Although the stock market technically offers no guarantees, patience has long been a pathway to riches. Despite the benchmark S&P 500 navigating its way through 38 double-digit declines since the beginning of 1950, each and every one of these drops was eventually put in the rearview mirror. Put another way, if you buy great companies and hang onto them for long periods of time, your chances of building significant wealth go way up.
Arguably the best thing about putting your money to work in the stock market -- aside from its long-term uptrend -- is that you don't need to have Warren Buffett's bankroll to make money. With most online brokerages dropping deposit requirements and commission fees, any amount of money can help begin or further your trek to financial freedom.
If you've got $50 in cash that you can invest, which won't be needed to pay bills or cover an emergency, the following trio of companies are the smartest stocks you can buy right now.
Walgreens Boots Alliance
First up is a stock that value investors and income seekers are likely to love: Walgreens Boots Alliance (WBA 0.41%).
Generally, healthcare stocks are a solid place to park your cash given the defensive nature of the sector. Since people don't have the ability to control when they get sick or what ailment(s) they develop, the demand for drugs, devices, and other healthcare services tends to remain uninterrupted, no matter how well or poorly the U.S. and/or global economy are performing.
In the case of Walgreens, it actually was disrupted by the coronavirus pandemic. With fewer people venturing out during the height of the pandemic, front-end retail sales and clinic-visit revenue declined. However, this temporary weakness is giving investors an opportunity to buy in on the cheap -- not to mention offering added incentive for Walgreens to move forward on a multipoint turnaround plan.
The way I see it, this turnaround has three key tenets. First, it's going to reduce annual operating expenses by more than $2 billion, beginning in fiscal 2022. Management has been clear that the company's goal of cutting costs is ahead of schedule.
Second, significant investments are being made in digitization efforts. It's no secret that big pharmacy chains like Walgreens have long been driven by their brick-and-mortar presence. The pandemic gave them a friendly kick in the backside that more needs to be done with direct-to-consumer sales. Even though online revenue comprises a very small portion of Walgreens' sales, it's a consistent double-digit growth opportunity.
Third, and most exciting, Walgreens Boots Alliance is partnering with VillageMD to open as many as 700 full-service clinics co-located in its stores in more than 30 U.S. markets. Whereas most in-store clinics handle simple tasks like vaccines, this partnership will have on-site physicians. Being a full-service clinic should encourage repeat visits and funnel customers directly to Walgreens' higher-margin pharmacy.
Sporting a nearly 4% yield and a forward price-to-earnings ratio of less than 10, Walgreens is a screaming buy.
To put things mildly, marijuana stocks have been a bit of a buzzkill over the past six months. There was initial euphoria that federal legalization could occur under the Biden administration, but that's since faded as other pressing economic issues have dominated debate in Congress. The thing is, federal legalization isn't necessary for pot stocks to succeed.
In total, 36 states have already waved the green flag on medical marijuana, with half of these states also allowing adult-use consumption and/or retail sales. As long as the Justice Department allows states to regulate their own pot industries, this hands-off approach will lead to some serious success stories.
One of those success stories should be Cresco, which has a two-pronged approach to growing its business.
For starters, it's expanding its retail presence like other multistate operators. Last month, it opened its 34th retail location, and it holds enough licenses to have in the neighborhood of four dozen dispensaries. Though it does have big-market aspirations -- e.g., acquiring Bluma Wellness to take a notable stake in Florida's medical marijuana market -- Cresco's management team loves to go after limited-license states, such as Illinois and Ohio. Markets where license issuance is purposely curtailed by regulators will ensure it has plenty of opportunity to build up its lesser-known brands and garner a following.
But the more exciting growth avenue for Cresco is likely its wholesale operations. Wholesale is typically looked down on by Wall Street for the lower operating margins it provides, relative to retail cannabis. However, Cresco's secret is that it holds one of a select few cannabis distribution licenses in California, the biggest weed market in the world. This license allows the company to place third-party and proprietary pot products into nearly 600 dispensaries throughout the state.
With Cresco Labs expected to be one of the fastest-growing pot stocks through mid-decade, it has a good chance to deliver for its shareholders.
A final smart stock that has the potential to bring the luster back to your portfolio is mid-tier gold and silver mining company SSR Mining (SSRM 0.13%).
Roughly a decade ago, when physical gold hit what was then its nominal high of $1,900 an ounce, gold miners were tossing money at projects as if cash grew on trees. This led many mining companies into debt, which they've spent the past half-decade trying to dig themselves out of. Then there's SSR Mining, which has been conservatively managed and has evolved into one of the best values in the mining industry.
Last year, SSR acquired Turkey's Alacer Gold in a merger of equals. This deal combined SSR's two gold mines (Marigold and Seabee) and one silver-producing asset (Puna operations) with Alacer's flagship Copler mine. Combining forces nearly doubled SSR's expected output, and led management to forecast between 700,000 gold equivalent ounces (GEO) and 800,000 GEO annually through at least mid-decade. Copler and Seabee are already low-cost mines, with capital expenditures at Marigold expected to decline in 2022.
Realistically, SSR could get its all-in sustaining costs down to the $900 to $950 per GEO range by next year, in my estimation. This would net an operating margin of around $900 per GEO.
In addition to steady or growing output, the new SSR anticipates bringing in $450 million in annual free cash flow this year and in 2022. This has allowed the company to commence a $0.05 quarterly dividend, as well as approve an up to $150 million share buyback. And unlike most gold stocks, SSR is swimming in cash. It ended June with a net cash position of more than $500 million, which gives it superior financial flexibility over its peers.
Need another reason to be excited about SSR Mining? Consider the bull case for the physical metals it mines. Historically low bond yields, ongoing quantitative easing from the nation's central bank, and rapidly rising short-term inflation are all reasons people could buy gold as a store of value in the months and years to come. As for silver, a rebounding U.S. and global economy bodes well for increased demand.
In more than a decade of following the mining industry, I've personally come to the conclusion that a cash flow multiple of 10 represents a fair valuation for gold stocks. In SSR's case, it can be scooped up for a shade over five times its expected cash flow for 2021. That's a lustrous opportunity for investors.