2 Bargain Stocks For Investors on a Budget

Key Points

• AT&T stock is a value buy because of its solid dividend and slimmed-down business model.

• Bargain-hunting investors should consider Alphabet, thanks to its diversified revenue streams and rock-solid growth.

• 10 stocks we like better than AT&T ›

$8,000.

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That's what the typical American has in the bank, according to the Federal Reserve. Most people need to use the money in their bank accounts to cover everyday expenses. However, some people, particularly those with more than $8,000 in the bank, may be able to invest a portion of their savings as a way to grow their money.

Let's examine two stocks that investors on a budget may want to consider.

Image source: Getty Images.

AT&T

First, there's AT&T (NYSE: T).

The telecommunications giant fits the bill as a bargain stock for several reasons. Let's start with the most obvious: Its stock recently cost less than $30 -- meaning most investors can afford to own a decent number of AT&T shares.

However, it's not just AT&T's low stock price that makes it appealing for investors looking for a bargain. There's also the fact that AT&T's valuation is affordable. AT&T's price-to-earnings (P/E) ratio, which compares its stock price to its earnings per share, is around 17x.

In comparison, the S&P 500 market index has a P/E ratio of about 30x. Moreover, many high-flying tech stocks sport P/E ratios north of 100x. Media-streaming veteran Spotify, for example, has a P/E ratio of 164x, as of this writing.

Finally, AT&T is a bargain buy for another reason: Its business model is solid, if not all that exciting. The company has refocused its efforts on delivering wireless and fiber service. It divested its media assets, spun off its WarnerMedia holdings, and sold its stake in DirecTV.

As a result, the company is better positioned to pay down debt -- it still has more than $141 billion in net debt on its balance sheet -- and return value to shareholders through dividend payments. The company pays a quarterly dividend of $0.2775, which works out to an annual dividend amount of $1.11 per share, resulting in a dividend yield of 3.75%.

AT&T offers a solid value, making it a name that investors on a budget should consider.

Alphabet

Next, there's Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).

At first blush, Alphabet might seem like a strange stock for bargain-seeking investors to consider. After all, shares of Alphabet recently were trading at around $249 each.

However, bargains aren't only found in low-priced stocks. Indeed, with the widespread availability of fractional share trading, the market price of a stock no longer matters the way it did in the past.

What makes Alphabet a stock for bargain-seeking investors is its wonderful mix of business segments. Alphabet is no one-trick pony.

Let's start with its most profitable and best-known operation: Google Search. The company's search business is its crown jewel. It generates more than $200 billion in annual revenue. What's more, this online behemoth is still growing like a weed. Search revenue increased 12% year over year in the recent second-quarter report, despite concerns that ChatGPT and other AI-powered chatbots would eat away at Google's search engine dominance.

In addition to its powerful search segment, Alphabet has other powerful divisions. Its Google Cloud segment, the third-largest player in the red-hot field of cloud services, racked up $13.6 billion in revenue last quarter (the three months ended June 30, 2025). That's a year-over-year growth rate of 32%. The company also recorded more than $17 billion in quarterly ad revenue from its YouTube division and its Google network (Gmail, etc.).

All in all, Alphabet's mix of business segments and solid growth make it a stock that investors on a budget should strongly consider.

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Jake Lerch has positions in AT&T, Alphabet, and Spotify Technology. The Motley Fool has positions in and recommends Alphabet and Spotify Technology. The Motley Fool has a disclosure policy.