Holy volatility, Batman!
According to the CBOE Volatility Index, or VIX, which measures the expected price fluctuations in S&P 500 options contracts over the next 30 days, things have never been this wild for equities. This past Wednesday, March 18 saw the VIX close at its highest level in history, handily surpassing the previous high set during the financial crisis.
Also as of this past Wednesday, we witnessed the iconic Dow Jones Industrial Average (^DJI -0.16%) close higher or lower by more than 1,000 points for eight consecutive sessions. Broadening a bit, over an 18-session stretch, the Dow has logged 9 out of its 11 largest single-day point losses, as well as 5 of its 6 largest single-session point gains. If you're a short-term trader, it's been a nauseating nightmare.
However, if you have a long-term mindset and have been focused on buying high-quality businesses, then the quickest downturn in stock market history may prove to be the opportunity of a lifetime.
The thing is, you don't need to have Warren Buffett's cash hoard to create wealth on Wall Street. Paving your path to a financially secure retirement can begin by adding just $100 to some of the market's top stocks. If you have $100 or more in disposable cash right now (i.e., cash you won't need to pay bills or for your emergency fund), then buying into the following seven stocks would be a genius move.
1. Bank of America
A little over a decade ago, we witnessed our nation's money-center banks near the brink of collapse during the financial crisis. Today, even with the coronavirus disease (COVID-19) bringing economic activity to a halt in a handful of U.S. states, our nation's money-center banks remain well-capitalized, and the Federal Reserve is willing to lend a helping hand. That's what makes Bank of America (BAC 0.35%) a stock to buy, even if you only have $100 at your disposal.
Bank of America has been particularly adept at reducing its noninterest expenses over the past decade and improving the credit quality of its outstanding loans. Having reduced its physical branch exposure while simultaneously adding to the number of active digital banking and mobile customers, Bank of America is a considerably more efficient and well-capitalized bank. And at only 76% of book value, it looks to be a veritable steal of a deal.
2. Bristol Myers Squibb
The thing about the healthcare sector is that people will continue to get sick and require treatment/medicine, regardless of how well or poorly the economy is performing. This makes drug developers like Bristol Myers Squibb (BMY -1.17%) among the safest ways to play the market.
Bristol Myers completed its game-changing acquisition of Celgene in November 2019, bringing multiple myeloma drug Revlimid under its umbrella. Revlimid continues to grow its sales annually by a double-digit percentage and will potentially top $12 billion annually in 2020. Revlimid is also protected from a flood of generic competition until the end of January 2026.
Beyond acquisitions, Bristol Myers' portfolio features leading blood-thinner Eliquis (which is co-marketed with Pfizer) and cancer immunotherapy Opdivo, which could potentially push to north of $10 billion in annual sales, depending on its ability to further expand its label. Bristol Myers Squibb is worth a nibble at less than seven times next year's profit forecast.
3. Walt Disney
Usually the happiest place on Earth, the "House of Mouse" has been anything of the sort recently. Walt Disney (DIS 0.72%) has been clobbered by delayed movie releases and the closure of its theme parks, which will undoubtedly provide a short-term sting to its bottom line.
Then again, there may not be a company better than Disney at transcending generational gaps to engage with consumers. In hindsight, the launch of Disney+ probably couldn't have come at a better time, with work-from-home mandates likely to push streaming subscriptions through the roof.
Walt Disney is also likely to recapture its seat at the head of the table once box offices reopen or remove occupancy restrictions. With some of the most valuable franchises on the planet in its back pocket -- Star Wars, Marvel, and Pixar -- genius investors are using this recent decline as a major buying opportunity.
4. Duke Energy
One of the smartest ways to invest during periods of heightened volatility is to purchase companies that provide a basic-need good or service. Duke Energy (DUK 1.38%), for example, provides energy services to over 7 million Americans and natural gas to another 1.5 million people. It's highly unlikely we will see much change in energy-consumption habits, regardless of how the U.S. economy performs. This means relatively predictable cash flow and profitability for Duke.
Furthermore, the Federal Reserve's 150 basis points' worth of rate cuts in March should provide quite the impetus for Duke Energy to move forward on green-energy projects that'll ultimately reduce its electricity-generation costs.
And the icing on the cake is that investors will net a 4.8% yield, which is more than double that of the S&P 500.
5. Sirius XM
Another genius way to put $100 or more to work right now would be to buy shares of satellite-radio operator Sirius XM (SIRI 0.08%). Although Sirius XM is likely to feel the pinch of weaker auto sales and may see some advertising weakness associated with Pandora, which it acquired last year, there's still plenty to like.
It's the only satellite operator in town, which means plenty of platform pricing power, as well as a reliance on subscriptions to drive revenue. It's far less likely to see subscriptions cancelled during periods of economic hardship than it is to see enterprise ad dollars decline. This means Sirius XM's subscription-heavy model puts it in far better shape than online and terrestrial radio operators.
Sirius XM's relatively fixed transmission costs also provide added certainty during very uncertain times. Its 35% haircut over the past month is a perfect buying opportunity for long-term investors.
6. SSR Mining
Feel free to call me a "homer" given that SSR Mining (SSRM 3.62%) is my largest portfolio holding, but gold miners are sitting in what should be a multiyear sweet spot. The Fed will be injecting money regularly to stabilize the financial system, and global bond yields are virtually nonexistent, providing few safe havens for investors to park their money. This makes physical gold and mining companies that produce gold, such as SSR Mining, likely winners in the months and years to come.
More specific to SSR Mining, it's one of a select few precious-metal miners with a net-cash position (about $282 million), which provides the company with substantial financial flexibility during a period of heightened uncertainty. It's also forecast to achieve record production from its Marigold mine in Nevada and Seabee mine in Canada. This should translate into a cash flow explosion in 2020 and beyond.
Lastly, let's end on a high note with companion pet-insurance provider Trupanion (TRUP 0.70%).
Why Trupanion, you ask? Simple: People will go through great lengths to ensure the well-being of their four-legged friends. A 2016 poll from Harris found that 95% of pet owners consider their pets to be family. That's meaningful, given that the American Pet Products Association is calling for $99 billion in estimated U.S. pet industry expenditures this year, including $30.2 billion in veterinary care and product sales.
This is where Trupanion comes into play. Only between 1% and 2% of companion pets in the U.S. and Canada are insured, and economic shocks like we're experiencing now are usually the kick in the behind that leads to a wave of insurance enrollments. With relatively minimal competition and a huge runway, Trupanion could easily dominate the health insurance landscape for pets. If you've got $100 to spare, Fido says Trupanion would be a solid long-term buy.