It's a popular misconception that you need a lot of money to start investing. But the truth is that investors can buy growth stocks for less than $100. The key to investing is diversifying your portfolio with good stocks from high-growth industries and holding them for the long haul.
This "buy and hold" strategy is especially helpful for beginner investors. Looking ahead and and staying focused on a long-term vision can help to weather the storm of short-term headwinds and stock slumps. Let's take a look at three stocks from different industries that have promising long-term potential and each trade for under $100 per share.
1. Pinterest
Social media stock Pinterest (PINS -0.52%) has been on a roller coaster ride since the pandemic. It drew a lot of traction during lockdowns when online-based platforms became hugely popular. But as the pandemic waned, the stock got hammered by investors who thought the business had been artificially inflated by the pandemic. However, Pinterest has proven investors wrong with its recent quarterly results.
Since before the pandemic, Pinterest has increased fourth quarter revenue by 120%, up to $877 million in the final quarter of 2022, compared to about $400 million in the same period of 2019. Monthly active users (MAU) has also seen a notable 34% increase in that time frame.
Though the company reported losses in the first three quarters of 2022, the most recent period reversed that trend and brought in GAAP net income of $17 million. Management believes that the company's efforts in creating more personalized, timely, and engaging content are boosting its MAU and mobile app user growth. In Q4, global mobile app users increased by 14% year over year.
Pinterest has spent a lot of money to increase user engagement and attract more advertisers. In 2022, it spent $949 million on research and development and $933 million on sales and marketing. The company is also well-positioned for a successful 2023, with a strong balance sheet that closed 2022 with $2.7 billion in cash and cash equivalents.
Pinterest continues to be an innovative platform for bringing together small businesses from various industries and attracting more customers. The recovery of the ad market will boost Pinterest's growth even more.
The stock currently trades for around $25. Pinterest's price-to-sales ratio sits at around 5.9, down significantly from its sky-high valuation in early 2021, making it a good opportunity for long-term investors to capitalize on.
2. Medtronic
Medical device company Medtronic's (MDT -1.12%) recent quarterly results might be a tad disappointing owing to external macro headwinds. Total revenue in the third quarter of fiscal 2023 (ended Jan. 27) was flat versus the prior-year quarter at $7.7 billion. Adjusted earnings per share fell 4% year over year to $1.30.
But what's most impressive is how the company has kept its business stable for years, allowing it to pay dividends consistently. Medtronic has 45 years of consistent dividend increases. Its dividend yield is 3.2%, which is significantly higher than the S&P 500's 1.7% average yield.
It had $2.5 billion in free cash flow at the end of the quarter, which will help fuel its growth strategies and dividend payouts this year.
Medtronic's management also expects revenue growth to remain stable in the coming quarters as short-term headwinds fade. In the medical device market, the company has a lot of potential. According to Fortune Business Insights, this market could grow at a compounded rate of 5.5% between 2022 and 2029, when it is estimated to reach $719 billion.
Furthermore, Medtronic has now expanded into the burgeoning robotic surgery industry. The Hugo RAS system, its robotic-assisted device, has been approved for use in international markets. The company saw Hugo garner positive sales momentum in global markets, according to management. Hugo was also used the first robotic-assisted urological procedure in the United States in December.
Trading at around $83 a share, Medtronic's diverse product portfolio and consistent dividend payouts make it an appealing healthcare stock.
3. Cresco Labs
Illinois-based Cresco Labs (CRLBF 2.49%) may have slightly fewer dispensaries than some of its larger competitors, but that's not stopping the cannabis company from firing on all cylinders. Cresco's revenue for fiscal year 2021 (ended Dec. 31, 2021) was $822 million. The company should report 2022 results in March, but its trailing 12 month revenue is $860.89 million.
The company could get much bigger once it completes its acquisition of another cannabis company, Columbia Care. The deal should close at the end of first quarter 2023 and will add another 130 dispensaries to Cresco's portfolio.
The company is also working on long-term profitability by closing underperforming facilities to save money. This strategy weighed on its most recent quarterly results. Adjusted EBITDA fell to $42 million in the third quarter (ended Sept. 30), down from $56 million the previous year, while revenue fell 2% to $210 million. However, management says Cresco should benefit in the long run, growing market share in key state markets as Pennsylvania, Ohio, and Florida look to legalize cannabis.
Cresco has not yet entered international markets, but this could happen sooner rather than later. While federal legalization in the United States appears to be a long shot, the international cannabis market is enormous. Allied Market Research estimates that by 2031, the rapidly expanding global cannabis market could be worth $149 billion.
Expect strong and stable companies like Cresco to continue spreading their roots. Cresco is currently trading for $1.74 and is valued at 0.61 times sales, indicating that it is likely undervalued and making now an excellent time to buy.
