Every stock investor has a risk tolerance and appetite that determines how much loss they’re willing to endure in the hopes of a potential gain. One of the mistakes many stock investors make is investing in stocks incompatible with their risk tolerance and appetite. When that happens, they usually end up losing their investment.
Knowing how to trade shares wisely is critical to earning the profit you wish to receive. One way to do that is by knowing first how much you can invest and how much you’re willing to lose. Indeed, acquiring stocks is one of the best investment types you can allocate for your funds if you want to grow them. However, it takes knowledge and strategies to earn enormous gains.
In this post, let’s look at some of the best stocks to acquire for every risk tolerance.
Conservative risk tolerance
If you have a conservative risk tolerance, you should acquire stocks with stable performance and provide steady gains. Here are some of the stocks you must consider.
1 – Walmart Inc. (WMT)
Walmart is an American company based in Bentonville, Arkansas. The company is known for its supermarkets, supercenters, and hypermarkets. Though the company’s headquarters is in America, Walmart has about 10,500 stores worldwide, with approximately 2.1 million associates globally.
During the end of the first quarter, Walmart was in the portfolios of 91 hedge funds with a total stake value of 5.7 billion dollars, according to Yahoo. Because their products and services are necessities in our daily lives, investing in them would provide a low risk of losses and a low risk of gaining massive returns because it’s a stable investment.
2 – The Home Depot Inc. (HD)
Another stock investment that is ideal for conservative investors is Home Depot shares. Home Depot is an American retail company offering products and services for home improvement. Its headquarters is in Atlanta, Georgia, with approximately 2,322 stores worldwide.
At the end of the first quarter, Home Depot had 65 hedge funds holding their stakes, with a total stake value of 2.1 billion dollars. Because of its installation services for various home issues and needs, the demand for the company is stable. Madison Investments even commended and recognised Home Depot in its second quarter 2023 newsletter.
Moderate risk tolerance
If you have a moderate risk tolerance, you’re more open to taking risks and balancing your investments between risky and safe asset classes. Here are some stocks you can consider if you fall under this category.
1 – Enphase Energy Inc. (ENPH)
Enphase Energy Inc. is an American energy company famous for developing and manufacturing micro-inverters, battery energy storage, and EV charging stations. It’s one of the leaders in the solar energy market, providing many with materials for better energy sources.
Over the past years, more people are opting for cleaner energy sources like solar. And since the rate of global warming and climate change are continuously becoming more prominent, companies are now slowly taking action to embrace better energy sources. According to U.S. News, Enphase is projecting a double-digit growth this fiscal year. The stock performance of Enphase is expected to grow even more in 2024, making it an investment that may be risky but will surely provide enormous gains.
2 – Tesla Inc. (TSLA)
Tesla is an American multinational clean energy company founded by Elon Musk. The company is famous for its electric vehicles, stationary battery energy storage devices, solar panels, and other products. The company is part of the best stocks to acquire for investors with a moderate risk appetite because many have different opinions regarding the company–and yet, its data and performance continuously grow despite those.
It’s an ideal stock to acquire because its shares in the last five years showed a massive increase. Its data and plans show a bright future for its investors and continue to move towards a positive momentum.
Aggressive risk appetite
If your risk appetite is aggressive, you’re willing to invest a massive sum of money for potential better gains. If this is your appetite, here are stocks you may want to consider.
1 – Unity Software Inc. (U)
Unity Software is an American video game software company based in San Francisco, famous for its interactive mobile, tablets, consoles, and other virtual reality games. Many developers, artists, and designers work in the company to bring products and services to many industries, including gaming, retail, film, automotive, construction, and more.
Unity Software’s annual revenue is estimated at 1807.69 million dollars, making it a company with an above-average performance. But even though its revenue is impeccable, its debt-to-equity ratio and operating margins are below the average range. That makes it a great investment for investors willing to invest a large sum of money with the possibility of earning bigger or losing it all.
2 – Farfetch (FTCH)
Farfetch is an e-commerce company that sells luxury fashion and beauty products from London. It offers luxury items from beloved fashion brands that you can order online. Yahoo Finance says that the luxury goods market could grow at a compound annual rate of 5.4% through 2030. When that happens, the company could hit 369.8 billion dollars.
The market recognises Farfetch because of the immense influence of social media on how millennials and the younger generation view luxury goods. But then again, this trend could change instantly, making it an aggressive stock investment.
Choosing a stock that suits your risk tolerance and appetite is the key to mitigating losses.
Becoming successful in your stock acquisition will be easier when you know your risk tolerance and appetite. Knowing your risk tolerance and appetite is knowing how much you’re willing to invest and lose for a company’s share. With those, you can find a company more likely to give you potential gains and mitigate unnecessary losses you can never earn back again.
Written by Bianca Banda
