Over the last century, the S&P 500 index has experienced over a dozen episodes of sharp sell-offs. That's about one downturn every decade. Despite that volatility, the market has always recovered and gone on to hit new highs. That's why holding shares of growing companies are no-brainer stocks to buy when the markets fall.
The great thing about investing in the stock market is that you don't need a lot of money to get started. Adding just a few hundred dollars per month can go a long way.
To help you narrow down your list of choices, three Fool.com contributors recently took a look at Lululemon Athletica (LULU 0.77%), Kura Sushi (KRUS -0.87%), and Walt Disney (DIS -0.45%). If you have $300 available that isn't needed for monthly bills, to pay off short-term debt, or the bolster your emergency fund, you might want to invest in these three no-brainer stocks as they are timely buys right now.
One of the best retail growth stories
John Ballard (Lululemon Athletica): Since opening its first store in Canada over 20 years ago, Lululemon continues to prove why it's an emerging global athletic wear brand. The company is coming off a strong year of growth, while many other retailers struggled. In the last earnings report in March, management even noted that momentum has carried over into the fiscal first quarter. With the stock down 21% from its previous highs, now could be a good opportunity to buy shares.
In fact, the stock has risen about 19% since the company's fiscal fourth-quarter earnings update was released in late March. Not many retailers are posting top-line growth of 30% year over year. Lululemon has consistently delivered these types of numbers over the last several years. But at $8 billion in annual revenue, it is still way behind the industry leader Nike, with $50 billion in annual revenue.
The trajectory of Lululemon's superior growth is pointing to enormous returns for investors, which is good news for those who missed the company's run-up in share price over the last decade.
The brand appeals to a mass market. Lululemon plans to open between 45 and 50 new company-operated stores in 2023, with most of these openings planned for China. Even while Lululemon continues to focus most store openings in international markets, revenue from its home turf in North America was up 29% in the last quarter, which was not far off the pace of the 35% growth posted internationally.
If I had $300 to invest, I would buy this top retail growth stock now, before more growth sends the stock price even higher.
The next Chipotle?
Jeremy Bowman (Kura Sushi): Big winners in the restaurant industry are hard to come by, but Kura Sushi is one worth watching. If you have $300 to invest, this is the kind of high-growth stock with multi-bagging potential that could make that sum much larger.
First off, as a sushi chain, the company has the potential to bring a large-scale new concept to the U.S. market. While sushi is popular in the U.S., most restaurants that serve it are independent, one-off locations. There's currently no major fast-casual sushi restaurant, but based on the success of Chipotle and other smaller fast-casual chains, there certainly looks like there's room in the market for one.
Kura Sushi is a subsidiary of Kura Japan, a Japanese-based revolving sushi chain with more than 500 restaurants and more than 35 years of operating history. In other words, it's a proven concept, and its Japanese heritage gives it authenticity in the U.S. market.
Kura Sushi opened its first restaurant in 2009 in Irvine, California, and finished fiscal 2022 with 40 restaurants in 12 states and Washington, D.C.
The company went public in 2019, and the initial results have been promising. Comparable sales jumped 17.4% in its most recent quarter, and revenue surged 40% year over year to $43.9 million. Even better, the company posted a restaurant-level operating margin of 20.3%, an excellent mark for a small restaurant chain. By comparison, just a year ago, Chipotle was posting similar restaurant-level margins.
The company plans to open nine to 11 restaurants this year, growing its base by 25%. It sees long-term potential for at least 290 restaurants in the U.S., or more than seven times the number it has today. If it continues on that plan and continues to grow profitability, Kura Sushi stock should be a winner over the long term.
The double-edged sword of moving parts
Jennifer Saibil (Disney): For a company that's the largest entertainment empire in the world, it's hard to believe that Disney has been struggling. But sometimes, too many moving parts are both a benefit and a burden.
The benefit part is easy to see, and it's the main reason I own Disney stock. It has so many powerful segments, each a leader in its field. When they all do well, Disney is an unbeatable powerhouse. When one of them isn't functioning quite as well as investors would want, the others invariably pick up the slack.
For example, in the last quarter before the pandemic, when all systems were rolling and streaming had just been launched, revenue increased 36% year over year. Immediately after, when parks were closed and bringing in no revenue, streaming soared.
Now streaming is beginning to plateau, but parks are enjoying a resurgence, and theaters are back in business. Disney's theme parks are best in class, and its film studios churn out top hits. In 2022, Disney produced four of the top 10 highest-grossing films, including the No. 1 movie, Avatar: The Way of Water, which is also the third-highest-grossing film ever.
Disney is a master at using all of its businesses together, cranking out new content based on hit films and characters and using these themes and characters to populate its streaming networks. It also uses this content to develop popular theme park attractions. In short, Disney's business is a well-oiled machine.
However, sometimes too many moving parts are hard to juggle, and lately, streaming is pulling the company down. Although it has reached more than 230 million total streaming subscriptions (including more than 160 million for the premium Disney+ channel), it has poured money into its launch, and its losses reached a boiling point where investors soured.
Management began to focus on cleaning this up, and although the operating loss for the streaming business came in at more than $1 billion in the first fiscal 2023 quarter (ended Dec. 31), that was an improvement from the nearly $1.5 billion loss in the 2022 fourth quarter.
Management is still optimistic and reiterated that it expected Disney+ to be profitable by the end of 2024. If that happens and the rest of the business is running on schedule, Disney will be in great form, and its stock will reflect that. Until then, any improvement in profitability should also tilt the stock price in its favor, making a $300 investment worth every penny.
