For the past 19 months, Wall Street and investors have enjoyed an epic stock market rally. Since the widely followed S&P 500 bottomed out on March 23, 2020, the benchmark index has doubled in value. It's the strongest bounce-back rally from a bear market bottom in history.
Yet, value can still be found. As long as you approach your investments with a long-term mindset, a number of great companies can be scooped up today at what may look like bargain-basement prices years from now.
Further, you don't need a mountain of cash to begin or further your journey to financial freedom. If you have $250 ready to be invested that won't be needed for emergencies or to cover bills, the following companies are some of the smartest stocks you can buy right now.
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BioMarin Pharmaceutical
The first exceptionally smart buy with $250 is biotech stock BioMarin Pharmaceutical (BMRN 0.40%). Though it's significantly underperformed the broader market over the past couple of years, brighter days may lie ahead.
To start with the basics, BioMarin is a healthcare company. As a general rule, healthcare stocks tend to be unaffected by the ebbs and flows of the U.S. economy and stock market. Since we don't get to choose when we get sick or what ailment(s) we develop, there's a fairly steady stream of demand for drugs, devices, and healthcare services year-round. Essentially, patients don't stop needing care just because Wall Street or the U.S. economy hits a rough patch.
Aside from being in a highly defensive sector, BioMarin is special because it targets ultra-rare diseases. Although developing treatments for small patient pools is risky, the reward is bountiful. The company often contends with minimal or nonexistent competition, and the high list prices it passes along on brand-name drugs rarely face any pushback from health insurers.
At the moment, BioMarin has a half-dozen Food and Drug Administration (FDA)-approved therapies, many of which are still growing sales by a double-digit percentage. For example, sales for Vimizim, Naglazyme, and Brineura have grown by 30%, 16%, and 16%, respectively, through the first half of 2021. Combined, these double-digit sales drivers have accounted for 64% of BioMarin's net product revenue this year.
But Wall Street should also be excited about two late-stage candidates that have a good shot at U.S. approval. The first is BMN 111, a treatment for achondroplasia in children that's been approved in the European Union and is marketed under the name Voxzogo. Though estimates vary wildly, peak sales for BMN 111 should easily top $500 million.
The second drug hopeful is hemophilia A candidate BMN 270, which is better known as Roctavian. Though initially rejected by the FDA due to a lack of data concerning its long-term efficacy, BioMarin should have all the necessary data for an FDA review in 2022.
Between these two drug hopefuls and the company's existing product portfolio, a doubling in sales over the next five years is a distinct possibility. This is all the more reason to buy into the BioMarin Pharmaceutical growth story.
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GrowGeneration
A second smart stock investors can buy right now with $250 is hydroponic and organic retail gardening chain GrowGeneration (GRWG 3.04%).
The GrowGen story is really all about cannabis. According to marijuana analytics company BDSA, weed sales in the U.S. are expected to grow by an annual average of 14% and eventually hit $47.6 billion by 2026. This represents the bulk of global cannabis sales, which BDSA estimates will be at $62.1 billion in 2026.
The great thing about the U.S. pot industry is that the federal legalization isn't necessary. Although marijuana's Schedule I classification at the federal level creates some annoying operating inefficiencies -- cannabis cannot be transported between states (even legal states) -- it hasn't stopped 36 states from legalizing pot in some capacity. With the Department of Justice maintaining a hands-off approach, individual states are free to regulate their own cannabis industries, which is allowing direct and indirect players to thrive.
GrowGeneration may well be the premier ancillary marijuana stock to own. GrowGen's rapidly expanding retail and wholesale operations cover everything from hydroponics, soil and nutrient options to lighting, fans, and humidifiers. In other words, it's perfectly positioned to help growers of all sizes maximize their yields in a rapidly growing market.
What's made GrowGen so intriguing is the company's inorganic growth focus. Although same-store sales growth has consistently ranged between 48% and 73% over the past eight quarters (ended June 2021), management has leaned on acquisitions to expand the company's reach. As an example, GrowGen's garden-center count more than tripled at the end of June from the prior-year period. While acquisitive-based growth can lead to higher costs in the near term, GrowGen shouldn't have any issue translating these buyouts into beefier long-term profits.
What investors should really like about GrowGeneration is the shellacking the company's stock has taken since the beginning of the year. With federal legalization hopes once again placed on the back burner, GrowGen's shares have been more than halved. But at its current valuation, investors now have a chance to scoop up shares at less than three times Wall Street's forecasted sales for 2022. With the company firmly profitable on a recurring basis, the time to pounce is now.
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Freshpet
A third and final smart stock investors can buy right now that offers plenty of "paw-tential" is natural pet food and treat manufacturer and retailer Freshpet (FRPT -0.32%).
The pet industry's growth rate is dwarfed by the likes of cloud computing, cybersecurity, and even cannabis. But when it comes to consistent, recession-resistant growth, the pet industry is about as steady as it gets.
According to data from the American Pet Products Association, the number of U.S. households owning a pet has grown from 56% in its first survey back in 1988 to 70% in its 2021-2022 survey. This equates to 90.5 million households that are on pace to spend almost $110 billion on their furry, feathered, and scaled family members this year.
Perhaps even more impressive is the fact that year-over-year spending on companion animals in the U.S. hasn't declined for over a quarter of a century. No matter how steep the recession or terrifying the crisis, pet owners will continue spending big bucks to ensure the health and well-being of their animal family. And at the top of that spending budget is pet food and treats.
Just as grocery stores embraced the organic and natural food movement in the 2000s, companies like Freshpet have come to realize that pet owners will pay a higher price if they can purchase better quality food and treats for their dog or cat. Incidentally, higher price points are yielding better margins for Freshpet.
Although the company has a burgeoning online presence -- e-commerce sales have skyrocketed in the wake of the pandemic -- most of its sales originate in brick-and-mortar stores. At the retail level, the dollar velocity of Freshpet's wet and dry dog-food brands is the highest among more than a dozen other pet-food brands in the United States.
In plainer English, Freshpet is seeing its pet food fly off the shelves faster than its peers. For the time being, the company has approximately 40,000 of its Freshpet fridges in retail stores.
What's even more amazing is how quickly Freshpet's sales have grown, considering that it's still relatively early in its advertising ramp up, which is designed to increase brand awareness.
This is a company on the cusp of recurring profitability that could reasonably deliver sustainable sales growth of 20% to 40% annually through the midpoint of the decade. Suffice it to say, Freshpet belongs in investors' portfolios.
