It was business as usual last week for Wall Street. The benchmark S&P 500 rallied to close at its 58th record closing high for 2021, and has more than doubled since hitting its pandemic trough a little over 19 months ago.
For some investors, the idea of putting money to work in a market that's regularly hitting all-time highs isn't that appealing. However, the reality is that bargains can be found anytime on Wall Street. As long as you're buying great companies with the intent of holding for years, great deals can always be found.
What's more, you don't need to invest a boatload of cash to build wealth. Putting even $300 to work right now is more than enough to begin or further your trek toward financial freedom.
If you have $300 to invest, which won't be needed to cover bills or emergencies, the following trio of companies stand out as no-brainer buys.
The first no-brainer stock investors can confidently put $300 to work in right now is specialty biotech company Vertex Pharmaceuticals (VRTX 1.82%).
Biotech stocks are like the roulette wheel of Wall Street. Many companies are still searching for their first blockbuster drug, and most clinical trials are ultimately going to fail. But when a biotech company hits on a key trial and nabs a Food and Drug Administration (FDA) approval, it can lead to game-changing returns for investors.
Vertex doesn't have these concerns. It's been able to consistently develop blockbuster next-generation therapies for patients with cystic fibrosis (CF). CF is a genetic disease characterized by thick, sticky mucus that can obstruct the lungs and pancreas. Although CF has no cure, Vertex's multiple generations of drugs have focused on improving patient lung function.
The newest combination treatment, Trikafta, targets the most common CF mutation (F508del), and is therefore applicable to about 90% of all U.S. CF patients. Following a positive late-stage clinical trial, the FDA granted Trikafta approval five months ahead of its scheduled review date. It's taken less than two years for Vertex's key drug to hit $5 billion in annual run-rate sales.
Beyond its moneymaking CF franchise, Vertex is developing a little over a half-dozen internally developed, out-licensed, or partnered treatments in a variety of indications, including type 1 diabetes, beta thalassemia, and sickle cell disease. Even though it's unlikely all of these studies will bear fruit, Vertex has a history of developing successful drugs for hard-to-treat indications.
Furthermore, Vertex Pharmaceuticals is swimming in cash. With its CF franchise well-protected from competition, the company ended the midpoint of 2021 with about $6.7 billion in cash, cash equivalents, and marketable securities. This cash will play a key role in funding its numerous clinical studies, partnerships, and may even fuel acquisitions.
It's not often investors have an opportunity to scoop up a biotech stock that qualifies as both a growth and value play, but that's what you'd get with Vertex.
Long-term investors with $300 ready to invest would also be wise to consider putting that money to work in companion animal health insurer Trupanion (TRUP 0.57%).
The pet industry may well be one of the biggest no-brainer opportunities right under investors' noses. Although pet sales growth isn't going to rival major growth trends like cloud computing and cybersecurity, it's about as recession resistant as an industry gets.
According to data from the American Pet Products Association (APPA), close to an estimated $110 billion will be spent on companion animals in the U.S. this year. Further, it's been more than a quarter of a century since year-over-year spending on companion pets declined in the United States. It really doesn't matter whether you throw an epic recession or a pandemic at pet owners -- they'll still open their wallets wide for their furry, scaled, and feathered family members.
During the June-ended quarter, Trupanion hit a milestone that's been two decades in the making: It surpassed 1 million total enrolled pets. This might sound like a big number, but it represents a penetration rate in the U.S. of only 1%. If Trupanion can build up pet insurance penetration to the same level as the U.K. (25%), the company would be staring down an addressable market of closer to $33 billion.
Trupanion offers a couple of key competitive advantages, as well. For example, it's been building priceless rapport at the clinical level with staff and veterinarians for the past 20 years. These clinics are ultimately the frontline marketers of Trupanion's products. Also, Trupanion is the only major pet insurer to provide software to veterinary clinics that handles payment at the time of service. This means less hassle for pet owners and clinic staff.
Though Trupanion isn't yet profitable, its subscription sales have the potential to grow by 20% or more on an annual basis through the midpoint of the decade.
A third no-brainer stock that can be bought right now with $300 is domestic auto giant General Motors (GM 0.44%).
The auto industry has been hit hard by supply chain issues over the past couple of months. Most next-generation vehicles are becoming more reliant on technology and electronics to make driving safer and more family friendly. However, with the semiconductor chips responsible for these next-gen advancements in short supply, auto stocks like GM have been forced to scale back production and take a hit to their sales in the short-term. This operating weakness being driven by supply, not demand, is the perfect opportunity for value investors to pounce.
The single greatest catalyst on GM's doorstep is the electrification of consumer and enterprise automobiles. One of the easiest ways for the world's leading countries to combat climate change is by switching to electric vehicles (EV). This won't happen overnight. In fact, this vehicle replacement cycle will almost certainly take multiple decades. Over this stretch, General Motors should see it growth rate and earnings multiple expand.
Earlier this year, General Motors announced that it would up its spending on EV, autonomous vehicle, and battery research to $35 billion through 2025. The goal being to launch 30 new EVs worldwide by mid-decade. CEO Mary Barra shed additional light on this push last week by noting her company will have four battery cell plants operational in the U.S. by mid-decade, with around $90 billion in revenue driven by EVs come 2030 (up from an estimated $10 billion in 2023).
And it's not just the U.S. that can drive growth for General Motors. China is the world's largest auto market, and GM will likely sell about 3 million vehicles there this year. With clear infrastructure advantages and a number of its brands already well-established in China, General Motors is well-positioned to gobble up EV share in the world's largest auto market.