Invest in the best stocks under $100 with Robinhood as your online broker.
Do you think that you can’t start investing because you don’t have thousands of dollars in your bank account to spend right now? Think again. Every company needs to start somewhere — and for just $100 or less, you can own a portion of a company with high growth potential. That's why it's a good idea to know about the best stocks under $100.
This guide will introduce you to a few of Benzinga’s favorite companies with stock prices under $100 a share and brokers to choose from. The list of characteristics to look for when you consider which companies should go to your watchlist will also help. Yes, these assets are expensive, but you never know how far certain stocks can go.
12 Best Stocks Under $100
Let’s take a look at some of the best stocks you can invest in for under $100. The list here should not be construed as financial advice but as a statement of market conditions.
Investing in Stocks Under $100
When most people think about investing in the stock market, they imagine blue-chip corporations like Amazon.com and Apple. However, you don’t need to have thousands of dollars in the bank to get started investing. There are plenty of stocks under $100 that have the potential to grow and increase in value. If so, you may have an asset you can trade for value. Other times, you may have found an asset that will stagnate at that price.
When you buy a share of stock, you buy a small piece of a publicly traded company. Corporations offer shares of stock to gain capital for upcoming projects, pay off debt or expand into a new market. Many other entities buy into these companies, including hedge funds, traders across Wall Street and investment management companies.
Most corporations begin selling shares of stock with an initial public offering (IPO). After an IPO, a company’s stock can be bought and sold by investors each day the stock market is open. Many investors hold onto shares of stock for years.
You can earn a return on your investment when you buy stock in two ways.
The Stock Increases in Value
The primary way investors earn returns on their investments is by holding onto their stocks until they increase in value and meet a specific price target. Though it’s entirely possible that your investment will decrease in value, the stock market on average has a long history of increasing in value by 7% to 8% annually after accounting for inflation. You can earn current or future income, depending on when you sell.
The Stock Pays Out Dividends
A dividend is a small share of a company’s earnings that it pays out to investors in exchange for holding stock. Though not every company chooses to offer dividends, many do to encourage investors to buy and hold onto their shares of stock. You can plan for the future and aim to create a steady stream of income.
Yes, you can save money by investing in stocks with a price under $100, but you must also consider the growth potential of each new asset. Some stocks may not move past $100, but others will easily surpass that figure and more. But, which assets will rise to that level and which will stagnate? This is why you must keep an eye on your portfolio at all times.
How to Choose Online Brokers for Stocks Under $100
You can buy and sell stock through a stockbroker. A broker is a company or online exchange that allows common investors to buy and sell shares of stock, sometimes in exchange for a fee or commission. The broker that you choose can play a major role in the platform that you trade on and your overall return on your investments.
Some of the features you might want to consider before you open an account with a broker include:
Your Broker’s Tools and Platform
The broker you open an account with will provide you with a platform that you can use to place buy and sell orders for your trade ideas. If you’ve never invested before, you may want to choose a broker that caters to users opening their first brokerage account.
Fees and Commissions
Though many brokers now offer commission-free trading, you shouldn’t assume that your broker will provide you with services for free. A broker might charge you a fee per trade or an annual account maintenance fee. Be sure to check each broker’s pricing schedule and know your fees before you open an account.
Almost every broker will provide you with comprehensive access to the U.S. stock market. However, some brokers will also offer access to cryptocurrency trading, forex and international markets. If these are important for you, be sure to choose a broker that offers more market access so that you can easily get into other assets that will serve your portfolio or represent quite a lot of potential.
Some brokers require you to make a minimum investment when you open your brokerage account. If your broker has an account minimum, be sure that you can meet it before you apply for your account. If you only have a few dollars to invest, you’ll usually want to search for a broker that offers $0 account minimums.
Not sure where to begin your search for the perfect broker? Consider a few of Benzinga’s favorite options below so that you can align your broker with the things that you prefer to do with your portfolio. Plus, a quality broker can help you gather information and even offer insight into your investments.
Features to Look for in Stocks Under $100
While there is no guaranteed way to separate the winners from the losers, a few key characteristics matter when you’re investing in the stock market. Before you buy stock under $100, be sure to look for these features.
Trends in Growth
Publicly traded companies must publish earnings and net profit every quarter. Before you invest in a stock, take a look at the company’s earnings growth over time. If a company’s earnings seem to be increasing each quarter it can be a good sign that the company is doing something right.
Proportionate Debt-to-Income Ratio
Almost every company of every size carries some form of debt. What’s important when comparing companies is that the debt of the stock you’re buying is proportionate to its income. You can calculate a company’s debt-to-income ratio by dividing the company’s total liabilities by the total amount of shareholders’ equity.
What’s a good debt-to-income ratio? The answer might vary depending on the industry you’re investing in. For example, the construction industry relies heavily on debt funding, which typically means a higher debt-to-income ratio. Compare the debt-to-income ratio of the company you’re thinking about investing in other businesses so that you see how the industry performs.
Dividend History and Yield
Not all companies pay dividends to their shareholders. If a company offers a dividend, it can be an indicator of financial health — especially if the company has paid dividends consistently, year after year. You can plan for future income, but you can also plan for retirement if you believe the asset will hold its value or grow in the future.
Be wary of dividend stocks with high dividend yields. A dividend yield is calculated by dividing the annual dividend paid out by the company by the current price of a share of the company’s stock. Companies that increase dividends may be desperate for investors or are headed for future financial trouble because they aren’t investing enough money in maintenance and growth.
As a general rule, you should be hesitant to invest in a company that has a dividend yield above 14%. This dividend level usually cannot be sustained in the long term, and it may indicate that the company will need to issue a cut to its dividends in the near future as the price of the stock declines.
Future Plans and Strength
The stock market is a volatile entity, and every corporation is likely to lose value at some point or another whether it is a value or growth stock. What matters is the company’s long-term plans and projections. Take a look at the history of each company you’re thinking about investing in and consider the long-term trends in its stock price and earnings.
Investing With Wisdom at Any Price Point
Investing isn’t only for people who have millions of dollars to spend — there are plenty of amazing companies with high potential for growth trading at less than $100 per share. Even large investors and investment firms direct a percentage of their capital to smaller companies.
If you do want to invest in larger mega-cap options, you may want to choose a broker that offers the ability to purchase fractional shares of stock. These brokers allow you to invest in dollars instead of shares — which means that if you only have $10 to invest, you can still purchase a fraction of a share of Apple, Amazon or Facebook stock.
Contact one of Benzinga’s recommended online brokers to open your account and buy stocks today. You may also return to Benzinga to research these assets or the brokers with which you would like to invest, keeping in mind that you should only invest money which you are prepared to lose. Why? There’s no way to know if the markets will pivot under your feet and reduce the value of your portfolio.
Read more about the best stocks on the market:
- Best Penny Stocks
- Best Stocks Under $5
- Best Stocks Under $10
- Best Stocks Under $20
- Best Stocks Under $50
- Best Gold Stocks
- Best Oil Stocks
- Best Tech Stocks
Select Stocks Strategically
Investing in stocks under $100 is a good way to start building an investment portfolio without needing a lot of money. It's important to research and analyze each company before investing, looking for positive earnings trends, proportionate debt-to-income ratios, a history of dividends and future plans. Choose a reputable online broker that aligns with your investment goals and offers the necessary tools and market access. With careful consideration, investing in stocks under $100 can help grow wealth over time.
Frequently Asked Questions
Can you invest without a lot of money?
Yes, you can begin investing by looking at lower-priced stocks such as those under $100.
How can I invest with only $10?
If you don’t have a lot of money, look into investing in fractional shares instead of going immediately to penny stocks or the risky cryptocurrency market. With these fractional shares, you can buy a piece of a good company.
What are the best stocks under $100?
There are various methods to identify the buying price target for a stock, including chart patterns, technical analysis indicators and fundamental factors. Careful analysis and research are necessary to get an accurate stock forecast as there is no single method that works for all stocks.
Best Stocks Under $100 Methodology
Benzinga analyzed a range of stocks to determine the best stocks under $100 that wouldn't break your bank account. They considered factors such as stock price, growth potential, debt-to-income ratio, dividend history and yield and future plans and strength. The list of stocks identified has the potential for growth and is worth considering for investment, but it is important to conduct thorough research and consider personal investment goals and risk tolerance.