Over the past 16 months, investors young and old have been given a firsthand lesson in patience. Despite the benchmark S&P 500 losing more than a third of its value in roughly a month last year, it's bounced back more ferociously than any other new bull market in history. Since bottoming out on March 23, 2020, the widely followed index is higher by 90%.
But here's the kicker: You can still find value, as long as you have a long-term mindset.
Best of all, you don't need to have Warren Buffett's pocketbook to build wealth on Wall Street. The rise of commission-free trading platforms and the removal of minimum deposit amounts by most brokerages means $100 is more than enough to begin or further your trek to financial freedom. Below are some of the smartest stocks you can buy right now with $100.
As you're about to see, healthcare stocks are a wise place to put your money to work. That's because we don't get to choose when we get sick or what ailment(s) we develop. No matter how well or poorly the economy is performing, healthcare product and service demand remains robust. That's why pharmacy-chain CVS Health (NYSE:CVS) would be such a smart stock to buy.
Right now, the administration of coronavirus vaccines is driving consumers to its stores and giving CVS an opportunity to create lifelong customers. But additional foot traffic to its stores represents just one small reason investors should be excited about CVS Health's prospects.
For example, the company has laid out the goal of opening approximately 1,500 HealthHUB health clinics nationwide. These clinics are aimed at attracting people who have chronic health conditions and getting them in touch with specialists. This grassroots approach will likely boost consumer loyalty in the CVS brand and funnel chronically ill people to the company's high-margin pharmacy segment.
CVS Health has also been thinking outside the box in terms of growth. Instead of continuing to expand horizontally by acquiring new pharmacy chains or building out new stores, it went out and acquired health-benefits provider Aetna in 2018. Aside from sizable cost synergies, Aetna lifts CVS' organic growth rate.
This is especially true since President Joe Biden is looking to rebuild the Affordable Care Act. And don't forget that Aetna's more than 20 million members are incented to stick within CVS Health's pharmacy ecosystem.
Considering how profitable CVS Health has become, a forward-year multiple of 10 times Wall Street's forecasted earnings is simply too inexpensive.
Most biotech stocks are losing money hand over fist and remain in search of a treatment that'll yield $1 billion or more in sales. That's not the case for Exelixis, thanks to lead drug Cabometyx. Exelixis' top drug is approved by the U.S. Food and Drug Administration (FDA) to treat first-and-second-line renal cell carcinoma (RCC), as well as advanced hepatocellular carcinoma. Without any additional research, these indications alone should lift Cabometyx above $1 billion in annual sales by no later than 2022.
But here's the thing: Exelixis isn't sitting on its laurels. Approximately six dozen clinical trials examining Cabometyx as a monotherapy or combination treatment are underway, one of which has already borne fruit. The CheckMate-9ER study, which combined Cabometyx with Bristol Myers Squibb's cancer immunotherapy Opdivo, ran circles around Pfizer's Sutent as a first-line RCC treatment. If even a small handful of these clinical trials lead to label expansions, Cabometyx could become a multibillion-dollar drug for Exelixis.
Furthermore, the incredible cash flow being created by Cabometyx has allowed Exelixis to reignite its internal growth engine. It recently filed an investigational new drug application with the FDA for its first-ever antibody-drug conjugate (XB002) and has initiated early stage trials for XL102, an internally developed CDK7 inhibitor.
Investors also often overlook that Exelixis is swimming in cash. It ended March with $1.6 billion in cash, cash equivalents, and investments, which is more than enough to support its ongoing clinical research. It may even encourage Exelixis to go on the offensive to make acquisitions.
With a sustained double-digit growth rate and forward-year price-to-earnings ratio of 24, Exelixis is a big-time bargain.
A third exceptionally smart stock that can be bought with $100 right now is pharmaceutical giant AstraZeneca (NASDAQ:AZN). (I did say you'd be learning all about how profitable the healthcare sector can be.)
For about a two-decade stretch between 1997 and 2017, AstraZeneca ran in place. It struggled with competition and the finiteness of brand-name drug exclusivity. But that's all in the past now. Two catalysts have turned AstraZeneca into a growth stock, and it could well be Big Pharma's outperformer in the years to come.
To begin with, oncology and cardiovascular therapies are driving sales growth. AstraZeneca's blockbuster cancer-drug trio of Tagrisso, Imfinzi, and Lynparza grew sales between 13% and 33% on a constant-currency basis during the first quarter from the prior-year period. Meanwhile, type 2 diabetes drug Farxiga saw sales skyrocket 50% on a constant-currency basis in Q1 2021.
Farxiga's annual sales run-rate, as of Q1 2021, is about $2.5 billion. However, some analysts on Wall Street foresee Farxiga peaking at around $9 billion in annual sales near the end of this decade.
AstraZeneca is also in the midst of acquiring rare-disease drugmaker Alexion Pharmaceuticals (NASDAQ:ALXN). While it's risky to develop treatments for patient pools that can be measured in the hundreds or thousands, success also means little or no pushback on high list prices from insurers and virtually no competition.
The best thing about Alexion is that it developed a successor to its blockbuster drug Soliris. This next-generation treatment, known as Ultomiris, is administered far less frequently, which means it improves the quality of life for patients. Ultomiris effectively locks up Alexion's cash flow stream for another decade, if not longer.