Ever since the green flag waved in 2023, Wall Street's major stock indexes have been off to the races. The iconic Dow Jones Industrial Average, widely followed S&P 500, and growth stock-powered Nasdaq Composite have catapulted higher by 21%, 47%, and 76%, respectively, and asserted that they're firmly in a bull market.
While some investors might be leery about putting their money to work when the stock market is pricey, history has shown over and over how much of an ally time and perspective can be for investors. Eventually, every crash, bear market, and correction has been cleared away in the major stock indexes by a bull market rally. This means any time can be ideal to invest, if you have a long-term mindset.
Image source: Getty Images.
Making matters even better, most online brokers have completely eliminated minimum deposit requirements and commission fees associated with common stock trades on major U.S. exchanges. For retail investors, it means any amount of money -- even $200 -- can be the perfect amount to put to work.
If you have $200 ready to invest, and this is cash you're certain won't be needed to pay your bills or meet unexpected financial obligations (e.g., an emergency), the following three stocks stand out as no-brainer buys right now.
Airbnb
The first unstoppable stock that makes for a genius buy if you have $200 that's ready to be put to work is travel-and-hosting companyAirbnb(NASDAQ: ABNB).
Like every publicly traded company, Airbnb has headwinds it needs to contend with. Perhaps the biggest at the moment is fighting off predictive data that strongly suggests economic weakness is on the horizon. In particular, the first notable decline in U.S. M2 money supply since the Great Depression brings into focus a potential weakening of consumer spending. If a U.S. recession takes shape, it wouldn't be a surprise to see travel spending contract.
On the other hand, Airbnb benefits from nonlinear economic cycles. Though recessions may be a normal and inevitable part of the economic cycle, they're historically short-lived. With most periods of growth lasting for multiple years, Airbnb has enjoyed a fairly steady uptick in bookings.
Despite being founded 17 years ago, a reasonable argument can be made that Airbnb is still in its very early innings of expansion. The "more than 5 million hosts" the company boasts are on its marketplace represent just a minuscule fraction of the roughly 1 billion homes worldwide. As the number of properties available on its platform scales, Airbnb should have no trouble sustaining a double-digit growth rate.
But what might be even more exciting is Airbnb's potential to secure revenue beyond just stays. The company is already working with local experts to lead travelers on adventures via its "Experiences" segment. However, this looks to be just the tip of the iceberg that could open doors to transportation, restaurant, and amusement/theme park partnerships in the future.
Although Airbnb's forward price-to-earnings (P/E) ratio of 28.5 isn't cheap by traditional standards, Wall Street's annualized earnings per share (EPS) growth forecast for the company of nearly 19% through 2028 makes it a bargain.
Image source: Getty Images.
Teva Pharmaceutical Industries
A second phenomenal company that makes for a no-brainer buy if you have $200 that's ready to be put to work is brand-name and generic drug developer Teva Pharmaceutical Industries(NYSE: TEVA).
Unlike Airbnb, where we're predominantly focusing on "what if's" as headwinds, Teva has dealt with a number of clearly defined problems. It contended with a mountain of lawsuits tied to its role in the opioid crisis, and grossly overpaid for its acquisition of generic drugmaker Actavis in 2016. This acquisition buried Teva under a mountain of debt.
While the going has been unquestionably tough for Teva and its shareholders, the company's turnaround efforts have taken hold.
To start with, Teva Pharmaceutical has put its major legal issues in the rearview mirror. In January 2023, it reached a nationwide settlement with 48 of the 50 states regarding its role in the opioid crisis. With this settlement spread out over 13 years, Teva should have no trouble honoring its terms.
More importantly, the company has made significant strides to reduce its debt and improve its financial flexibility. Under turnaround specialist (and prior CEO) Kare Schultz and current CEO Richard Francis, Teva's net debt has declined from around $35 billion to $16.7 billion, as of March 31. Selling off noncore assets and organically paying down debt with operating cash flow is making Teva a leaner company with each passing day.
Meanwhile, Francis has adjusted Teva's operating focus to place greater emphasis on higher-margin, faster-growing novel therapies. With sales of tardive dyskinesia drug Austedo climbing 67% in the first quarter and pacing $1.5 billion this year, the value of brand-name therapies can't be overstated.
Despite Teva's stock more than doubling from its October 2023 low, shares are still valued at just 6 times forward-year earnings. With sales growth picking up and the company's balance sheet on the mend, multiple expansion looks probable in the years to come.
The third no-brainer stock that makes for an amazing buy with $200 right now is none other than social media mavenPinterest(NYSE: PINS).
Pinterest's biggest flaw is that it was a victim of its own success. During the early stages of the COVID-19 pandemic, Pinterest's monthly active user (MAU) count soared as people were stuck in their homes. But during the downswing, when COVID-19 vaccines became available, the company's MAUs shifted into reverse -- and the stock was punished. With these knee-jerk reactions now behind it, investors can gain proper perspective of what's happening with the company.
During the first quarter, Pinterest's global MAUs hit an all-time high of 518 million (up 12% from the comparable period in 2023). This suggests that investments made in the platform, including improved search functionality and video, are paying off.
More importantly, Pinterest has no trouble monetizing the MAUs it has, regardless of whether MAUs are growing, flat, or modestly declining. Having more than a half-billion monthly active users is only going to improve Pinterest's ad-pricing power and draw more merchants/advertisers to the platform.
Another reason Pinterest can be trusted by growth-seeking investors is the company's operating model. Whereas most social media platforms rely heavily on data-tracking tools to determine what users like and to help advertisers target their message(s), the entire premise of Pinterest's platform is for users to willingly and freely share what things, places, and services interest them. With app developers now allowing users to turn off data-tracking tools, Pinterest's operating model won't be adversely impacted.
To add to this point, there's also a real possibility we'll witness Pinterest evolve into a meaningful e-commerce destination during the second half of this decade.
The final piece of the puzzle is that its stock remains reasonably cheap. It's valued at 23 times forward-year earnings, but is forecast to grow its EPS by an annualized rate of 23% through 2028. Tack on nearly $2.8 billion in cash, cash equivalents, and marketable securities, to go along with a share buyback program, and you have a bargain that's just waiting to be bought by opportunistic investors.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,705!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,291!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $354,018!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of July 15, 2024
Sean Williams has positions in Pinterest and Teva Pharmaceutical Industries. The Motley Fool has positions in and recommends Airbnb and Pinterest. The Motley Fool has a disclosure policy.
