Ready or not, stock market volatility is back! January saw the tech-heavy Nasdaq Composite and broad-based S&P 500 undergo their steepest corrections since the initial stages of the coronavirus pandemic in March 2020.
But where there's heightened volatility, there's almost always opportunity for long-term investors. With every previous correction eventually erased by a bull market rally, dips in the broader market represent the perfect time to put money to work.
Best of all, you don't need a mountain of cash to take advantage of these market declines. Any amount of money -- even $400 -- can be the ideal amount to build wealth during corrections.
If you have $400 ready to invest, which won't be needed to cover emergencies or pay bills, the following three no-brainer stock are begging to be bought right now.
Buying industry leaders that are riding sustained double-digit growth trends is often a recipe for success when a correction occurs. That's why cloud-based customer relationship management (CRM) software solutions provider Salesforce.com (CRM 3.22%) makes for such a no-brainer buy.
CRM software is what consumer-facing businesses use to enhance existing relationships with clients and boost their sales. It can handle simple tasks, like managing product or service issues and accessing real-time client information, to more complex jobs, such as overseeing an online marketing campaign or running predictive sales analyses for a new product or service. CRM software is a natural fit for the service industry, but it's been finding plenty of growth runway in the industrial, financial, and healthcare sectors in recent years.
Salesforce is the overwhelmingly dominant player in CRM software. According to an IDC report, Salesforce accounted for 23.9% of global CRM spend in the first half of 2021, and was the leading revenue generator of CRM solutions for the eighth straight year. In fact, the next four-largest CRM players don't even add up to Salesforce's nearly 24% share. It's consistently gained share for years, which makes it unlikely to be dethroned as the go-to CRM solutions provider anytime soon.
Aside from its dominant market share, the company's growth is also a reflection of CEO and co-founder Marc Benioff making prudent acquisitions to expand the company's ecosystem and reach. Some of the more notable and successful purchases include MuleSoft, Tableau, and Slack Technologies. The Slack buyout was completed last July and gives Salesforce access to a broad array of small-and-medium-sized businesses. In addition to expanding its revenue stream, Slack gives Salesforce the ability to cross-sell its solutions.
Few mega-cap companies have delivered more consistent growth over the past two decades. With Benioff forecasting that sales can grow from $21.3 billion at the end of fiscal 2021 to at least $50 billion by fiscal 2026, any significant dip in Salesforce's shares is an opportunity for patient investors to pounce.
Another no-brainer buy with $400 for opportunistic investors is regional banking giant U.S. Bancorp (USB 3.31%).
Like all bank stocks, U.S. Bancorp is highly cyclical -- but that's not a bad thing. Even though banks do come under pressure from higher loan/credit delinquencies when recessions inevitably arise, these periods of contraction tend to only last a few months to a couple of quarters. By comparison, periods of expansion are almost always measured in years. In other words, buying bank stocks allows investors to take advantage of the U.S. or global economy expanding over time.
Beyond having a numbers game advantage, U.S. Bancorp also benefits immensely from its digital presence. Arguably, no big bank has had more success in shifting core banking transactions online or to its mobile app. During the fourth quarter (ended Nov. 30), the company completed 81% of all transactions digitally, with 66% of all loan sales coming from online or mobile sources. That's up from just 45% of all loan sales being completed digitally, as of Jan. 1, 2020. Digital transactions are considerably more cost-effective for the company, and they've allowed U.S. Bancorp the ability to further reduce its expenses by consolidating some of its branches.
Although it's not the most interest-sensitive big bank, U.S. Bancorp should also see a healthy uptick in net interest income as the Federal Reserve begins its rate-hiking cycle. With January's trailing 12-month inflation hitting a 40-year high of 7.5%, higher lending rates are a given. That means more money for banks with outstanding variable-rate loans.
Lastly, investors can appreciate U.S. Bancorp's steady and conservative management team. Whereas money-center banks have previously been lured by risky derivative markets, U.S. Bancorp has primarily stuck to the bread and butter of banking: loan and deposit growth. This allows it to bounce back quickly from recessions and produce some of the highest return on assets in the banking industry.
Novavax is one of more than a dozen drugmakers that have worked on therapeutics to treat the coronavirus disease 2019 (COVID-19). But unlike many vaccine developers, Novavax's lead vaccine, NVX-CoV2373, has hit rarified territory when it comes to efficacy.
To date, there have been three key studies published. In March and June of last year, Novavax announced that its large-scale studies in the U.K. and U.S./Mexico produced respective vaccine efficacies (VEs) of 89.7% and 90.4%. Then, earlier this week, Novavax released data on adolescents, which showed that its vaccine offered an 82% VE against the delta variant (the dominant variant at the time of the study). Only three COVID-19 vaccine developers have hit the 90% VE mark, and Novavax is one. This makes it a logical choice to become one of the key players in the global vaccination campaign.
Something else to consider is that the SARS-CoV-2 virus that causes COVID-19 has continued to mutate and produce new variants. This makes it likely that COVID-19 becomes an endemic illness, similar to the flu. While that's not great news for the world, it's fantastic news for Novavax and its drug-development platform. Instead of NVX-CoV2373 just being a one-hit wonder for initial inoculations, Novavax should enjoy a recurring revenue stream dependent on booster shots, variant-specific vaccinations, and possibly even combination vaccines (e.g., an influenza and COVID-19 booster combined into one shot).
The only reason Novavax is so inexpensive (less than 4 times forecast earnings per share in 2022) is because the company delayed a number of key regulatory filing for its COVID-19 vaccine last year, and it's run into snafus while ramping production this year. Though any issues are less-than-ideal, it's important to recognize that these problems are short-term in nature. Novavax has a wildly successful vaccine that shouldn't have any trouble becoming a key solution over time.