As much as we'd enjoy a stock market that never declined, stocks can and do move in both directions. Last year, all three major U.S. stock indexes tumbled into respective bear markets and produced their worst returns since the financial crisis.
But short-term pain has been known to give way to long-term gains. Despite 39 official stock market corrections in the benchmark S&P 500 since the beginning of 1950, all but the current decline eventually gave way to a bull market rally that took the broader market to new highs. At some point in the future, the current bear market is all but certain to share this fate. It's what makes bear markets such an ideal time to put your money to work.
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One of the best aspects of investing on Wall Street today is that you're doing so in the freest and fairest market in history. Most online brokerages have completely done away with commission fees (save for options transactions) and minimum deposit requirements, and in some instances, online brokers will allow for fractional-share purchases. Any amount of money -- even $10 -- can be just the right amount to put to work right now.
If you have $10 that's ready to be invested, which you won't need to cover any other expenses, the following three stocks stand out as no-brainer buys.
Nio
The first surefire stock that's ripe for the picking right now with $10 is China-based electric-vehicle (EV) manufacturer Nio (NIO -0.72%).
For three years, the COVID-19 pandemic was a mammoth headwind for Nio and its China-based peers. China's zero-COVID strategy, which entailed stringent lockdown rules, wreaked havoc on supply chains and constrained Nio's ability to ramp up its production.
But following protests late last year, China has abandoned its controversial COVID-19 mitigation strategy. While it could take some time for citizens to build up some degree of immunity to COVID-19, this action taken by Chinese regulators should allow the country's economy to rebound. More importantly, persistent supply chain issues and demand lumpiness caused by China's COVID-19 mitigation strategy should end.
With the exception of January, which is when factories shut down for Chinese New Year. Nio has managed to deliver in excess of 10,000 EVs every month since June 2022. The company's management team has stated the goal for this year is to deliver up to 250,000 EVs. The bulk of this delivery ramp up is expected to occur in the second-half of the year.
But what really allows Nio to stand out is its innovation. Nio's two sedans, the ET7 and ET5, only hit showrooms last year, yet account for more than half of Nio's deliveries, on a combined basis. Introducing at least one new EV annually, as well as targeting a higher-earning clientele that's less affected by economic "hiccups," has been a smart strategic move by Nio.
Furthermore, Nio introduced its battery-as-a-service (BaaS) subscription in August 2020 as a way to keep early buyers loyal to its brand. With BaaS, buyers can charge, swap, and upgrade their batteries. For Nio, BaaS provides high-margin, recurring subscription revenue.
Sirius XM Holdings
A second no-brainer stock you can confidently buy with $10 right now is satellite-radio operator Sirius XM Holdings (SIRI -4.91%).
Since the beginning of February, Sirius XM's stock has been clobbered due to concerns about slowing ad spending and the possibility that a U.S. recession would hamper auto sales. Sirius XM counts on converting some of its promotional subscriptions with new vehicle purchases into self-pay subscribers. While these are tangible short-term concerns, they're largely overstated given the well-defined competitive advantages Sirius XM brings to the table.
To start with the elephant in the room, Sirius XM is a legal monopoly. Although it does still face competition for listeners from terrestrial and online radio, it's the only company legally authorized to operate as a satellite-radio provider. This monopoly status helps it maintain relatively strong subscription pricing power.
Another key point with Sirius XM is that its revenue mix is quite different from online and terrestrial operators. Whereas online and terrestrial radio providers are reliant on advertising for virtually all of their revenue, Sirius XM only brought in 20% of its 2022 full-year sales from ads. The bulk of its sales (77%) come from subscriptions, which tend to be stickier than advertising. By "stickier," I mean that while advertisers tend to pull back quickly on their spending during recessions, the reasonably low cost of a Sirius XM subscription doesn't increase churn much, if at all, during an economic downturn.
Additionally, Sirius XM has a considerably more transparent cost structure, when compared to terrestrial and online radio. Though royalty and talent acquisition costs can and do change from quarter to quarter, equipment and transmission expenses generally don't. As Sirius XM's self-pay subscriber count rises, the company's transmission costs won't.
At roughly 12 times Wall Street's forecast earnings in 2023 and 2024, Sirius XM is cheaper now than at any point in its publicly traded existence.
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Teva Pharmaceutical Industries
The third no-brainer stock to buy right now with $10 is brand-name and generic-drug developer Teva Pharmaceutical Industries (TEVA 0.79%).
Teva has had a rough eight-year stretch -- and that's putting it mildly. The company grossly overpaid for generic-drug developer Actavis, which buried it in debt. It then contended with generic-drug price weakness and a seemingly endless series of litigation tied to its role in the opioid crisis. But many of these persistent gray clouds are finally lifting.
Easily the biggest news for Teva is that it finalized a nationwide settlement concerning opioid litigation. Although the cost of this settlement ($4.2 billion) is a bit higher than expected, it removes any future uncertainty from the equation. It's also worth noting that Teva will be paying this settlement over the course of 18 years. Drawing out this settlement through 2040 ensures that Teva's balance sheet can continue to improve.
Speaking of improvements, CEO Kare Schultz has done an incredible job giving Teva financial flexibility following the Actavis deal that preceded his tenure. Since taking the reins, Teva's net debt has been reduced from around $35 billion to $18.4 billion, as of the end of 2022. This has been achieved by cutting billions of dollars in annual operating expenses, divesting non-core assets, and using the company's abundant cash flow to steadily reduce outstanding debt.
Another reason to be excited about Teva is that growth from newer brand-name therapeutics is now outpacing the revenue declines associated with multiple sclerosis drug Copaxone, which lost its sales exclusivity. Tardive dyskinesia drug Austedo, which neared $1 billion in sales last year, is forecast to deliver roughly $1.2 billion in sales this year. Meanwhile, migraine drug Ajovy is expected to top $400 million in sales in 2023.
Although Teva has a long way to go to regain the trust of Wall Street and investors after an abysmal stretch, the company's vast portfolio of generic drugs, growing brand-name drug portfolio, and ultra-cheap valuation (about 3.5 times Wall Street's forecast earnings in 2023 and 2024), make it a no-brainer buy.
