The past 14 months have reminded investors the stock market doesn't move up in a straight line. Since the beginning of 2022, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have all fallen into respective bear markets.
However, there is light at the end of the tunnel. Despite not being able to precisely predict when bear markets will occur, how long they'll last, or where the bottom will be, investors do know that every bear market decline throughout history has eventually been completely recouped (and then some) by a bull market. For long-term investors, it means they have a green light to put their money to work whenever the stock market plunges.
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Perhaps best of all, you won't need a mountain of money to build wealth on Wall Street. Since most online brokerages have done away with commissions and minimum deposit requirements, any amount of money -- even $50 -- can be the perfect amount to invest.
If you have $50 ready to put to work right now, which won't be needed at any point over the next couple of years to pay bills or cover emergencies, the following three stocks stand out as no-brainer buys.
Nio
The first surefire stock patient investors can buy with just $50 right now is China-based electric-vehicle (EV) manufacturer Nio (NIO 0.34%).
Nio is certainly a stock that investors are going to want to buy with the expectation of holding five or more years. Nio has the potential to be one of the key players that transforms China's EV industry, but it's not going to be without its speed bumps.
For the past three years, China's COVID-19 mitigation strategy led to unpredictable lockdowns, parts supply shortages, and consumer demand ebbs and flows. This strategy slowed China's economic growth and delayed Nio's ability to ramp up its production. These supply chain issues won't be resolved overnight.
However, China abandoned its zero-COVID strategy three months ago, which is going to steadily reopen and normalize China's economy. Over time, this should allow Nio to rapidly increase its output to closer to 50,000 EVs per month. For some context, the company delivered more than 10,000 EVs in each of the seven months leading up to January (January production tapers due to factory closures tied to Chinese New Year).
Nio's innovation is what's truly impressive. It's been introducing at least one new EV annually for years, and its sedans appear to be a big hit with China's middle- and upper-income consumers. The ET7 and ET5, which rolled into showrooms last year, offer battery upgrades that can expand their driving range to an estimated 621 miles (1,000 kilometers). That's nearly double the standard range of Tesla's flagship Model 3 sedan.
Nio's out-of-the-box innovation is just as eye-opening. The company's battery-as-a-service subscription allows buyers to charge, swap, and upgrade their batteries at more than 1,300 Power Swap stations and over 1,200 Power Charger stations, as well as receive a discount on the purchase price of their EV. In exchange for giving up a little low-margin revenue now, Nio locks customers into a high-margin, recurring revenue subscription that'll keep them loyal to the brand.
A second stock that stands out as a no-brainer buy with $50 right now is social media company Pinterest (PINS 0.34%).
Like Nio, Pinterest is contending with some short-term headwinds. The biggest of these issues is weaker ad spending, which is a reflection of businesses expecting the U.S. economy to either fall into a recession or weaken considerably as interest rates rise. Since Pinterest is an ad-reliant business, it's not a surprise to see its revenue growth slowing a bit over the past couple of quarters.
Despite this short-term slowdown, many of Pinterest's key performance indicators are still promising. After a pandemic-related pop and subsequent drop in monthly active users (MAUs), Pinterest's MAUs are, once again, climbing. Panning out five years shows a relatively steady increase in active users.
More importantly, advertisers are clearly willing to pay a premium to get their message(s) in front of Pinterest's 450 million potential shoppers. Even though the company's MAU count grew by a modest 4% in 2022 from the prior-year period, average revenue per user (ARPU) jumped 10% globally last year, with even higher ARPU growth registered outside the U.S. (sans Europe). Pinterest has never had an issue monetizing its user base.
Something else critically important about Pinterest's operating model is that it doesn't require data-tracking tools to be successful. The entire premise of Pinterest's platform is to have its users willingly share the things, places, and services that interest them on their boards. While declining data-tracking tools might hurt other social media sites, Pinterest can help merchants target customers with ease.
To build on this point, it also sets the company up to become a leading e-commerce player at some point this decade. It's just the tip of the iceberg when it comes to Pinterest's innovation. That's what makes this cash-rich and consistently profitable social media stock a screaming buy.
Image source: Getty Images.
Bank of America
The third stock that makes for a no-brainer buy right now with $50 is financial juggernaut Bank of America (BAC -0.95%).
Investors usually don't buy into bank stocks when the U.S. economy looks to be on the verge of a recession. Banks are cyclical, and therefore prone to higher loan losses during recessions. Additionally, the Federal Reserve often lowers interest rates to spur lending activity during a recession, which means lower net-interest-income-earning potential for banks. But this time is different.
The U.S. inflation rate hit a more than 40-year high in June 2022, and the nation's central bank is solely focused on taming the rate of price increases for goods and services. It's accomplishing this by raising interest rates at the fastest pace in four decades. Even if the U.S. economy falls into a recession, the benefit of more net interest income from Bank of America's variable-rate outstanding loans should more than offset loan losses. In other words, bank stocks can grow their earnings during a recession.
However, Bank of America isn't just any old bank stock. It's the most interest-sensitive of all the domestic money-center banks. During the fourth quarter, BofA's net interest income grew $3.3 billion from the prior-year period to $14.8 billion. Take note that the Federal Reserve isn't done increasing interest rates yet, either.
Although Bank of America is typically viewed as something of a dinosaur among U.S. banks, it's stealthily done a good job of investing in digitization initiatives and encouraging its customers to bank online or via mobile app. BofA ended 2022 with 44 million active digital users and saw almost half of all sales completed online or via mobile app. As more of its customer base shifts to digital transactions, BofA will have the opportunity to lower its operating expenses by consolidating some of its physical branches.
Lastly, don't overlook Bank of America's capital-return program. During bull markets, it's not uncommon for BofA to return in excess of $20 billion annually to investors via share buybacks and its dividend. At a multiple of 9 times Wall Street's forward-year consensus earnings, Bank of America is a deal.
