Building a Thriving $50k Portfolio with Visa, Robinhood, and Meta
Starting your own stock portfolio can seem intimidating, given the multitude of stocks listed on the market. Not all these stocks tend to outdo the larger market indicators. However, by opting for an array of stable stocks, smart investors may cultivate a portfolio which not only perseveres but flourishes. In the following discussion, I will detail a theoretical approach to building a $50,000 portfolio today.
The first stock in my theoretical portfolio would be Visa (NYSE: V). The simplicity and asset-light attributes of Visa’s business strategy make it highly commendable. Its expansive network effect strengthens annually. Visa cultivates beneficial partnerships with organizations that provide card services, such as banks and credit unions.
These financial institutions issue debit and credit cards to their members, enabling them to conduct transactions over Visa’s payment channel. For the use of its network, Visa garners fees for each transaction it authorizes. This method paves the way for the largest chunk of its annual revenue of $37 billion. On an yearly basis, Visa handles about 234 billion transactions, with a jaw-dropping total value of about $16 trillion.
To assign a value to these numbers, it is similar to the yearly gross domestic product (GDP) of China or the European Union. Visa makes an incredible addition to my hypothetical investment portfolio, where I allocate $20,000, representing 40% of my total hypothetical fund.
Shifting our attention to the domain of online brokerages, this sector is not a newcomer in the market. The ability for investors to manage and track their investments online has been a feature for the past few decades. However, key players in this space such as Robinhood (NASDAQ: HOOD) have seen exceptional growth in recent times.
As per recent research, Robinhood is the ninth-largest by assets under management (AUM), with impressive growth in this figure reaching approximately $100 billion by end of 2023. In terms of speed of AUM growth, the firm takes the top spot with a staggering growth rate of 96%, far surpassing its nearest competition, Ally Financial, which maintains a growth rate of 47%.
Robinhood’s accelerated growth can be attributed to its favorite status among youthful investors, who are enticed by its offerings in areas like cryptocurrencies, futures, and live-event trading. For my hypothetical portfolio, I would assign a 10% or $5,000 allocation to Robinhood.
We now turn to Meta Platforms (NASDAQ: META), a stock whose robust fundamentals are hard to overlook. Consider this – in the last year, the company posted revenue of $170 billion, net income of $67 billion, and free cash flow of $52 billion. These figures have seen a remarkable rise over the past five years, with increases of 127%, 183%, and 178%, respectively.
By contrast, firms like Home Depot, which boasts similar yearly revenue like Meta, could only manage a 34% increase in revenue, a 25% increase in net income, and actually saw a 7% decline in free cash flow over the same timeframe. The growth speed of Meta’s metrics is surprisingly swift for a company of its enormous size.
An astounding figure of approximately 3.5 billion users engage with Meta’s platforms daily. This high user interaction provides an opportunity for the company to generate extensive advertising revenue. Besides, Meta’s abundant free cash flow and robust balance sheet suggest it could provide substantial long-term return for buy-and-hold investors.
Given all these impressive factors, Meta would claim the lion’s share in my hypothetical portfolio. I would designate $25,000, or half of my total investible funds, to purchase Meta stocks. This completes my proposed allocation for my hypothetical $50,000 portfolio.