Just Started Investing? Here's 1 Solid Company to Buy With $200

Stock investing is a proven vehicle for maintaining and growing wealth. At a time when inflation is unnecessarily high, stocks could be an even more useful tool to profit even when prices are higher.

While stocks offer significant advantages, they also come with risks, including the potential for capital loss. Investors should stick to proven strategies, such as buying and holding well-established and stable companies for the long term.

This article will look at one of these solid companies that beginners can consider with as little as $200: Amazon (AMZN -0.09%).

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Amazon is a leader in two major industries

Amazon was just an online bookstore in the U.S. when Jeff Bezos founded it in 1994. After years of relentless expansion, it is now a tech conglomerate with diverse business operations. Among them, two businesses stand out as clear leaders in their field.

Let’s begin with e-commerce, the backbone of Amazon. Amazon is the clear leader in the U.S., with around 38% market share. Amazon’s strategy for its e-commerce business is relatively simple — it provides consumers with low prices, plenty of selections, and excellent services (mainly fast delivery). It also counts on its subscription service (Amazon Prime) to provide unbeatable benefits to members, including free shipping and free video.

Via its customer-centric approach, Amazon built a loyal following. And in 2002, it launched Amazon Web Services (AWS), giving enterprise customers access to low-cost cloud computing services.

AWS is the other significant business for Amazon, which has become even more profitable than the e-commerce business. For perspective, AWS generated $5.4 billion in operating income in the second quarter of 2023, when groupwide operating income was $7.7 billion.

AWS has been a runaway success — with around one-third of global market share — thanks to its early mover advantage, which allowed it to provide the most comprehensive services in the early days. Understandably, customers joined AWS to take advantage of its offerings. As more customers came on board, AWS gained scale and used that to its advantage by lowering prices, bringing in even more customers over the years.

Amazon is positioned to grow its empire further

It is no secret that Amazon is a massive company with around half a trillion dollars in revenue. Still, there are good reasons to be optimistic about its growth prospects.

One thing is that despite its huge market share, e-commerce penetration in the U.S. remains low at around 15%, giving Amazon plenty of room for expansion. So long as it can continue to innovate and delight its loyal members with new and better services, Amazon stands a good chance of growing customers’ wallet share over time. Besides, it can expand its overseas operations in emerging markets like India.

Besides, AWS is poised to grow as it rides megatrends like migration to the cloud and the development of artificial intelligence (AI). The latter is exciting because it will open up new revenue sources. The AI field is rapidly evolving, and plenty of new technologies will come to market in the coming years.

On top of that, Amazon is constantly experimenting with new services and products that could open up new growth opportunities. AWS, Kindle, Alexa, and Prime Video are successful examples. We can count on this culture of experimentation to continue.

Start a small position and add to that position over time

Amazon owns a diversified business serving consumers in the e-commerce segment and enterprise customers in its cloud computing business. And despite its large empire, the company has room to grow further in these businesses.

Buying and holding Amazon’s stock for the long term is not a bad idea for new investors beginning their investing journey. They should start small and gradually add to their positions over time. A single share of Amazon stock costs far less than $200 at this writing.

Doing that will help them test their strategies, grow their knowledge, and gain confidence over time. It also spreads risk over multiple purchases and ensures they can handle market fluctuations.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon.com. The Motley Fool has a disclosure policy.

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