It's been a rough start to the year for Wall Street and the investing community. Both the iconic Dow Jones Industrial Average and benchmark S&P 500 are officially in correction territory (down at least 10% from recent highs). Meanwhile, the tech-dependent Nasdaq Composite has pushed lower by more than 20% from its all-time high. This puts the index in a bear market.
While the velocity of moves lower in the market can be scary at times, history has shown time and again that stock market crashes and corrections are an ideal time to put your money to work. That's because every single correction throughout history has eventually been erased by a bull market rally.
Best of all, with most online brokerages eliminating commissions and minimum deposit requirements, any amount of money -- even $200 -- is the perfect amount to invest when the market corrects lower.
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If you have $200 ready to invest that won't be needed to pay bills or cover emergencies, the following three stocks are no-brainer buys during the market sell-off.
Western Digital
The first beaten-down stock to buy hand over first during this sell-off is data storage solutions provider Western Digital (WDC 0.90%).
Anyone who's followed Western Digital for any reasonable amount of time knows that it's highly cyclical (i.e., it depends on a growing U.S. and global economy to thrive). They're also likely aware that Western Digital and its peers have a way of sabotaging themselves by oversupplying the market with data storage solutions when pricing improves.
While this has been a very real concern for a long time, the COVID-19 pandemic has adversely impacted supply chains globally. For Western Digital, it means no chance of oversupplying the market and substantially stronger pricing power throughout fiscal 2022 and probably 2023.
In terms of growth drivers, Western Digital has a number of near-term and long-run catalysts. Over the next year or so, the company will continue to benefit from residual sales growth tied to the gaming industry. Next-generation gaming consoles require beefed-up storage solutions. With COVID-19 weighing on the holiday shopping season over the past two years, there remains plenty of demand for newer gaming consoles.
There's also strong near-term demand and long-term opportunity when it comes to data centers. With businesses shifting their data into the cloud at a faster rate than ever before, demand for hard-disk drives in data centers should grow. Over the long term, Western Digital's NAND flash-memory solutions could become the standard in data centers.
Western Digital's opportunity extends to the automotive industry, as well. As next-gen vehicles become more dependent on technology, Western Digital will be relied on even more to provide solutions ideal for these connected automotive systems.
With shares of the company valued at a mere five times Wall Street's estimated earnings for fiscal 2023, now looks like a great time to buy.
Image source: Getty Images.
Cresco Labs
A second no-brainer stock to buy with $200 during the market sell-off is marijuana stock Cresco Labs (CRLBF 2.50%).
To be blunt (and use a terrible pun while doing so), pot stocks have been a buzzkill since February 2021. The expectation had been that a Democrat-led Congress would quickly pass cannabis reforms last year. But these reforms haven't materialized, and Wall Street has shown its displeasure.
However, federal legalization isn't necessary for marijuana stocks like Cresco Labs to succeed. While legalization would eliminate certain operating inefficiencies, 37 states have, thus far, given cannabis the green light in some capacity. That's more than enough states for multi-state operators (MSOs) to be successful.
What makes Cresco Labs so intriguing is the company's dual approach to growth. First, like most MSOs, the company has a burgeoning retail presence. The next dispensary Cresco opens will be its 50th.
Although it does have a growing presence in Florida -- 16 of these 50 dispensaries will be located in the medical-marijuana-legal Sunshine State -- Cresco has focused quite a bit of its attention on building up its retail presence in limited-license states, such as Illinois, Ohio, and Massachusetts. Limited-license states cap the total issuance of dispensary licenses, which allows Cresco to build up its brand(s) and gain a loyal following without being overrun by competition.
The secret sauce to Cresco's success is the company's wholesale operations. Wall Street analysts often heavily discount wholesale cannabis due to its lower margins relative to the retail side of the equation. But Cresco has significant volume on its side.
It holds one of only a select few cannabis distribution licenses in California, the world's largest weed market by annual revenue. This license allows Cresco to place its proprietary pot products into more than 575 stores throughout the Golden State.
Cresco is expected to turn the corner to recurring profitability this year, making now the perfect time to scoop up this rapidly growing pot stock.
Image source: US Bank.
U.S. Bancorp
The third no-brainer stock to buy with $200 as the market pushes deeper into correction territory is regional-banking giant U.S. Bancorp (USB -1.06%).
Big-bank stocks across the globe have been hit hard over the past couple of weeks due to the uncertainty surrounding the Russia-Ukraine conflict, as well as rapidly rising inflation. The worry with the latter is that higher prices will push the domestic or global economy into a recession, leading to an increase in credit/loan delinquencies. While these might be tangible concerns for the banking industry as a whole, U.S. Bancorp shareholders shouldn't be worried.
One of the most important things to understand about U.S. Bancorp's management team is that they're generally conservative. Whereas money-center banks got themselves in trouble during the financial crisis by making riskier derivative bets, U.S. Bancorp has kept its head down and focused on the bread and butter of banking -- i.e., growing its loans and deposits. A high-quality loan portfolio has helped the company quickly bounce back from economic downturns.
To build on this point, investors should understand that banks are cyclical -- and that's a good thing. Even though recessions are an inevitable part of the economic cycle, periods of economic expansion last considerably longer than recessions. This is a fancy way of saying that banks benefit over the long run from the steady growth of the U.S. economy.
Something that really separates U.S. Bancorp from the pack is its ability to encourage customers to bank digitally. As of the end of November, 80% of the company's total active customers were banking online or via mobile app. What's more, 66% of all loan sales were completed digitally, which was up 21 percentage points from the beginning of 2020. Digital transactions are far more cost-effective than in-person or phone-based interactions.
Offering one of the highest return on assets among big bank stocks, U.S. Bancorp checks all the appropriate boxes to be a no-brainer buy.
