Over the past couple of weeks, Wall Street and investors have been given a stern reminder that stock market crashes and corrections are a normal part of the investing cycle.
But something else that's commonplace is having bull markets significantly outpace corrections and bear markets in both length and magnitude. In other words, pullbacks in stocks tend to be short-lived, with long-term investors benefiting from higher valuations in quality companies over time.
Best of all, you don't need a mountain of cash to take advantage of these pullbacks. With most online brokerages eliminating commissions and minimum deposit requirements, any cash sum -- even $300 -- is the perfect amount of money to invest in the stock market during a pullback.
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If you have $300 ready to invest, which won't be needed to pay bills or cover emergencies, the following three no-brainer stocks would make for perfect buys right now.
General Motors
In an environment where inflation is at a four-decade high and the Federal Reserve is expected to hike interest rates multiple times in 2022, value stocks can be a no-brainer buy. That's why shares of auto stock General Motors (GM -0.04%) would be a smart place to put $300 to work right now.
Traditionally, auto stocks have mid-to-high single-digit price-to-earnings (P/E) multiples as a result of the cyclical nature of the auto industry and the large debt loads automakers typically carry on their balance sheets. In GM's case, it's valued at 7.5 times Wall Street's earnings forecast in 2022.
However, the traditional way of valuing auto stocks like General Motors may not make sense anymore given the opportunity of a lifetime that's on the industry's doorstep. The electrification of consumer and enterprise vehicles is a multi-decade runway for GM and its peers to deliver steady growth well above what they've produced over the previous two decades.
With the understanding that most developed countries are going to push for more electric vehicles (EVs) on their roads, General Motors announced in June 2021 that it would be upping its aggregate investment in EVs, autonomous vehicles, and batteries to $35 billion by 2025. CEO Mary Barra expects to have two facilities devoted to battery production by 2023, with the company rolling out a grand total of 30 new EVs globally by mid-decade.
In addition to advancing its next-gen automotive line for businesses and consumers, General Motors is focused on global expansion. Last year, GM delivered 2.9 million vehicles in China, the world's No. 1 auto market. General Motors has more than a century of history behind its brand, as well as the infrastructure needed to be a leader in the electrification of autos in China. Considering how young the China EV market still is, GM is a good bet to be one of many key players.
Long story short, a P/E ratio of 7.5 doesn't do justice to GM's sustainable growth potential on the heels of the EV revolution.
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CrowdStrike Holdings
Another perfect example of a no-brainer buy is a company that stands head and shoulders above its competition: cybersecurity stock CrowdStrike Holdings (CRWD -0.68%).
When you think of basic necessity goods and services, things like food, water, and electricity probably come to mind. But if you're a business with an online presence, cybersecurity has effectively become a basic need service. No matter the size of the business, or how well the economy is performing, hackers and robots don't take time off from trying to steal company and customer data. As businesses shift their data into the cloud at a swifter pace in the wake of the pandemic, it's third-party providers like CrowdStrike that are the real beneficiaries.
What makes CrowdStrike tick is the company's cloud-native security platform, known as Falcon. Being built in the cloud and relying on artificial intelligence to grow smarter over time, Falcon can detect and respond to threats more effectively than on-premises security solutions. According to the company, Falcon oversees roughly 1 trillion events daily.
In terms of end-user security, CrowdStrike is the premier stock to own and has quickly become a favorite among businesses of all sizes. In less than five years, CrowdStrike's subscriber count has moonshot from 450 to nearly 14,700, all while consistently retaining approximately 98% of its customers.
What's more, CrowdStrike isn't just growing because it's picking up new clients. A sizable portion of its expansion is organic. In the same period it took for its subscriber count to go from 450 to nearly 14,700, the number of clients that had purchased four or more cloud-module subscriptions jumped from a high single-digit percentage to 68%. Because cloud subscriptions offer such juicy margins, the company's adjusted subscription gross margin is already at 79%. Considering CrowdStrike is still in the early stages of its growth, this gross margin figure alone is enough to make it a no-brainer buy.
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Visa
A third no-brainer stock patient investors can buy right now with $300 is payment-processing giant Visa (V 0.33%).
Arguably the best thing about Visa is the company's cyclical ties. Cyclical businesses tend to perform well when the U.S. and global economy are growing, and they perform poorly or struggle when contractions or recessions arise. It's easy to understand why Visa, which relies on higher consumer and enterprise spending to grow, can perform poorly during recessions.
But the key point here is that contractions and recessions don't last very long. Whereas recessions are typically measured in months or quarters, economic expansions almost always last multiple years, if not a decade. Buyers of Visa stock are simply biding their time during contractions, recessions, and stock market corrections, because they understand the numbers game is working in their favor over the long run.
Another reason to like Visa is its dominant position in the world's top market for consumption: the United States. In 2018, Visa controlled a 53% share of credit card network purchase volume in the U.S., which was more than 30 percentage points higher than its next-closest competitor, Mastercard.
Like GM, Visa isn't simply satisfied being a major domestic player. It acquired Visa Europe in 2016 to broaden its reach, and is expected to expand its infrastructure organically into underbanked emerging market regions in the Middle East, Africa, and Southeastern Asia, in the years and decades to come. There's are a long runway for Visa to maintain a high single-digit or low double-digit growth rate.
Lastly, it's important for investors to note that Visa is purely a payment processor and not a lender. Although it could generate fees and interest income from lending, doing so would also expose the company to credit/loan delinquencies during periods of recession or economic contractions. Since it isn't a lender, Visa doesn't have to set aside capital to cover loan losses. This is what ensures its profit margin stays above 50%.
