Despite what the headlines make it look like, the stock market has not acted all that healthy. In reality, just a handful of stocks are driving the bulk of the gains in the indices. On the one hand, it’s not healthy price action. On the other hand, it creates opportunities in other stocks. So what are some of the best stocks to buy with $500 in June?
I am looking for names that have avoided the surge in AI stocks. Why? Because many of these names could fall 20% to 40% in the blink of an eye — and I’m even bullish on artificial intelligence!
Instead, I want to pick out a few affordable stocks to buy in June. Specifically, I am looking for names that, while they may falter a bit in the present, will provide excellent long-term gains.
So what are some high-return stocks for even a $500 investment? Let’s look.
Best Stocks to Buy With $500: Target (TGT)
Target (NYSE:TGT) is in a state of free-fall right now. The stock has declined in nine straight sessions, falling almost 20%. It’s a tremendous decline for what has become a staple in the retail sector.
Shares are now down more than 51% from the all-time high of roughly $269, which was hit in November 2021. Here’s the thing. Investors who buy today are not guaranteed to experience large losses in the short or intermediate term. Target can continue lower, and if we enter a painful recession, the stock will perform even worse.
Here’s the flip side. Anyone who buys today and holds through the turbulence will see a return of at least 100% (plus the dividends) should Target stock, a premier retailer, ever hit all-time highs.
Speaking of the dividend, shares currently yield 3.3%. Even better? Last June, Target raised its dividend by a whopping 20%, marking its 51st consecutive annual dividend increase.
High Return Stocks for a $500 Investment: Disney (DIS)
Disney (NYSE:DIS) reminds me a lot of Target. It’s a long-standing firm atop its industry but has been in considerable pain. Shares are down slightly more than Target, though, off 56.5% from the all-time high.
In fact, if the stock falls just 10% from current levels, then Disney shares will retest the Covid low.
Disney is not navigating an easy environment. Aside from all of the macro headwinds and worries of a recession, the firm is navigating a large restructuring as it cuts costs and reduces its headcount. Disney even had to bring back its former CEO, Bob Iger, to run the ship.
While it’s great to have Iger back, investor enthusiasm has waned. A disappointing earnings report was not received well by investors. While the firm reported over 230 million paying streaming subscribers last quarter, the segment is still losing money and was down more than 3 million users from its prior quarter.
The stock has plenty of upside if you think Disney will eventually climb back atop the entertainment space.
Affordable Stocks to Buy in June: PayPal (PYPL)
Disney and Target are not straightforward propositions. On the one hand, they are doubling from current levels if and when they hit new highs. On the other hand, the trends have not been good, and a worsening economic situation will negatively impact these stocks. That said, that’s true for most stocks.
PayPal (NASDAQ:PYPL) is not an exception to this observation. However, its valuation has become quite compelling now that the stock has suffered a peak-to-trough decline of 81%. While the company has struggled, it’s not some flash-in-the-pan growth stock — many of which have experienced similar (or even better) performances from their highs.
As it stands, PayPal stock trades at just over 12 times earnings. That’s despite analysts calling for almost 20% earnings growth this year and 15% growth next year. Revenue is forecast to climb in the high-single-digits for both years too.
I don’t know where the low is, but at some point, this is a reasonable play. Some investors thinking on the speculative side may argue that PayPal is one of the best stocks to buy, with $500 this month.
On the date of publication, Bret Kenwell held a long position in PYPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.