The stock market offers few constants. Yet in spite of its many crashes and corrections, one given is that long-term investors are handsomely rewarded for their patience. When examined over rolling 20-year periods between 1919 and 2020, the average annual total return for the S&P 500 has never been negative.
For long-term investors, this means it's always a good time to put money to work in the stock market. Best of all, you don't have to have Warren Buffett's pocketbook to make good money. With most brokerages dropping minimum account balances and/or commission fees, you can start building wealth with as little as $200. Here are some of the smartest stocks you can buy right now with $200.
One genius way to put $200 to work right now is with up-and-coming e-commerce destination Etsy (ETSY 4.56%).
There's no question that Etsy found itself in the right place at the right time when the pandemic struck. With people choosing to buy more basic-need and discretionary items online, Etsy saw its sales skyrocket. In the most recent quarter ended in March, Etsy recorded a 132% increase in the gross merchandise sales on its platform.
However, this isn't just a pandemic play. Etsy was growing at an exceptionally fast pace prior to the pandemic because it offers something that other platforms can't: personalization. The vast majority of Etsy's merchants are small businesses that cater to the individual or customized needs of buyers. Even with giants like Amazon dominating the retail space, Etsy's small-merchant focus and personalization of the buying process give it a competitive moat that's going to be tough to topple.
Etsy's operating model is also entirely dependent on the success of its small merchants. That's because these merchants pay for ads and other services, which is how Etsy generates revenue. As such, it's been investing heavily in its platform. Last year, the company introduced listing videos, which'll help keep users engaged. It's also worked to streamline the analytic tools provided to businesses.
Etsy has the potential to grow at a double-digit rate throughout the decade, if not beyond. It may be a nearly $21 billion company, but you'd still be getting in at a very reasonable valuation.
Some of the biggest gains to be made over the next decade might just come from the cannabis space. That's why U.S. marijuana stock Cresco Labs (CRLBF -2.79%) is one of the smartest pot companies to buy now with $200.
Cresco is a bit different from most U.S. multistate operators (MSO). But before getting to that big difference, let's begin by taking a look at its retail operations.
At the moment, it has more than 30 operational dispensaries, a number of which are located in limited-license states, such as Illinois (10 dispensaries) and Ohio (five dispensaries). By building a presence in states that cap the number of retail licenses issued, it's guaranteeing itself an opportunity to build up its brand and gain a loyal following, all while facing limited competition.
What makes Cresco unique is the emphasis the company has placed on wholesale cannabis. In the March-ended quarter, the company generated a record $95.6 million in wholesale revenue out of $178.4 million in net sales.
Wall Street analysts typically discount wholesale for its lower margins than retail cannabis. But as the owner of a cannabis-distribution license in California, Cresco has access to almost 600 retail locations throughout the state. Being able to place third-party and proprietary pot products (say that three times fast!) into this many dispensaries in the largest marijuana market by annual sales is Cresco's ticket to success.
By the end of this year, it should be generating $1 billion in annual run-rate revenue, which'll put it on track to top $1 billion in sales in 2022. It's also on the cusp of recurring profitability.
Cresco isn't getting the love it should be receiving from marijuana investors, which means there's a bargain to be had.
Typically, electric-utility stocks are companies that investors buy when volatility and uncertainty pick up. They're often slow-growing, boring operating models capable of producing dividend yields that outpace the prevailing inflation rate. Thankfully, NextEra doesn't fit this definition.
What makes NextEra a unique utility is its focus on renewable energy. No utility in the country is generating more capacity from solar or wind power than NextEra. Between 2020 and 2022, it's devoting between $50 billion and $55 billion to infrastructure projects, nearly all of which will be geared toward green energy.
Although these investments aren't cheap, historically low lending rates have made it easier for NextEra to put capital to work. It'll also be ahead of whatever clean-energy legislation eventually comes out of Washington.
By pushing renewable energy sources, NextEra has been able to consistently grow its earnings per share by a high-single-digit percentage for more than a decade. That compares to the typical growth rate for utilities in the low single digits.
What's more, NextEra has regulated operations that yield highly predictable cash flow. Though it isn't able to pass along rate hikes at will, the company's also not exposed to the wild fluctuations of wholesale electric pricing.
NextEra Energy is as steady as they come in the electric-utility space.