In a little over 15 days, we'll turn the page on what should go down as another outperforming year for Wall Street. The broad-based S&P 500 was higher by 25% through this past weekend, which more than doubles up its average annual total return of 11% over the past four decades.
But regardless of whether the market is near an all-time high or not, there are always bargains to be found for patient investors.
Best of all, you don't need a boatload of money to buy Wall Street's best stocks. Since most online brokerages have eliminated minimum deposit requirement and commission fees, any amount of money -- even $100 -- can be the perfect amount to build wealth.
If you have $100 ready and raring to go for 2022, here are four of the best stocks you can buy.
Innovation is king on Wall Street, which is why cloud-based advertising technology company PubMatic (PUBM -0.64%) can be confidently bought in 2022.
Four decades ago, before the internet was a thing, buying and selling ads was a slow and arduous process that required a lot of human input. Thankfully, the advent of the internet allowed businesses to focus on programmatic advertising -- i.e., allowing technology to automate the buying, selling, and optimization of ads.
PubMatic's entire operating model is built on machine-learning algorithms that go to work for its clients: the publishers. The company's cloud-based infrastructure sells digital advertising space. The interesting thing is the platform doesn't always sell this space to the highest bidder. PubMatic fully understands that providing relevant content to users will not only make advertisers happy, but it'll eventually increase the pricing power of display space for the company's clients over time. If publishers make more money, so will the company.
To say that PubMatic has been crushing it would be an understatement. Existing clients have spent at least 50% more on a year-over-year basis in four consecutive quarters, and the company has consistently doubled up the average growth rate for global digital ad spend. In short, it's a small-cap stock with large-cap aspirations.
Bristol Myers Squibb
Speaking of large-cap stocks, value investors would be wise to consider putting $100 to work in pharmaceutical giant Bristol Myers Squibb (BMY -1.15%) next year.
There are three reasons investors should be excited about Bristol Myers, no matter what happens with the U.S. economy or stock market in 2022. First, it's a highly defensive stock. Since people don't get to choose when they get sick or what ailment(s) they develop, there tends to be pretty steady demand for drugs, devices, and healthcare services.
Second, Bristol Myers' internal growth engine is chugging along nicely. Oral anticoagulant Eliquis, which was developed in cooperation with Pfizer, should push for $10 billion in sales for the company this year. Likewise, cancer immunotherapy Opdivo is approved in 10 U.S. indications and is likely to benefit from increased pricing power and label expansion opportunities over time. Opdivo brought in around $7 billion in sales in 2020.
Third, the company made a smart acquisition of cancer and immunology drugmaker Celgene in late 2019. This deal added a handful of blockbuster drugs to Bristol's portfolio, but the prized asset is cancer drug Revlimid. Revlimid has generated double-digit annual sales growth dating back more than a decade, and it's liable to produce more than $13 billion in revenue this year.
At just 7 times Wall Street's forward-year consensus earnings estimate, Bristol Myers Squibb is an absolute steal of a deal.
Want a mix of growth and value? Marijuana stocks are one of the best places to look to find that combination. In particular, U.S. multi-state operator (MSO) Cresco Labs (CRLBF -9.09%) would be a smart stock to put $100 to work in for 2022.
Before digging into what makes Cresco so intriguing, let's address the elephant in the room: The U.S. federal government doesn't have to legalize weed for pot stocks to succeed. As long as the federal Justice Department allows the 36 legalized states to regulate their own industries, a majority of MSOs will perform just fine.
Cresco Labs' success is built on a two-pronged strategy. First, as with most MSOs, the company is focusing its attention on high-dollar and limited-license markets, such as Illinois and Ohio. Regulators in limited-license markets purposely cap how many dispensaries can open, as well as how many retail licenses a single business can hold. This competition-encouraging regulation ensures that Cresco is given a chance to build up its brands and garner a following in key markets.
The second key to Cresco's rapidly growing sales is its industry-leading wholesale operations. Wall Street analysts often snub their nose at wholesale cannabis due to its significantly lower margins than the retail side of the equation. But what Cresco lacks from a margin perspective, it more than makes up for with volume. That's because it holds a cannabis distribution license in California, the top weed market in the world. Being able to place its proprietary pot products in over 575 dispensaries statewide makes Cresco a budding superstar of a stock.
Annaly Capital Management
Finally, I haven't forgotten about you, income investors. One of the best stocks to buy with $100 in 2022 is ultra-high-yield dividend play Annaly Capital Management (NLY 3.65%). For those curious, Annaly was paying out a cool 10.5% yield as of this past weekend, and has averaged about a 10% yield over the past two decades.
Annaly is a mortgage real estate investment trust (REIT). While the industry might sound complicated, it's pretty easy to unpack. Mortgage REITs aim to borrow money at lower short-term rates, and they use this capital to buy assets with higher long-term yields, such as mortgage-backed securities (MBS). Annaly is simply trying to maximize the difference between the yield it receives minus the borrow rate. This difference is known as net interest margin.
What makes Annaly so intriguing is that we've reached the sweet spot of the growth cycle for mortgage REITs. When bouncing back from a recession, we almost always see the interest rate yield curve steepen. This is to say that the gap between short-term and long-term U.S. Treasury bond yields widens. If this is accompanied by transparent Federal Reserve policy, we usually see a healthy expansion in the net interest margin for mortgage REITs.
Something else to consider with Annaly Capital Management is its focus on agency assets. An agency security is backed by the federal government in the event of a default. Although this added protection does have a negative effect on the yields of the MBSs Annaly purchases, it also allows the company to utilize leverage to its advantage.
With Annaly valued right around its book value and trouncing the prevailing inflation rate with its monster yield, it's the perfect stock for income investors to buy for the new year.