10 Best Stocks for Beginners with Little Money According to Reddit
In this article, we discuss 10 best stocks for beginners with little money according to Reddit. You can skip our detailed analysis of the growing trend of retail investors and the overall stock market, and go directly to read 5 Best Stocks for Beginners with Little Money According to Reddit.
In the months and years following the pandemic, Reddit communities have played a significant role in shaping and impacting the stock market. People are increasingly turning to these online forums when they start investing instead of depending solely on expert opinions. Both new and experienced investors find value in these forums for gaining insights. According to the 2023 Digital Investor Survey by the Brunswick Group, 58% of investors representing banks, companies, or pension funds said they rely on Reddit for at least some of the information they use to make investment decisions. Additionally, 46% of these investors plan to use Reddit even more in 2023 compared to 2022.
The GameStop short squeeze in early 2021 significantly increased the popularity and visibility of retail investors. It brought attention to the fact that individual investors can collectively impact stock prices and challenge institutional investors and hedge funds. Brunswick’s analysts have also made remarks about the rising popularity of online forums:
“Institutional investors are encroaching on traditionally retail-oriented online spaces. This increased interest in retail investors could be a consequence of the financial fallout from popular ‘meme stocks’ like GameStop, AMC, and Bed Bath & Beyond as institutional investors look for ways to keep their pulse on the conversation among retail investors.”
In one of our previous articles on the subject, we mentioned Vanda Research’s report which revealed that individual investors have been putting in approximately $1.36 billion in the stock market each day. The report also pointed out that this surge in retail investors buying stocks is probably causing a short squeeze in small-cap stocks.
Another report by Bain & Company states that retail investors now hold half of the world's wealth, marking a significant increase in their influence. In response, companies are creating investment products to attract these retail investors, blurring the lines between retail and institutional investment. Additionally, retail investors are becoming more knowledgeable and doing their own research. A study by the Public investing platform found that around 63% of retail investors dedicated more time to researching stocks in February compared to the previous year.
Forums like Reddit can become more important for beginners with limited funds seeking investment advice. These platforms often provide a wealth of information, experiences, and insights from a diverse group of individuals, which can be particularly valuable when starting with limited capital. On subreddits like r/investing, r/wallstreetbets, and r/stocks, retail investors widely favor popular stocks such as Tesla, Inc. (NASDAQ:TSLA), Microsoft Corporation (NASDAQ:MSFT), and Apple Inc. (NASDAQ:AAPL). While these are solid investment choices, they may not be the best or most affordable options for beginners. For this reason, we have made a list of cheap beginner stocks to buy according to Reddit.
Photo by Mohamed Hadji on Unsplash
Our Methodology:
For this list, we extensively reviewed Reddit trading forums like r/investingforbeginnners, r/WallStreetBets, r/stocks, and r/trading, where retail investors actively discuss and share investment ideas. After conducting thorough research and analysis, we identified 20 stocks that are receiving significant attention on Reddit and have share prices below $60, as of September 13. These stocks can be good investment options for beginner investors with little funds because of their comparatively low share prices. From this list, we selected 1o stocks that had the highest number of hedge fund investors tracked by Insider Monkey as of Q2 2023.
10. Aurora Cannabis Inc. (NASDAQ:ACB)
Number of Hedge Fund Holders: 7
Share price as of September 13: $0.80
Aurora Cannabis Inc. (NASDAQ:ACB) is a Canadian cannabis company that specializes in the cultivation, production, and distribution of cannabis and cannabis-related products. According to the Reddit community, as more states in the US are legalizing cannabis, the industry has a lot of potential to grow, which would benefit the stocks as well. The stock is currently trading at $0.80 per share, which makes it one of the best cheap beginner stocks according to Reddit.
In its recently-announced Q1 2023 earnings, Aurora Cannabis Inc. (NASDAQ:ACB) reported a net revenue of C$75.1 million, which showed a nearly 50% growth from the same period last year. The rise in revenue compared to the previous period is primarily because the company's medical cannabis business is growing globally, and its plant propagation business achieved its highest-ever quarterly revenue. The company's cash position also remained as it had C$157.8 million available in cash and cash equivalents.
At the end of Q2 2023, 7 hedge funds tracked by Insider Monkey reported having stakes in Aurora Cannabis Inc. (NASDAQ:ACB), compared with 8 in the previous quarter. Among these hedge funds, D E Shaw was the company's leading stakeholder in Q2.
9. GameStop Corp. (NYSE:GME)
Number of Hedge Fund Holders: 10
Share price as of September 13: $17.81
GameStop Corp. (NYSE:GME) is an American video game and consumer electronics retail company. The stock has a loyal group of retail investors who held onto their shares even when the stock performed poorly last year. According to Redditors, the company has a strong cash position and a healthy balance sheet that would provide the stock some extra cushion in uncertain times. The community also lauded the company's recent quarterly earnings.
In the second quarter of 2023, GameStop Corp. (NYSE:GME) posted revenue of $1.16 billion, which not only grew by 1.8% on a year-over-year basis but also beat analysts' estimates by $20 million. The company ended the quarter with cash, cash equivalents, and marketable securities of roughly $1.2 billion. With a share price of $17.81, GME is one of the best cheap beginner stocks according to Reddit.
As of the close of Q2 2023, 10 hedge funds in Insider Monkey's database reported having stakes in GameStop Corp. (NYSE:GME), down from 15 in the previous quarter. The consolidated value of these stakes is over $60.4 million. With over 1.6 million shares, Citadel Investment Group was the company's leading stakeholder in Q2.
8. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 12
Share price as of September 13: $19.11
Lithium Americas Corp. (NYSE:LAC) is a resource exploration and development company that specializes in the mining and production of lithium, a critical element used in rechargeable batteries. The stock has been gaining the attention of the Reddit community when General Motors announced to invest $650 million to support the company's Nevada project earlier this year. In addition to this, the company's Caucharí-Olaroz project is expected to produce approximately 5,000 tonnes of lithium carbonate in 2023. LAC is currently traded at $19.11 per share, which makes it one of the best cheap beginner stocks according to Reddit.
At the end of June 2023, 12 hedge funds tracked by Insider Monkey held stakes in Lithium Americas Corp. (NYSE:LAC), compared with 14 a quarter earlier. The consolidated value of these stakes is over $75.3 million. Israel Englander's Millennium Management was the company's largest stakeholder in Q2.
7. AMC Entertainment Holdings, Inc. (NYSE:AMC)
Number of Hedge Fund Holders: 16
Share price as of September 13: $8.24
AMC Entertainment Holdings, Inc. (NYSE:AMC) is next on our list of cheap beginner stocks according to Reddit. It is the American movie theater chain and entertainment company that operates a vast network of movie theaters across the country. The stock became a focal point of discussion on Reddit's WallStreetBets forum in early 2021. Reddit users began buying AMC stock and options with the intention of creating a short squeeze. Some investors believe that the stock still has short-squeeze potential. AMC currently trades at a share price of $8.24.
In the second quarter of 2023, AMC Entertainment Holdings, Inc. (NYSE:AMC) reported revenue of $1.35 billion, up 15.6% from the same period last year. The company's net income for the quarter came in at $8.6 million.
The number of hedge funds tracked by Insider Monkey owning stakes in AMC Entertainment Holdings, Inc. (NYSE:AMC) stood at 16 in Q2 2023, which remained unchanged from the previous quarter. The collective value of these stakes is roughly $40 million.
6. Hostess Brands, Inc. (NASDAQ:TWNK)
Number of Hedge Fund Holders: 18
Share price as of September 13: $33.50
Hostess Brands, Inc. (NASDAQ:TWNK) is an American food company that specializes in producing and marketing a variety of snack cakes and baked goods. The company is known for its iconic brands and products.
According to Reddit, J.M. Smucker's acquisition of Hostess Brands, Inc. (NASDAQ:TWNK) for $5.6 billion, including debt, marks a significant merger between two major American snack manufacturers. This deal brings together the iconic brands and products of both companies, creating a larger and more diversified player in the snack industry. The stock currently trades at $33.50 per share and can be a cheap beginner stock to invest in. At the end of June 2023, 18 hedge funds tracked by Insider Monkey owned stakes in Hostess Brands, Inc. (NASDAQ:TWNK), up from 17 in the previous quarter. The collective value of these stakes is roughly $70 million. Among these hedge funds, GLG Partners was the company's leading stakeholder in Q2.
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Disclosure. None. 10 Best Stocks for Beginners with Little Money According to Reddit is originally published on Insider Monkey.
