New to the stock market? Here are 2 of the best shares to consider buying

Starting out in the stock market can be confusing. Here, this Fool explains his strategy and picks out two shares he’d consider buying.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Smart young brown businesswoman working from home on a laptop

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investing in the stock market can be daunting. Often, investors don’t know where to start.

I was in a similar position when I first started. Nowadays, there’s an abundance of noise surrounding the markets, with many promoting get-rich-quick schemes through methods such as day trading.

I tend to ignore that. I’ve settled on buying high-quality businesses that I think have the potential to deliver long-term growth. To keep it as simple as possible, I also target companies where I can easily understand the business models and how they make money. That’s a key strategy used by billionaire investor Warren Buffett.

Should you invest £1,000 in Tesla right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tesla made the list?

See the 6 stocks

If I were starting out again, here are two stocks I’d consider buying, if I had the cash.

GSK

The first is GSK (LSE: GSK). It’s a pharmaceutical giant that delivers over 1.5m doses of its vaccines every day. The stock’s got off to a hot start in 2024, rising 20%.

Created with Highcharts 11.4.3GSK PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

What I most like about GSK is the defensive nature of the stock. By that, I mean it offers investors, to a certain extent, protection against tough economic conditions.

That’s because there’ll be consistent demand for its products. Even in periods of economic downturn, like we are in now, people still need to buy medicines and treatments. We saw this in Q1 when its sales jumped 10% compared to last year.

I further like GSK shares because they offer a dividend yield. Paying a dividend is a form of profit-sharing companies use to reward shareholders. Right now, the stock yields 3.3%. That’s below the FTSE 100 average (3.9%). However, it’s predicted to rise to 4%.

As is the case with all stocks, investing in GSK comes with risks. Pharmaceutical companies have to spend millions to bring drugs or treatments to the market and things such as R&D can be costly.

But trading on a price-to-earnings (P/E) ratio of 16.2, I think GSK shares look fairly priced today.

Burberry

Another stock I’d consider is Burberry (LSE: BRBY). The British luxury fashion house needs little introduction. Unlike GSK, Burberry’s struggled so far in 2024. Year to date, its share price has fallen 18%.

Created with Highcharts 11.4.3Burberry Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

But now trading on a P/E ratio of 10, I think the stock looks like decent value for money. That’s way below its long-term historical average of closer to 20.

Unlike GSK, Burberry’s cyclical. This means its performance can be tied closely to the economy. As such, right now the biggest threat to Burberry is a slowdown in spending.

The business has issued two profit warnings in recent times as racing inflation and high interest rates have curbed spending habits. In the months to come, this will likely continue to be an issue.

But as rates are cut, we should begin to see spending pick up again. What’s more, the business also stands in good stead to capitalise on growing wealth in Asia.

Burberry shares boast an impressive 5.5% yield. That means I can collect some passive income while I wait for its share price to recover. I suspect this may take time but, at its current price, I see long-term value.

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Burberry Group Plc and GSK. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

5 passive income techniques of stock market millionaires

Christopher Ruane details a handful of approaches many successful stock market investors use to grow their passive income streams.

Read more »

Aston Martin DBX - rear pic of trunk
Investing Articles

Down 42% in a year, here’s why Aston Martin shares could keep falling

Aston Martin shares have destroyed vast amounts of shareholder value since the company listed in 2018. Are they now a…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

FTSE shares: a once in a blue moon chance to get rich?

Christopher Ruane explains why he thinks hunting for blue-chip FTSE bargains in the current market could help an investor build…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

4 stocks Fools have bought for growth and dividends

Sometimes, an investor doesn’t have to make the choice between buying a growth stock or dividend shares! Some investments offer…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

Is there no limit to how high Rolls-Royce shares might go?

Christopher Ruane sees some reasons Rolls-Royce shares could continue pushing upwards. But is he persuaded enough about the potential value…

Read more »

Businessman hand flipping wooden block cube from 2024 to 2025 on coins
Investing Articles

How much could £20k in a Stocks and Shares ISA be worth in 2030?

UK investors have enjoyed spectacular returns in their Stocks and Shares ISA's over the past five years. Would could the…

Read more »

Passive and Active: text from letters of the wooden alphabet on a green chalk board
Investing Articles

Is the FTSE 100 good for passive income?

Our writer considers whether investing in the UK’s largest listed companies could help generate generous levels of passive income.

Read more »

piggy bank, searching with binoculars
Investing Articles

Here’s the growth forecasts for International Consolidated Airlines (IAG) shares through to 2028!

Shares of International Consolidated Airlines (LSE: IAG) have risen following a strong set of first-quarter financials last week. Is the…

Read more »