corp. (NVDA)
Nvidia designs and sells high-end graphics and video-processing chips used for desktop and gaming computers, workstations, and advanced servers and supercomputers. A fourth-quarter earnings beat has Nvidia shares up 59.5% this year through March 2, the best performance of any stock on this list. Analyst Vivek Arya says there are plenty of things to like about Nvidia as an investment, including its solid balance sheet, its capital returns and its exposure to large, high-growth markets such as AI, cloud computing, next-generation autos and online gaming. Bank of America has a “buy” rating and $275 price target for NVDA stock, which closed at $233.14 on March 2.
UnitedHealth Group Inc. (UNH)
UnitedHealth is the largest U.S. managed health care firm, providing health plans and health care services to a wide range of customers. UnitedHealth shares are down 9.9% this year as of March 2, making it the worst-performing stock on this list. Analyst Kevin Fischbeck says managed care organizations are particularly attractive investments during periods of macroeconomic uncertainty because they are immune to the negative effects of inflation, rising interest rates and a tight labor market. Fischbeck says UnitedHealth’s Optum business is a unique growth opportunity. Bank of America has a “buy” rating and $650 price target for UNH stock, which closed at $477.70 on March 2.
Exxon Mobil Corp. (XOM)
Exxon Mobil is the largest publicly traded U.S. integrated oil company. The oil and gas industry was one of the few stock market bright spots in 2022, and analyst Doug Leggate says Exxon’s capacity for growth sets it apart. Leggate says the company’s goal of doubling 2019 free cash flow by 2027 is achievable and calls Exxon Mobil the “only meaningful growth story of the global oil majors.” Exxon’s balance sheet has near-zero net debt, and Leggate projects at least $40 billion in 2023 free cash flow. Bank of America has a “buy” rating and $140 price target for XOM stock, which closed at $111.40 on March 2.
Visa Inc. (V)
Visa is a global credit card leader and owner of the world’s largest electronic payment network. Analyst Jason Kupferberg says Visa’s business model is recession resistant and it is exposed to the secular shift from cash and check payments to digital and card payments. In addition, he says the stock is reasonably valued at about 23 times forward earnings estimates. Visa has a strong track record of execution and a massive addressable market. In the near term, Kupferberg says a recovery in cross-border payments could be a growth driver. Bank of America has a “buy” rating and $260 price target for V stock, which closed at $219.06 on March 2.
7 best stocks to buy now with $1,000:
— Microsoft Corp. (MSFT)
— Amazon.com Inc. (AMZN)
— Nvidia Corp. (NVDA)
— UnitedHealth Group Inc. (UNH)
— Exxon Mobil Corp. (XOM)
— Visa Inc. (V)
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7 Best Stocks to Buy Now With $1,000 originally appeared on usnews.com
Update 03/03/23: This story was previously published at an earlier date and has been updated with new information.