Best Stocks Under $100 Right Now • Benzinga

Do you think that you can’t start investing because you don’t have thousands of dollars 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 our favorite companies with stock prices under $100 a share. We’ll also introduce you to a few of Benzinga’s favorite brokers and share a list of characteristics to look for when you consider which companies should go to your watchlist or, potentially, worth the investment. Yes, these assets are expensive, but you never know how far certain stocks can go, shattering glass ceilings at every turn.

When most people think about investing in the stock market, they imagine million-dollar 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 major 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 in order to gain capital for upcoming projects, pay off debt, or expand into a new market. At the same time, there are many other entities buying into these companies like hedge funds, traders across Wall Street, investment management companies and more.

Most corporations begin selling shares of stock with an “initial public offering” or “IPO” for short. 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 on end, building something of a retirement account (or a portfolio that can be used for retirement.)

There are 2 ways that you can earn a return on your investment when you buy stock:

• 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. 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. Here, you can guarantee 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. These aren’t value stocks, but they do pay you back. Here, you can plan for the future and 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.

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. If you’ve never invested before, you may want to choose a broker that caters to users opening their 1st 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.
• Market access. Almost every broker will provide you with comprehensive access to the US 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.
• Account minimums. 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.

While there is no guaranteed way to separate the winners from the losers, there are a few key characteristics to look for 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 profit every quarter. Before you invest in a stock, take a look at the company’s earnings over time. If a company’s earnings seem to be increasing each quarter (even by a small margin) is 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. Very few companies are required to pay out dividends to their shareholders. This means that if a company offers a dividend, it can be an indicator of financial health—especially if the company has paid out its dividends consistently, year after year. Yes, 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 companies with high dividend yield. A dividend yield is calculated by dividing the annual dividend paid out by the company with the current price of a share of the company’s stock. Companies that increase dividends are often 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 any 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 will lose value at some point or another. 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. 

As you can see, 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 investing firms often direct a percentage of their capital to smaller companies.

If you do want to invest in a larger mega cap option, 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 at any time 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 or not.