The stock market has been nothing short of an unstoppable force over the past 17 months. Since bottoming out on March 23, 2020, the widely followed S&P 500 has effectively doubled in value through this past weekend and has hit dozens of new all-time highs in 2021.
But even with the market persistently pushing to record levels, value can still be found.
Best of all, you don't need a massive bankroll to take advantage of these values. If you have $250 in available cash for investments, and that money isn't needed to cover emergencies or pay bills, you have more-than-enough capital to buy some of the smartest stocks on Wall Street right now.
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Bank of America
Believe it or not, one of the smartest ways you can put your cash to work right now is with banking giant Bank of America (BAC 1.53%). Although bank stocks aren't the fastest-growing industry, a confluence of factors are working in favor of BofA.
To start with, bank stocks are inherently cyclical. This is a fancy way of saying they perform well when the U.S. and global economy are expanding and struggle during economic contractions or recessions. Right now, we're in the midst of an economic recovery.
But what's far more important is the fact that the U.S. economy spends years in expansion mode, compared to a couple of quarters for the typical recession. This means patient investors are often rewarded by an expanding U.S. economy.
More specific to Bank of America, it's set to benefit from eventual monetary tightening. Of all the money-center banks, BofA is the most interest-rate sensitive. When yields rise, it sees a big uptick in net interest income.
In fact, the company noted in its second-quarter earnings presentation that a 100-basis-point parallel shift in the interest-rate yield curve would generate an estimated $8 billion in net interest income over 12 months. While it's unlikely we'll see the yield curve adjust this quickly, eventual rate hikes could add tens of billions in additional net interest income that'll flow directly to BofA's bottom line.
Bank of America has also done an impressive job of digitizing its business to speak to a younger generation of customers. BofA now has more than 40 million active digital banking users and completed 44% of its sales online or via mobile app in the second quarter, up 15 percentage points from the comparable quarter three years prior. As more of its banking customers turn to online and mobile banking, BofA will be able to consolidate some of its branches and reduce its noninterest expenses.
With a pathway to significantly increased profitability around the corner and a history of its management team returning lots of capital to shareholders via dividends and buybacks, Bank of America makes a lot of sense to buy right now.
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Trulieve Cannabis
For growth seekers, U.S. marijuana stock Trulieve Cannabis (TCNNF -3.22%) is one of the smartest buys right now.
Though there's been some concern about the federal government stalling on cannabis-reform measures, the fact is that U.S. multistate operators (MSO) like Trulieve don't need federal reform to succeed. While it would invariably make things easier, the Justice Department's hands-off pledge in 36 legalized states and counting should allow pot stocks to deliver impressive growth throughout the decade.
The biggest differentiating factor between Trulieve and other MSOs is how the company has chosen to expand its reach. Whereas most MSOs have expanded into a dozen or more markets, Trulieve has primarily built its presence in a single state: Florida. This past week, it opened its 88th dispensary in the medical-marijuana-legal Sunshine State -- and that's out of 97 retail stores nationally.
By saturating Florida, Trulieve has been able to build up its brand without breaking the bank when it comes to marketing costs. As a result, it's generated 14 consecutive quarters of profitability and controls roughly half of Florida's dried cannabis flower and higher-margin oils market share.
With the company's Florida blueprint proving overwhelmingly successful, Trulieve is only now looking to new states for expansion opportunities. The biggest splash it's made is the pending $2.1 billion all-stock deal to acquire MSO Harvest Health & Recreation (HRVSF).
Harvest Health has a five-state focus, one of which happens to be Florida. So, yes, Trulieve is actually going to beef up its already dominant presence in the Sunshine State when this deal closes.
However, the crown jewel of this acquisition is the 15 dispensaries Harvest Health operates in its home state of Arizona. The Grand Canyon State legalized adult-use weed in November, commenced sales in January, and could well become a cash cow for Trulieve Cannabis.
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Enterprise Products Partners
For you income investors, one of the smartest stocks to buy right now with $250 is oil and gas master-limited partnership Enterprise Products Partners (EPD 0.18%).
Last year, oil stocks were arguably the last place investors wanted their money. The coronavirus pandemic and subsequent lockdowns led to an unprecedented drawdown in crude oil demand. For a very brief period in April, oil future contracts traded heavily in negative territory. For a generally debt-heavy industry, it was a worst case-scenario. But one oil and gas company that hardly flinched was Enterprise Products Partners.
The reason Enterprise Products has held up so well is because it's a midstream provider. Whereas drillers (upstream) were clobbered by falling crude prices, midstream providers like Enterprise, which manage over 50,000 miles of pipeline and 14 billion cubic feet of natural gas storage in the U.S., saw little interruption in their operations.
The company also benefits from the way its contracts are structured. By leaning on long-term take-or-pay contracts, Enterprise Products Partners has a very clear outlook as to how much cash flow it'll be generating on a quarterly and annual basis. This transparency has played a big role in allowing the company to continue outlaying capital for new infrastructure projects without threatening its profitability or distributions.
Speaking of distributions, Enterprise Products Partners is paying out an 8% yield that looks completely sustainable. This is a company that's increased its annual payout for 22 consecutive years and maintained a distribution coverage ratio of 1.6 or higher since the pandemic began.
