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3 No-Brainer Stocks to Invest $300 in Right Now

By Sean Williams – Sep 6, 2021 at 6:06AM

Key Points

  • Patience has proven fruitful for long-term investors.
  • The trio of fast-growing companies is ripe for the picking.

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You don't need a mountain of money to generate serious returns with these innovative companies.

Last Thursday, Sept. 2, was business as usual for the stock market. The broad-based S&P 500 notched its 54th record close this year, and has now gone more than nine months without a 5% pullback.

While some investors would be skeptical about putting money to work in a market that would seemingly be overdue for a healthy correction, history has conclusively shown that how long you hold onto your investments is far more important than when you buy. For example, there's never been a rolling 20-year period where the S&P 500 has delivered negative total returns, including dividends.

Best of all, you don't need a boatload of cash to get started in the stock market or to further your trek toward financial independence. If you have $300 ready to invest, which won't be needed for bills or emergencies, the following trio of stocks are no-brainer buys right now.

Three rolled up one hundred dollar bills lined up in a neat row.

Image source: Getty Images.

Redfin

The first no-brainer buy for investors is technology-driven real estate company Redfin (RDFN 1.16%), which has been nearly halved from its all-time high set earlier this year.

On the surface, it makes sense why some on Wall Street would be leery of Redfin's operating performance in the coming years. After all, mortgage rates have been historically low and the likelihood is they'll move higher in the years that lie ahead. This should, presumably, cool buying and selling activity within the housing space. But even with this projected slowdown, Redfin has a number of growth "tricks" up its sleeve.

Where Redfin has been able to really stand out is on the cost-saving front. Most traditional real estate companies charge a 2.5% or 3% listing fee/commission. Meanwhile, Redfin's fee to help you buy or sell a home ranges from 1% to 1.5%, depending on how much previous business was undertaken with the company.

This up to two-percentage-point saving might not sound like much nominally, but it's a mammoth amount of cash when you consider how much home values have appreciated in recent years. According to the National Association of Realtors, the median price for an existing home sold in July was $359,900.  That's up to $7,200 in savings for Redfin customers.

In addition to saving home buyers and sellers a lot of money, Redfin's personalized services are top-notch. For instance, during the pandemic, its use of 3D and virtual tours kept the housing hamster on the wheel, so to speak. The RedfinNow service is also being expanded to new cities. This is a service that allows Redfin to buy homes directly from sellers for cash. This combination of savings and personalization has nearly tripled the company's share of U.S. existing home sales since the end of 2015 (0.44% fourth-quarter 2015 to 1.18% second-quarter 2021). 

Chances are that Redfin can quintuple its sales and push to recurring profitability by mid-decade, compared to 2020. That's a recipe for significant upside in its valuation.

Person sitting on a sectional couch in a furniture expo.

Image source: Getty Images.

Lovesac

Another really smart stock to invest $300 in right now is furniture company Lovesac (LOVE 0.82%).

I know what you're probably thinking, and you're absolutely right: The furniture industry is slow-growing and boring. However, Lovesac is nothing like the industry you're probably thinking of. This company is a true disruptor that's really resonating with millennials.

Although Lovesac first made a name for itself with its sacs (beanbag-style furniture), nearly 85% of its sales these days derive from its "sactionals."  A sactional is a modular couch that can be rearranged in dozens of different combinations to fit any livable space. Sactionals have around 200 possible cover choices, meaning buyers shouldn't have any issue matching Lovesac's furniture to the theme of their home. And best of all, the yarn used in these covers is made entirely from recycled plastic water bottles. This is an eco-friendly product with choice and functionality all rolled up into one.

Beyond its innovative product line, Lovesac is disrupting the furniture industry with its omnichannel presence. Instead of relying almost entirely on a brick-and-mortar presence like traditional furniture companies, Lovesac had online sales and pop-up showrooms in its sales channel arsenal long before the pandemic hit.

When most physical showrooms shut down last year, Lovesac was able to pivot to online sales and maintain its high-growth momentum. In fact, with the company built for lower overhead costs, this shift to online sales actually helped it become profitable far ahead of Wall Street's expectations.

Lovesac may operate in a stodgy industry, but we're talking about an eco-friendly, innovative, online-driven company that could double its sales in under five years. This makes it a good bet to outperform in investors' portfolios.

A person using their credit card to pay a bill in a restaurant.

Image source: Getty Images.

Visa

A third no-brainer stock you can put $300 to work in right now is payment-processing behemoth Visa (V 0.97%). Every single double-digit percentage dip in Visa has been a buying opportunity since it became a public company, which means there's a good chance its recent pullback is simply a gift for patient investors.

Why Visa? To begin with, Visa is a cyclical business that benefits from the expansion of consumer and enterprise spending over time. Like most financial stocks, it's going to be hit by recessions. The thing to understand is that recessions normally last a few months to a couple of quarters. By comparison, periods of economic expansion often go on for years, if not a decade. Buying shares of Visa allows investors to take advantage of these disproportionately longer periods of expansion.

Another reason Visa is such an amazing company is its dominance in the leading market for consumption -- the United States. In 2018, Visa controlled approximately 53% of all credit card network purchase volume in the U.S., which was more than 30 percentage points higher than the next-closest competitor. What's more, Visa's share of credit card network purchase volume grew faster than any other traditional payment platform following the Great Recession (2007-2009).

Visa also excels as a result of its lending avoidance. Although some of its peers do double as payment processors and lenders (e.g., American Express and Discover Financial Services), Visa chooses to strictly focus on payment processing. When recessions do inevitably strike, Visa doesn't have to set aside capital for delinquent credit accounts. This is the reason it bounces back from recessions so quickly, and why its profit margin is consistently above 50%.

Just because Visa is a mega-cap stock doesn't mean it won't continue to deliver for investors.

American Express and Discover Financial Services are advertising partners of The Ascent, a Motley Fool company. Sean Williams owns shares of The Lovesac Company. The Motley Fool owns shares of and recommends Redfin and Visa. The Motley Fool recommends Discover Financial Services and recommends the following options: short August 2021 $65 puts on Redfin. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Visa Stock Quote
Visa
V
$213.79 (0.97%) $2.06
Redfin Stock Quote
Redfin
RDFN
$5.23 (1.16%) $0.06
The Lovesac Company Stock Quote
The Lovesac Company
LOVE
$25.93 (0.82%) $0.21

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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