Individual stocks SHOULD NOT be purchased by folks who:
don't have a 8-12 month emergency fund;
carry a monthly balance on their credit cards;
don't have adequate life/disability/medical insurance;
have a high-interest car loans;
don't have a fully-funded 401K/ROTH IRAs in broad market index funds;
don't have at least a 5-year horizon for the invested cash;
and don't have a slush fund to use for fun vacations, experiences and adventures with their families each year.
Even with the most conservative, dividend-paying blue chips, the risk is too high if you have all that other stuff hanging over your head. The way I look at investing in stocks (or any investment vehicle), with all the above elements in place--and after doing due diligence--I simply ask myself, "Can I afford to lose all this money and still maintain my lifestyle?" If the answer is "yes," then I'll pull the trigger.
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