Time is the most important variable on Wall Street.
Over short periods, the performance of the major indexes can be unpredictable. For instance, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, all plunged into a bear market in 2022 after rocketing to new highs in the previous year.
But over long stretches, time is an undefeated ally for investors. Even though short-term corrections and bear markets can't be predicted with any accuracy, we do know that every previous dip in the major indexes was eventually wiped away by a bull market rally. For patient investors, it means corrections and bear markets represent a surefire buying opportunity.
Image source: Getty Images.
Best of all, taking advantage of these opportunities is easier than ever. Since most online brokerages have done away with commission fees and minimum deposit requirements, any amount of money -- even $200 -- can be the ideal amount to put to work.
If you have $200 that's ready to invest, and you're certain you won't need this cash to pay bills or cover emergencies as they arise, the following three stocks stand out as no-brainer buys right now.
Walt Disney
The first surefire buy with $200 in the wake of the 2022 bear market is none other than media stock Walt Disney (DIS -0.04%).
For most companies, the COVID-19 pandemic was a period of immense challenges. This was especially true for Walt Disney, which saw two of its core operating segments slowed to a crawl. The company's theme parks were largely shut down, while movie theater attendance fell dramatically, which hurt the company's film entertainment division.
The good news for Disney is that, while the pandemic isn't officially over, it's no longer a global emergency. Much of the world has returned to business as usual, which is allowing its theme park and entertainment segments to shine, once more.
Despite the challenges Disney has endured as a company over the past three years and change, it's important for investors to take a step back and recognize that this is a unique business. Even though there are other theme parks people can go to and content they can watch, no other media or entertainment company has the richness of stories or vastness of characters that Walt Disney brings to the table. This ability to connect with consumers of all ages is an intangible that no other company can match.
The next step in Walt Disney's evolution is making its streaming segment profitable. While more mindful spending is one part of this equation, being able to pass along price hikes is another variable that should help Disney's direct-to-consumer division reach profitability by sometime in the second-half of fiscal 2024 (Disney's fiscal year ends in late September or early October).
The company recently introduced ad-supported streaming services and has raised monthly subscription prices for all of its streaming tiers. In spite of higher subscription prices, Disney+ has shed just 6.4 million of the 164.2 million subs it acquired in the three years following its launch. This adds fuel to the fire that Disney's brand is quite the lure.
Shares of the company have averaged a forward-year price-to-earnings (P/E) ratio of 38.4 over the past five years. Investors can scoop up shares of Walt Disney at the moment for a comparatively inexpensive 17 times consensus earnings for fiscal 2024.
Exelixis
A second stock that stands out as a no-brainer buy with $200 right now is biotech company Exelixis (EXEL 0.72%).
If there's a knock against Exelixis, it's that the company's efforts to diversify its product portfolio beyond blockbuster cancer drug Cabometyx have mostly fallen flat. Since brand-name drugs have finite periods of sales exclusivity before biosimilar and/or generic drugs can enter the scene, Wall Street would like to see Exelixis diversify its revenue stream. For long-term investors, there looks to be good news on all fronts.
For the moment, Cabometyx is firing on all cylinders. Improved cancer-screening diagnostics, coupled with label expansion opportunities and strong pricing power, should allow Cabometyx's net sales to grow by double-digits every year for the foreseeable future. Exelixis is has around six-dozen clinical trials underway that are testing its lead cancer drug as either a monotherapy or combination treatment. Even a small handful of successes in these trials has the potential to more than double its peak annual sales.
However, Exelixis isn't sitting on its hands. It's advancing internally developed cancer therapeutics into late-stage trials and has collaborated with a number of drug developers to research early stage compounds. Zanzalintinib (previously XL092) is one example of a novel drug currently being tested in phase 3 trials as a combination therapy for colorectal cancer (Stellar-303 trial) and renal cell carcinoma (Stellar-304 trial).
If you're wondering what's fueling this expansive product pipeline, look no further than Cabometyx's juicy cash flow and Exelixis's balance sheet, which is flush with capital. Inclusive of cash, cash equivalents, short-term investments, and long-term investments, Exelixis is sitting on $2.12 billion. In addition to this cash affording Exelixis the liberty of running numerous clinical trials, it's also undertaken an up to $550 million share repurchase program.
With Exelixis forecast to grow its earnings by an annualized average of 27% over the next five years, yet trading at a forward P/E ratio of only 20, it represents one of the best values in the biotech industry.
Image source: Starbucks.
Starbucks
The third no-brainer stock that's begging to be bought right now with $200 is coffee chain behemoth Starbucks (SBUX 0.47%).
Similar to Walt Disney, Starbucks struggled during the COVID-19 pandemic. The company closed indoor seating in certain markets and had to contend with China's zero-COVID strategy throughout most of 2022, which led to unpredictable lockdowns and supply chain woes in a key market. But with pandemic-related headwinds now firmly in the rearview mirror, Starbucks' competitive advantages and innovation are once again on display.
Arguably the top reason for Starbucks' ongoing success is the loyalty of its customers. As of April 2, 2023, Starbucks had 30.8 million Rewards members (up 15% from the prior-year period). In exchange for offering these repeat customers a free drink or food item every now and then, Starbucks is able to entice these customers into its stores with frequency. Rewards members typically have higher average tickets, and are also more likely to use mobile ordering or save their payment information on their phone to expedite the ordering and payment process. Dangling a small carrot has made Starbucks a more operationally efficient business.
To build on this point, Starbucks is able to leverage the popularity of its brand and beverages into significant pricing power. No matter how rapidly the U.S. inflation rate ticked up last year, Starbucks was able to outpace it with price hikes of its own. With coffee prices well off their highs set last year, there's a good likelihood we'll see Starbucks' operating margin expand this year.
On top of its stellar pricing power and branding, Starbucks continues to lead the way in the coffee space with its innovation. Management took the pandemic as a learning experience and shifted its focus to improving the drive-thru experience. Digital ordering boards that incorporate video to allow drivers to see baristas, coupled with an expanded food menu, are ways the company is making the drive-thru experience as personal and productive as going inside its stores.
By all accounts, Starbucks hasn't lost its swagger. Global comparable-store sales surged 11% in the company's fiscal second quarter, with Wall Street looking for annualized earnings growth of better than 16% over the next five years. Even with shares of the coffee giant well off of its 2022 low, they're still a bargain considering the sustained catalysts that lie ahead.
