Written by MarketBeast Staff
June 1, 2021
Graduations are often seen as an ending. But they also have the potential to be an exciting new beginning. We may be biased, but we believe an ideal way to launch your graduate into the world is by helping them begin their investing education. And one way to help them do that is by having them invest in what they know.
This current crop of graduates has never lived in a world without things like iPhones, the internet, and they were the generation that likely had smartphones when they were in high school. This is a generation that has embraced and demanded relentless technological innovation. And they have rewarded the companies that have delivered.
Now it’s time to reward them, and maybe yourself as well. In this special presentation, we’ll take a look at seven stocks that would make ideal graduation gifts. Each of these stocks has a lesson(s) for graduates to take throughout their lives and careers.
Quick Links
- Disney
- Apple
- Amazon
- PayPal
- Advanced Micro Devices
- RingCentral
- DocuSign
#1 - Disney (NYSE:DIS)
Disney (NYSE:DIS) is one of my all-time favorite stocks for many reasons. But the company’s business model provides so many lessons for graduates. Those of us of a certain age can remember when DIS stock wasn’t an ideal growth stock. However, Disney was reinventing itself before that phrase became cliché.
Today’s graduates grew up watching The Disney Channel. They don’t remember a world without Pixar Films. And during the pandemic, it’s likely that many of them turned to Disney+ as a way of passing time. This concept of reinvention gives Disney multiple revenue streams; an attribute that helped the company weather the pandemic when their theme parks and cruise lines were not in operation.
Disney suspended its dividend during the pandemic, but that will likely be reinstated as the company begins to fire on all cylinders. When the dividend comes back into play, it will be yet another compelling reason to buy and hold Disney shares.
About Walt Disney
The Walt Disney Company operates as an entertainment company worldwide. It operates through three segments: Entertainment, Sports, and Experiences. The company produces and distributes film and television video streaming content under the ABC Television Network, Disney, Freeform, FX, Fox, National Geographic, and Star brand television channels, as well as ABC television stations and A+E television networks; and produces original content under the ABC Signature, Disney Branded Television, FX Productions, Lucasfilm, Marvel, National Geographic Studios, Pixar, Searchlight Pictures, Twentieth Century Studios, 20th Television, and Walt Disney Pictures banners.
Read More - Current Price
- $112.03
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 19 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $123.58 (10.3% Upside)
#2 - Apple (NASDAQ:AAPL)
Apple (NASDAQ:AAPL) is a brand known for its iconic iPhone and for its innovation. Like Disney, the company continues to reinvent itself in an attempt to “skate where the puck is going.” That’s why the company has broadened its reach into Services and may even be making a foray into the electric vehicle (EV) sector.
It may be enough for some investors for to point to AAPL stock as a “Warren Buffett stock.” But when you look at Buffett stocks, you also include a stock like Coca-Cola (NYSE:KO) …not exactly a growth stock. Apple on the other hand is part of the FAANG stocks. But unlike many of those companies, Apple operates much more like a value stock.
To illustrate that, Apple initiated a four-for-one stock split in 2020 showing that the company is mindful of keeping AAPL stock accessible for many investors. Plus it just increased its dividend and its share buyback program.
About Apple
Apple Inc designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod.
Read More - Current Price
- $254.49
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 11 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $236.78 (7.0% Downside)
#3 - Amazon (NASDAQ:AMZN)
It would be irresponsible to create a list of great graduate stocks without including Amazon (NASDAQ:AMZN). The idea of buying stock in companies that you buy from doesn’t always fit. However, in the case of Amazon, it really does.
This current crop of graduates was born around the turn of the century. At that time, Amazon was still largely known as an online bookseller. AMZN stock was trading at around $69 per share.
But today, many of these graduates are Amazon Prime members and ordering products of all types for next-day delivery. And AMZN stock is trading at over $3,000 per share.
When you’re a company that becomes synonymous with a category the way Amazon is with e-commerce, then you’re a company that is worth investing in for the long haul.
In fairness, buying a graduate an entire share of AMZN stock would be an elaborate gift. But if they’re on Robinhood or Webull, perhaps you can buy them a fractional share to get started.
About Amazon.com
Amazon.com, Inc engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content.
Read More - Current Price
- $224.92
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 42 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $243.00 (8.0% Upside)
#4 - PayPal (NASDAQ:PYPL)
Speaking of skating where the puck is going, that is a great reason to make shares of PayPal (NASDAQ:PYPL) a great gift for a graduate. PayPal is one of the pre-eminent names in the financial technology (fintech) sector. This is a sector that JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon expressed concern about as a clear and present threat to traditional banks.
But that’s not news to anyone that’s been doing business with PayPal in the last 10 years. The company has become so much more than a vehicle for peer-to-peer transactions. On the business side, the company offers small business loans through its PayPal Working Capital program.
The company also has business debit and credit cards. In short, the company gives small businesses many of the tools that traditional banks can provide.
Plus, investing in PYPL stock provides an indirect, and perhaps safer, exposure to cryptocurrency. PayPal began allowing its customers to buy Bitcoin (CRYPTO:BTC) and other cryptocurrencies in 2020. And recently the company announced plans to allow customers to transfer crypto “off platform” to their digital wallet.
About PayPal
PayPal Holdings, Inc operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, PayPal and Venmo branded credit products comprising its installment products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards.
Read More - Current Price
- $87.13
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 21 Buy Ratings, 15 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $88.42 (1.5% Upside)
#5 - Advanced Micro Devices (NASDAQ:AMD)
Having the patience to wait on something good would be sage advice when offering graduates a share or two of Advanced Micro Devices (NASDAQ:AMD). This is a company that has been doing a lot of the right things for a long time. But for the last 10 years or so, its profit margins have lagged behind its competitors.
That shouldn’t be the case for much longer. That’s a great reason to look at AMD stock as a buy-and-hold play that would make a thoughtful gift for any graduate. And as of this writing, AMD shares are down 30% in 2021.
In the short term, investors can expect AMD to generate significant revenue and profit from the global chip shortage. However, over time, this supply chain issue will resolve itself. When it does, the semiconductor sector will go back to being defined by the best in class. That’s a description that fits Advanced Micro Devices well.
About Advanced Micro Devices
Advanced Micro Devices, Inc operates as a semiconductor company worldwide. It operates through Data Center, Client, Gaming, and Embedded segments. The company offers x86 microprocessors and graphics processing units (GPUs) as an accelerated processing unit, chipsets, data center, and professional GPUs; and embedded processors, and semi-custom system-on-chip (SoC) products, microprocessor and SoC development services and technology, data processing unites, field programmable gate arrays (FPGA), and adaptive SoC products.
Read More - Current Price
- $119.21
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 27 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $191.96 (61.0% Upside)
#6 - RingCentral (NYSE:RNG)
Although many of us would prefer to never take another “Zoom meeting” anytime soon, it’s been a way of life for many college graduates for the better part of a year. But if we’re honest with ourselves the workplace was heading that way long before the pandemic.
In some form, work-from-anywhere is not going away. And that means there will be demand for services such as the kind that RingCentral (NYSE:RNG) provides. But if you believe that RingCentral is simply a pandemic stock, you’re missing the bigger story. RingCentral has a recurring revenue narrative termed Unified-Communications-as-a-Service (UCaaS) that will continue long after the new normal arrives.
Currently the company only has about 1.2 billion out of a market that generated $50 billion in 2020. However, with a service that they can provide for as low as $19.99/month, RingCentral has an opportunity to expand their market share.
After surging by 122% last year, RNG stock is down 30% for the year. But once investors cast a more discerning eye at tech stocks, RingCentral is likely to recover in a big way.
About RingCentral
RingCentral, Inc, together with its subsidiaries, provides cloud communications, video meetings, collaboration, and contact center software-as-a-service solutions worldwide. The company's products include RingCentral Message Video Phone that provides a unified experience for communication and collaboration across multiple modes, including HD voice, video, SMS, messaging and collaboration, conferencing, online meetings, and fax; RingCentral Contact Center, a collaborative contact center solution that delivers AI-powered omnichannel and workforce engagement solutions with integrated RingCentral MVP; and RingCX, an AI-powered contact center that a native delivers omnichannel experience.
Read More - Current Price
- $37.45
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 6 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $42.00 (12.1% Upside)
#7 - DocuSign (NASDAQ:DOCU)
DocuSign (NASDAQ:DOCU) is a stock that was on my radar long before the pandemic. The company is best known for its e-signature platform. But that is only one aspect of this technology company that is a strategic play on the cloud. DocuSign sells its products via a Software-as-a-Service (SaaS) model which makes its revenue extremely sticky.
What I appreciated about the company from the first time I was introduced to it is the “it’s about time” characteristic. The current crop of graduates is part of a generation that is comfortable with e-commerce and they’re becoming comfortable executing even the most complex of transactions from their smartphone.
Just as the pandemic has highlighted the convenience of e-commerce, it’s also transformed the way many consumers think of the value of their time. If they can sign documents electronically, they will.
And while that may be an argument for a cybersecurity stock, it’s also a reason to buy DOCU stock. The company’s business model makes sense for a paperless, and increasingly contactless, world.
About DocuSign
DocuSign, Inc provides electronic signature solution in the United States and internationally. The company provides e-signature solution that enables sending and signing of agreements on various devices; Contract Lifecycle Management (CLM), which automates workflows across the entire agreement process; Document Generation streamlines the process of generating new, custom agreements; and Gen for Salesforce, which allows sales representatives to automatically generate agreements with a few clicks from within Salesforce.
Read More - Current Price
- $94.41
- Consensus Rating
- Hold
- Ratings Breakdown
- 3 Buy Ratings, 7 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- $92.45 (2.1% Downside)
In many ways, the advice today’s graduates will receive hasn’t changed from years gone by. Embrace change. Take calculated risks. Invest in yourself. And as this generation becomes the next generation of investors those are the same characteristics they should look for when they consider companies to invest in.
While the pandemic has popularized a category of low-priced “meme stocks,” investors are beginning to realize that price and value are two separate things. There’s no shortcut to building your personal wealth. And there’s no shortcut for building wealth in your portfolio.
The stocks in this presentation are not pre-revenue companies and all of them are profitable. While they shouldn’t comprise the whole of an investor’s portfolio, they do illustrate the concept of anchoring a portfolio with high-quality stocks. These stocks present low risk and high reward. These stocks won’t necessarily be the ones they brag about to their new colleagues, but they’re the ones that will keep them sleeping well at night.
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