Investing $5,000 in the stock market can be a significant amount of money if you keep it invested for the very long haul. Suppose you find a good growth stock that rises by an average of 15% over a period of 30 years. In that case, your $5,000 investment would grow to be worth more than $330,000.
By no means is every investment going to deliver those types of returns. But it’s an important reminder that finding a good growth stock and piling some money into it can lead to some significant gains for long-term investors; it isn’t just about finding which hot stock to buy right now that has the potential to double your money within a short time frame. For truly large, life-changing gains, you’ll want to invest for the long haul.
And one way to potentially maximize your long-run returns is by targeting stocks that are cheap and that you can buy at steep discounts right now. Three stocks you may want to consider investing $5,000 or more in today are Pfizer (NYSE: PFE), Cisco Systems (NASDAQ: CSCO), and Baidu (NASDAQ: BIDU).
1. Pfizer
One of the best deals you can find in healthcare today is Pfizer. The stock offers a mouthwatering yield of 5.7%, and it’s also trading at less than 11 times its estimated future earnings. Investors have been bearish on the stock since it’s now struggling to grow its revenue as the revenue from its COVID vaccine and pill have been declining sharply. The company is also facing multiple patent cliffs in the years ahead for top drugs such as Eliquis, Vyndaqel, and others.
It’s a challenging road for Pfizer to be on right now, but that’s why the company has been aggressively pursuing acquisitions in recent years — to bolster its pipeline and put itself in a great place to get back to growing its operations. Its purchase of Seagen last year was a key piece of that strategy as getting deeper into cancer drugs, and, specifically, antibody-drug conjugates which are more targeted and potentially more effective treatments for patients, can be key to its long-term growth.
Pfizer is still a business that will bring in around $60 billion in revenue this year. It’s up a modest 2% since January, but in the long run it can have much more room to grow, especially as the company launches new products and continues to innovate. Overall, it’s still a fairly safe stock to invest in for the long haul, and its high dividend yield only sweetens the deal.
2. Cisco
Although the growing popularity of artificial intelligence (AI) is fueling the growth behind many tech stocks this year, Cisco doesn’t fall into that category. Its shares are down 4% this year as the company has been struggling to grow its top line. The stock is trading at a forward price-to-earnings (P/E) multiple of 14, which could prove to be dirt cheap given how much room there may be for the business to expand in the future.
Cisco’s products help businesses stay connected to the internet safely, and its infrastructure is critical in offices all over the world. Its acquisition of cybersecurity company Splunk earlier this year will also better position Cisco to help companies actively manage and prevent threats.
It’s easy to be bearish on Cisco’s stock as its revenue declined by 6% in its most recent fiscal year (ended July 27). But forward-thinking investors know that while companies are loading up on AI chips and software-related opportunities today, it will be only a matter of time before there’s also a growing need to upgrade routers, networking devices, and other key pieces of IT infrastructure — and that’s when Cisco will start to see a benefit from the AI revolution.
Meanwhile, the stock pays a nice 3.28% yield, which should please investors. In the long run, this can be a fairly safe tech stock to own given Cisco’s strong brand.
3. Baidu
There’s some heightened risk investing in Chinese stocks given the potential for geopolitical issues to impact growth prospects of those companies and for the Chinese government to impose heavy-handed regulations. And that’s a big part of the reason why Chinese tech company Baidu trades at an incredibly low forward P/E of less than 8. The stock is also valued below its book value, at a price-to-book multiple of just 0.80.
Baidu is often seen as the Chinese version of Alphabet, as it also runs a popular search engine and has a broad business that includes cloud solutions and other segments. The company even has an AI chatbot, Ernie, which has more than 200 million users.
Baidu has struggled to grow of late, and with the Chinese economy not looking particularly strong right now, it’s understandable why investors may not be eager to pile money into the stock. But if you’re investing for the long haul, adding the stock to your portfolio now, while investors are bearish on Baidu, could set you up for some tremendous returns given the potential growth opportunities that lay ahead for the company in China.
There’s some risk with Baidu, but the upside could also be significant.
Should you invest $1,000 in Pfizer right now?
Before you buy stock in Pfizer, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pfizer wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $730,103!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 9, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Baidu, Cisco Systems, and Pfizer. The Motley Fool has a disclosure policy.
Got $5,000? 3 Dirt Cheap Stocks to Buy Right Now was originally published by The Motley Fool
