Although it can be an unpleasant realization, stock market corrections are more common than you probably realize. Since the start of 1950, the broad-based S&P 500 has undergone a double-digit percentage decline, on average, every 1.87 years.
But there's another side to the coin: opportunity. Though the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite all fell into a bear market in 2022, history shows that every correction and bear market throughout history is eventually recouped by a bull market rally. In other words, the 2022 bear market is a red-carpet buying event for long-term investors.
Image source: Getty Images.
Perhaps the best aspect of putting your money to work on Wall Street is that most online brokerages have completely done away with minimum deposit requirements and commission fees. The stock market is freer and fairer than ever to access, which means any amount of money -- even $300 -- can be the perfect amount to put to work.
If you have $300 that's ready to invest and don't need this cash to cover emergencies or pay bills, the following three no-brainer stocks stand out as phenomenal buys right now.
Alphabet
The first stock that's a surefire buy with $300 is FAANG stock Alphabet (GOOGL 10.22%) (GOOG 9.96%), which is the parent company of internet search engine Google, autonomous vehicle company Waymo, and streaming platform YouTube.
Even industry-leading stocks deal with headwinds, and Alphabet is no different. Its biggest challenge at the moment is the growing expectation that the U.S. will dip into a recession at some point in the not-too-distant future. Most of Alphabet's sales are generated from advertising, and advertisers tend to pare back their spending when there's the slightest chance of the U.S. economy shifting into reverse.
But things look vastly different when examined over a longer time frame. Despite recessions being a normal and inevitable part of the economic cycle, economic expansions last considerably longer than downturns. This means ad-driven stocks should possess strong ad-pricing power more often than not.
Looking ahead, there's no reason to believe Google won't continue to absolutely dominate internet search. It accounted for more than 93% of worldwide internet search share in March 2023 and hasn't dipped below 91% of global search share in more than four years.Advertisers are well aware that Google provides the best path to targeting messages at internet search users.
However, it's Alphabet's ancillary segments that could really drive its operating cash flow growth in the latter half of the decade. Google Cloud has risen through the ranks to become the global No. 3 cloud infrastructure service provider, with a 10% share. Enterprise cloud spending is still arguably in its early innings, which provides an exceptionally long growth runway for high-margin cloud services.
Likewise, YouTube has grown like a weed. It's the second most-visited social media platform on the planet, which bodes well for its long-term subscription and ad revenue growth. In about a year, the number of YouTube Shorts watched daily has jumped from around 30 billion to north of 50 billion, which signals another well-defined monetization opportunity for YouTube and parent company Alphabet.
If this still isn't enough, consider Alphabet's valuation. It can be purchased right now for a mere 17 times Wall Street's forecast forward-year earnings, despite a long history of double-digit sales and earnings growth.
CrowdStrike Holdings
A second stock that makes for a no-brainer buy if you have $300 ready to invest is end-user cybersecurity stock CrowdStrike Holdings (CRWD 2.03%).
The clearest headwind for CrowdStrike is simply the company's valuation. When interest rates were at or near historic lows and there were no questions about U.S. economic growth, Wall Street was willing to tolerate a nosebleed valuation premium. But with a recession growing likelier and the Nasdaq Composite still navigating a bear market, a forward price-to-earnings ratio of 44 might be difficult for investors to stomach. I'm here to tell you that CrowdStrike is worth every bit of its premium.
Before focusing on company specifics, investors should recognize that cybersecurity solutions have pretty much evolved into necessities. With businesses moving their data into the cloud at an accelerated pace following the pandemic, third-party providers like CrowdStrike are increasingly being relied on to protect sensitive information.
The key cog that makes CrowdStrike such an effective provider of end-user cybersecurity solutions is Falcon. This platform was built in the cloud, and it relies on artificial intelligence (AI) and machine-learning software to grow more adept at recognizing and responding to potential threats over time. In a typical week, Falcon will oversee trillions of events.
The true mark of CrowdStrike's success can be seen in its gross retention rate. Even though CrowdStrike's cloud-based software-as-a-service (SaaS) solutions tend to be pricier than many of its peers, the company's gross retention rate has climbed from sub-94% to 98% over the past six fiscal years. This tells investors that businesses are sticking around and are more than willing to pay CrowdStrike's premium due to the quality of its solutions.
To build on this, CrowdStrike's existing users have been collectively adding to their initial purchases. As of Jan. 31 (the end of CrowdStrike's fiscal 2023), 62% of the company's just over 23,000 subscribers had purchased at least five cloud-module subscriptions. Six years ago, when CrowdStrike had 450 total subs, a single-digit percentage of these clients had purchased four or more cloud-module subscriptions.
Add-on sales are the gift that keeps on giving for hypergrowth companies. With an adjusted subscription gross margin that has neared 80% in recent years, CrowdStrike's earnings growth should be able to easily outpace its sales growth for the foreseeable future.
Image source: Walt Disney.
Walt Disney
The third no-brainer stock to buy with $300 right now is none other than the famed House of Mouse, Walt Disney (DIS -0.04%).
For much of the past three years, the COVID-19 pandemic has been Walt Disney's clear-cut headwind. Theme park closures and reduced attendance at movie theaters hit two of the company's core sales channels. While the company's impending rebound probably won't be linear, Disney has all the catalysts needed to make its patient shareholders richer over time.
One of the biggest tailwinds for the company is Chinese regulators abandoning the zero-COVID mitigation strategy that led to stringent provincial lockdowns and supply chain disruptions throughout China. While Chinese citizens will still need to develop some form of natural or vaccine-based immunity to the SARS-CoV-2 virus that causes COVID-19, a reopened economy provides a path for Walt Disney's theme park operations to shine once more.
Investors should also be excited about the rapid ramp-up in Walt Disney's streaming operations. Disney+ was launched in November 2019 and took less than three years to surpass 160 million paying subscribers. Even with the company increasing the monthly subscription price for Disney+ and introducing a cheaper ad-supported version, a net of only 2.6 million Disney+ subs were lost in the latest quarter. Passing along price hikes is critical to helping the segment achieve profitability by sometime in late fiscal 2024.
The reason Walt Disney has such amazing pricing power is because its operating model can't be duplicated. Even though there are other theme parks and animated films, Disney's characters and stories hit home with multiple generations of consumers. There'll never be another theme park like Disneyland or animated films that connect viewers through imagination quite like Snow White and the Seven Dwarfs. This is what makes Disney's pricing power virtually unmatched in the media/entertainment space.
With the worst of the COVID-19 pandemic now in the rearview mirror, Walt Disney stock is looking cheaper than it has in a long time. Disney's forward-year price-to-earnings ratio of 18 is the lowest it's been since 2018. With Wall Street expecting annualized earnings growth of 21% from Disney over the next five years, now is the perfect time for opportunistic investors to pounce.
