If you have $1,500 to invest, you have many options for places to invest it. One good option would be to invest it in index funds, which are among the least risky stock investments you can make. Index funds reduce your risk by “spreading your eggs across many baskets,” thereby limiting your exposure to any one potential corporate catastrophe. They also tend to deliver good returns over time.
That doesn’t mean that investing in individual stocks is pointless. To the contrary, if you want to have any chance at outperforming the index without using leverage, individual stocks are practically mandatory. In this article, I will explore three individual stocks that you could invest $1,500 into. Of course, you should always bear in mind the importance of diversification; the Motley Fool generally recommends 25 stocks minimum. The three in this article could be good additions to a portfolio, but do not constitute an adequately diversified portfolio in themselves.
Suncor Energy
Suncor Energy Inc (TSX:SU) is a TSX energy stock that has a 4.35% dividend yield. The stock has done well over the last year, rising 13.6%.
Suncor is well known throughout Canada. It operates the popular gas station chain, Petro Canada. It also has some business exporting petroleum products to the United States.
One thing Suncor has going for it right now is a very cheap valuation. At today’s prices, Suncor trades at:
- 5.6 times earnings
- 1.1 times sales
- 1.6 times book value
- 4 times operating cash flow
This stock is very cheap, going by last year’s earnings anyway. Oil prices aren’t as high now as they were for most of 2022, so Suncor’s 2023 earnings are likely to decline somewhat. However, when you look at Suncor’s aggressive debt repayment, it’s possible that its earnings won’t decline as much as oil prices would predict.
Royal Bank
Royal Bank of Canada (TSX:RY) is a great Canadian bank stock. The company is about 170 years old, making it the second oldest bank in Canada. Canadian banks are doing well this year thanks to the bank of Canada’s interest rate hikes. In its most recent quarter, RY delivered a 4% increase in adjusted earnings. Its GAAP earnings (earnings including non-recurring and irregular items calculated by official accounting rules), went down 19%, but that was mainly due to some tax changes and the Canada Recovery Dividend. On the whole, looking at the factors that are likely to recur into the future, Royal Bank put a half-decent quarter behind it. Nevertheless, the stock is pretty cheap, trading at just 11.6 times earnings and sporting a 4% dividend yield. Not a bad value if you ask me.
Alimentation Couche-Tard
Alimentation Couche-Tard Inc (TSX:ATD) is a Canadian convenience store company. The retailer has significantly expanded over the years. It brought the Circle K chain to Canada by buying it from ConocoPhillips in the 2000s. Later, ATD expanded Circle K by buying out Irving gas stations. Today, ATD makes money off of fuel sales, as well as sales of chips, cigarettes, lottery tickets, and other such things inside of its stores. It got a big boost in fuel sales in 2022 thanks to the high oil prices that prevailed that year. It should do reasonably well this year, though maybe not as good as last year.
