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If I had saved up £3,000, here are two stocks I’d buy. I think investors should consider them today.
Apple
One of the first ever stocks I bought was Apple (NASDAQ: AAPL). Over the years, I’ve slowly been adding to my position. I reckon it’s one of the highest-quality stocks I own and one I plan to hold for a very long time.
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There’s a lot to like about the business. Renowned investor Warren Buffett says we should buy companies where we understand the business model. With Apple, it’s pretty easy to see.
Around 20% of the world’s population owns an Apple product. That means it has an incredibly powerful market position. What’s more, it’s highly effective at keeping users in its ecosystem. I can’t remember the last time I didn’t own an iPhone!
There are risks with the business. Its exposure to China is one. Sales for the region have slowed recently. That’s an issue given the size of the market. I’ll be keeping a close eye on how its sales fare for the remainder of the year.
But I’m optimistic they’ll pick up again. And despite lagging its competitors in the space, Apple is finally making waves in artificial intelligence (AI).
In June it released the first version of Apple Intelligence, a range of features that will enhance AI capabilities on upcoming iPhones.
I’m excited to see how it will continue to develop in the growing space in the years ahead.
Marks and Spencer
I’m jumping over to the retail sector for my next pick. But sticking with Buffett’s theme of investing in businesses that are easy to understand, I think Marks and Spencer (LSE: MKS) would be a great shout were I new to the stock market.
One reason I say this is because of the stock’s valuation. It trades on a price-to-earnings ratio of 15.9.
It had experienced a decline. From a once-booming retail giant, it’s safe to say Marks fell out of fashion.
But under its new strategy — upgrading stores as well as enhancing its online presence — it has made a solid turnaround. So much so that it was recently promoted back to the FTSE 100, the UK’s leading index.
As a result of its success, earnings have soared in recent years. Last year, profits rose by 58% to £716.4m from £453.3m the year prior.
That’s not to say it hasn’t faced challenges. The ongoing cost-of-living crisis is one. We’re not out of the woods yet and factors such as inflation still pose a risk to Marks and Spencer. If it rises again, sales could fall. On top of that, the retail industry is also very competitive.
Nonetheless, we just saw the Bank of England make its first interest rate cut in four years, reducing the base rate from 5.25% to 5%. Market spectators are expecting more potential cuts this year, before multiple chops in 2025.
Lower interest rates will boost spending, which could lead to rising sales for the retail giant in the times ahead. That’s why I think it’s worth considering the stock now.
