Since the year began, Wall Street and investors have been offered a stern reminder that stock market crashes and corrections are more common than they probably realize. The latest double-digit correction for the S&P 500 marks its 39th since the beginning of 1950.
While downside moves in the market can be unnerving in the short run, they're historically a great time to put your money to work. That's because every single crash or correction in the S&P 500 throughout history has eventually been erased by a bull market rally.
Perhaps best of all, you don't need a mountain of cash to take advantage of these wealth-building opportunities. With most online brokerages abandoning minimum deposit requirements and commission fees, any amount of money -- even $200 -- is the perfect amount to put to work.
Image source: Getty Images.
If you have $200 ready to invest, which won't be needed to cover emergencies or pay bills, the following three no-brainer stocks can be bought at a discount right now.
The first no-brainer buy is a social media company that's been bruised and battered since the summer: Pinterest (PINS 4.04%). Going into its fourth-quarter earnings release, shares of the company were roughly 70% below their all-time high set last year.
Arguably the biggest concern for Pinterest has been the company's sequential decline in monthly active users (MAUs), which began after the first quarter of 2021. In each of the three subsequent quarters, the platforms' MAUs have dropped (478 million MAUs in Q1 2021 to 431 million MAUs in Q4 2021). In a space where eyeballs tend to be everything, this decline clearly has some folks worried.
However, Pinterest's fourth-quarter operating results and first-quarter outlook, which called for high teens percentage sales growth from the prior-year quarter, put this big concern to rest.
To begin with, a softening or reversal in MAUs was always the expectation after the initial stages of the coronavirus pandemic sent MAU growth into overdrive. With global vaccination rates ticking up, we're simply witnessing MAU growth revert back to historic norms. Plus, according to management, global MAUs were 436.8 million, as of Feb. 1. This suggests the fourth quarter may have been the bottom.
What's far more important is that Pinterest's user monetization still has plenty of momentum. Global average revenue per user (ARPU) jumped 25% globally and 62% internationally during the fourth quarter. Even with fewer MAUs, advertisers are willingly paying more to get their message(s) in front of the company's user base.
This leads to the next key point: Pinterest's perfect operating model. Most social media platforms leave advertisers to do some guesswork when it comes to targeting their message at users. That's not the case with Pinterest. The entire premise of the platform is for users to share what things, places, and services interest them. This makes it easy for merchants to effectively target their ad dollars. In other words, ARPU should continue to rise at a steady pace for a long time to come.
Taking into account the company's steady growth potential and hearty recurring profits, Pinterest is a screaming bargain and no-brainer buy at its current price.
Image source: Getty Images.
Petco Health and Wellness
Another stock that has "surefire buy" seemingly written all over it is companion animal-focused retail chain Petco Health and Wellness (WOOF).
The pet industry may not deliver the jaw-dropping annual growth of cloud computing, cybersecurity, or cannabis, but it's possibly the most recession-resistant industry on the planet. Data from the American Pet Products Association (APPA) shows that it's been at least a quarter of a century since year-over-year U.S. pet expenditures have declined. In other words, pet owners will gladly open their wallets for their furry, feathered, scaled, and gilled family members, even during recessions.
What's more, the coronavirus pandemic has led to a big uptick in demand for companion animals. The 2021-2022 APPA survey found that 70% of all U.S. households owned a pet. That's up from 56% in the first survey, conducted in 1988. More pet ownership means more opportunities for companies like Petco to generate recurring revenue.
Petco is in the midst of a long-term transformation that'll see it focus on high-margin services and digitization. In terms of the former, Petco plans to build out veterinary clinics co-located at its stores. Veterinary practices traditionally produce juicy margins, and demand for vet services should only increase as the companion animal population grows. Petco notes that vet services revenue jumped 24% in the third quarter from the prior-year period.
When it comes to digitization, Petco's management team understands that direct-to-consumer sales are an easy way to sustainably boost organic growth. While driving foot traffic to in-store high-margin services, such as grooming and vet care, is still preferable, convenience in the wake of the pandemic is important to consumers.
Petco is also pushing recurring subscription services as a long-term catalyst. The company's Vital Care program, which offers savings on vet care and grooming, is one such example of keeping consumers loyal to the brand.
With a forward-year price-to-earnings multiple below 20, Petco has the look of a stock that can fetch big gains for patient investors.
Image source: Getty Images.
NextEra Energy
For value and income seekers, the third no-brainer buy with $200 is electric utility stock NextEra Energy (NEE -1.36%).
Traditionally, electric utilities are slow-growing, low-volatility companies that investors buy into for a dividend yield that's higher than what they'd receive from an index fund. However, NextEra is breaking the mold on multiple fronts.
Since the year began, NextEra's shares are lower by 19%. That's a huge move for an electric utility. Then again, NextEra has delivered a positive total return, including dividends paid, in 19 of the past 20 years for its shareholders. Since the Great Recession bottom for the stock market in March 2009, NextEra has produced a total return of almost 1,000%!
What makes NextEra different from the average utility is the company's willingness to spend big on green-energy projects. No utility in the country is currently generating more capacity from solar or wind power. Further, this is unlikely to change anytime soon. The company has been leaning on historically low interest rates to fund renewable energy projects. In total, management expects $50 billion to $55 billion to be spent on new infrastructure between 2020 and 2022.
Although switching to green energy comes with a large upfront price tag, the reward is a consistently above-average growth rate. While many of its peers are growing by a low single-digit percentage, NextEra has grown by a high single digit annual rate for more than a decade.
Additionally, with crude and natural gas prices soaring, NextEra will be better-positioned to weather inflation than other electric utilities.
Taking into account the company's track record of success and its 2% yield, NextEra Energy is a perfect stock for long-term investors to buy following its pullback.
