2 Brilliant Stocks to Buy With $500 Right Now

Investing in a growing company in the stock market can help you achieve financial freedom. However, you want to invest in companies that stand out from the competition in their respective industry. Investors who regularly buy shares of strong companies with above-average growth prospects can build tremendous wealth.

To help you in your search, here are two relatively small businesses that are expanding into large markets and having success. An investor with just $500 can buy one share of each of these stocks.

1. Toast

Toast (TOST 1.60%) is a leading restaurant software platform that is finding a massive market for its services. The stock tumbled following its initial public offering in 2021, but after settling at a more reasonable valuation, the share price soared over the past year and could have room to run.

More restaurants are updating their systems to meet the modern need for online ordering, pickup, and delivery. Toast is meeting this demand by offering all the tools a restaurant needs to build a successful business. Toast offers its services through subscriptions, and it also makes money from processing payments. Annual recurring revenue grew 28% year over year in Q3, with gross payment volume up 24%.

Restaurant technology is a competitive market, but Toast is standing out because its all-in-one package is tailor-made for the restaurant industry. It handles all the basics a restaurant owner needs, like inventory management, payroll, and reservations, but the company continues to add more capabilities from customer feedback.

Toast added 7,000 net locations in Q3, bringing its total customer base to 127,000. Management still sees a huge opportunity to make more money from signing up more restaurants. Indeed, there are an estimated 905,000 restaurants in the U.S. alone, according to xmap.ai.

This doesn’t count international opportunities. Toast clearly has enormous growth potential, and its strong revenue growth indicates that restaurants are finding its products better than alternatives. The stock could deliver excellent returns for years to come.

2. RH

Home sales are showing signs of a recovery, according to the latest data from the National Association of Realtors. This is great news for RH (RH 0.13%) (formerly Restoration Hardware), a top brand in the luxury furniture market. The stock had an incredible run before falling in 2022, but with demand for home goods starting to show signs of turning a corner, the share price is starting to move up again.

RH is not your typical furniture store. It has elevated its brand with lavishly designed stores located in large metropolitan areas. It continues to expand its unique inventory of bespoke furniture with new collections and offers a wide range of products through its stores, websites, and Sourcebooks.

As a premium brand, it has held up much better during the recent housing downturn than most other furniture stores that compete on price. The company’s revenue increased by 8% year over year in Q3, but it should see even higher growth in a stronger housing market.

RH’s CEO, Gary Friedman, stated in its Q3 shareholder letter that “We believe our collections reflect a level of design and quality inaccessible in our current market and a value proposition that is disruptive across multiple markets, positioning RH to gain significant market share for the foreseeable future.”

In North America alone, management sees a multibillion-dollar opportunity, while RH is also planning to expand globally across Europe, the Middle East, and Australia over the next decade.

RH’s ability to grow in a tough environment reflects its premium brand positioning, which will naturally attract high-income customers with spending power. It earned a healthy operating profit margin of 12.5% in Q3 — consistent with its 10-year average.

The stock has started to rebound as Wall Street senses a recovery underway in the housing market, and it could hit more new highs in 2025. As the market recovers, analysts expect earnings to grow at an annualized rate of more than 30%, which could send the stock soaring over the next five years.