Since the curtain lifted on 2021, the stock market has proved unstoppable. It's been nine months and counting since the benchmark S&P 500 has even undergone a 5% correction. Yet even with the broader market consistently nipping at record highs, value can still be found.
You see, when you buy isn't nearly as important as the quality of the company you buy and how long you plan to hold. According to a report from Crestmont Research, the rolling 20-year total return (including dividends) of the S&P 500 for any period between 1900 and 2020 has never been negative.
Equally important is the idea that any amount of capital can be used to begin or further your trek toward financial independence. If you have $100 at the ready that won't be needed to pay bills or cover an emergency, this is more than enough to buy the following trio of smart stocks right now.
To begin with, investors should strongly consider putting their $100 to work in tech-based real estate company Redfin (RDFN 2.00%).
The most obvious concern with real estate stocks is that everything has been almost too perfect for the past couple of quarters. Historically low mortgage rates and soaring national home prices have lifted housing demand across the board, but history tells us this can't last forever. What separates Redfin from traditional real estate companies, and what should insulate the company from a moderation in homebuying and selling activity, is the cost savings it can provide and the personalization it brings to the table.
Most traditional real estate companies charge a listing fee or commission of 2.5% to 3%. By comparison, Redfin charges its clients either 1% or 1.5%, depending on how much previous business has been conducted with the company. This difference of up to 2 percentage points may not sound like much, but it's massive.
According to the National Association of Realtors, the median existing-home sales price rose to $363,300 in June. If a seller chooses Redfin instead of a traditional real estate company, this up to 2 percentage-point difference could result in a cost savings of $7,266. With home prices continuing to climb, the savings Redfin can provide are only being magnified.
From a personalization standpoint, Redfin has introduced a number of services designed to ease the hassles of buying or selling a home. For instance, it's leaned on 3D virtual-home tours to give prospective buyers a safe way to view properties during the pandemic.
Redfin has also been expanding its RedfinNow service to new markets. This service purchases homes for cash, thereby removing the haggling and uncertain time frames that can come with selling a home.
The bottom line is that Redfin's share of U.S. existing home sales has nearly tripled from 0.44% to 1.18% in the past 5.5 years, and there's no sign of this momentum slowing. Patient investors should be handsomely rewarded.
Although the North American cannabis industry is expected to see revenue soar throughout the decade, it's the U.S. pot industry that offers the most promise. With the U.S. Department of Justice allowing states to regulate their own cannabis industries, the 36 states that have legalized weed in some capacity are providing more than enough of a long-term growth runway for marijuana stocks to thrive.
What makes Jushi so intriguing is the way it's looking to expand. Instead of trying to establish a presence in as many legalized markets as possible, Jushi anticipates that more than 80% of its sales this year will derive from three markets: Pennsylvania, Illinois, and Virginia. What's special about these states is that they purposefully limit how they issue retail and cultivation licenses.
Pennsylvania and Illinois cap how many aggregate retail licenses are issued, as well as how many licenses a single company can hold. Meanwhile, Virginia assigns licenses by jurisdiction. Since Jushi only has 20 operating dispensaries at the moment, its focus on these limited-license states ensures that it has a fair chance to build up its brand and create a loyal following without being overrun by a larger multistate operator.
Despite being a small-cap pot stock, Jushi has also shown a willingness to make acquisitions in order to expand its reach. This year, it's bulked up its medical marijuana cultivation capacity in Virginia via acquisition and purchased two retail dispensaries in California, the leading cannabis market in the world.
If you need one more great reason to jump onboard, consider that Jushi's valuation, relative to its forward-year sales and profit potential, is substantially more attractive than other U.S. multistate operators. Pardon the pun, but Jushi should have long-term investors seeing green.
A third really smart buy with $100 is fast-growing data-mining specialist Palantir Technologies (PLTR -2.54%).
On the surface, Palantir isn't cheap by any means. As of last weekend, it was valued at nearly 28 times Wall Street's forecasted sales for 2021 and sporting a forward-year price-to-earnings multiple of just over 100.
Even for a growth stock, Palantir appears to be pushing valuation boundaries. But the simple fact is that there's no other company that offers an artificial intelligence-driven data-mining platform quite like Palantir.
For the time being, the company's Gotham platform is driving the bulk of its growth. Gotham is Palantir's government-focused operating segment that helps with missions and big-data analysis. In recent years, large U.S. government contracts have been the key to pushing revenue significantly higher. In the first quarter alone, Palantir's U.S. government business revenue jumped 83% from the year-ago period.
However, the more impressive long-term opportunity lies with the company's Foundry platform. This is the segment that serves global enterprises by helping them make sense of data in order to streamline their operations. Since Gotham's reach is potentially limited (e.g., Palantir has refused to work with China), Foundry offers the most encompassing long-run growth potential.
According to the company, the average commercial contract as of the end of March was 4.6 years. Presumably, these long-duration contracts will provide predictable cash flow for Palantir for years to come.
With no company capable of filling Palantir's shoes, the company is a good bet to head higher over the long haul.