On Wall Street, getting from point A to B rarely occurs in a straight line. Over the past two years, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have surged to record-closing highs, plunged into a bear market, and bounced decisively off of their 2022 bear market lows. However, with all three indexes nowhere near their all-time highs, bargains can still be found.
The best part of putting your money to work on Wall Street is that the financial barriers to entry for everyday investors have largely been removed. Most online brokers have completely done away with commission fees and minimum deposit requirements, meaning any amount of money -- even $100 -- can be the perfect amount to invest right now.
If you have $100 to invest and are certain you won't need this cash to pay bills or cover an emergency, three stocks stand out as no-brainer buys right now.
Image source: Getty Images.
Intel
The first seemingly surefire stock to buy with $100 for the long-term is semiconductor specialist Intel (INTC 0.18%).
If you're wondering why shares of Intel have been halved since January 2020, look no further than the company's first-quarter operating results. Intel produced its largest operating loss in its storied history, with client computing group and data center/artificial intelligence (AI) segment sales respectively down 38% and 39% year over year. Some of this decline can be blamed on weak personal-computing (PC) sales as the worst of the COVID-19 pandemic is put behind us.
There have also been concerns about chief rival Advanced Micro Devices gobbling up Intel's central processing unit (CPU) market share in PCs and data centers. While it's true that AMD has been (pardon the pun) chipping away at Intel's share, the latter still retains the lion's share of CPUs in PCs, mobile, and data centers. In other words, we're still talking about substantial cash-flow generation for Intel.
But it's not Intel's legacy operations that make it worth buying. Rather, it's the company's newfound focus on its foundry operations and the role it could play in the AI revolution that should excite investors.
In January 2022, Intel announced plans to construct two chip fabrication plants in Ohio for a total price of $20 billion. Two weeks ago, the company signed a nearly $33 billion deal to build a chip-fab plant in Germany, with the German government footing a third of the bill. Intel is also in the process of acquiring Tower Semiconductor. When all of these puzzle pieces are put together, Intel can become the No. 2 global foundry by the end of the decade.
Intel also plans to debut its AI-focused data-center chip, known as Falcon Shores, in 2025. If history serves as a guide, it's going to take years for AI to mature. This should give Falcon Shores plenty of opportunity to take share from Nvidia, which currently accounts for around 95% of AI-driven graphics processing units (GPUs) used in data centers.
JD.com
A second stock that stands out as a no-brainer buy with $100 for patient investors is China-based e-commerce company JD.com (JD 11.26%).
As with Intel, you don't have to dig too far to discover what's been ailing JD.com and sending its share price lower. For China stocks, the primary headwind has been the pandemic. For three years, stringent mitigation measures were put in place in China, which ultimately disrupted supply chains and curbed economic activity.
The good news for JD and its peers is that Chinese regulators abandoned their zero-COVID mitigation efforts in December. Although it could take some time before China's residents develop natural or vaccine-based immunity to the virus that causes COVID-19, an open China is, ultimately, a positive for the country's long-term growth.
On a more company-specific basis, JD's operating model helps it stand apart from its peers. In terms of e-commerce market share, JD takes a clear back seat to Alibaba. However, Alibaba is fairly reliant on third-party providers listing on its marketplace.
By comparison, JD is primarily a direct-to-consumer provider like Amazon. It purchases and oversees its inventory, as well as operates its own logistics network. The advantage for JD is that it has better control over its expenses and operating margin than its key rival.
Furthermore, JD aims to unlock value for its shareholders by spinning off its industrial and property units, with the goal of listing each on the Hong Kong Stock Exchange. Although it's not yet clear how much JD will net from spinning off these segments, it'll make understanding the remaining business a bit easier for Wall Street and investors.
As of this past weekend, a share of JD.com can be purchased for just 10 times forward-year earnings. That's the cheapest JD's shares have been since debuting on the Nasdaq exchange more than nine years ago.
Image source: Block.
Block
The third no-brainer stock to buy with $100 right now is none other than fintech giant Block (SQ 4.55%), the company formerly known as Square.
Like most fintech-inspired businesses, Block has been clobbered over the past two years. A combination of higher inflation weighing on low-earning workers, cryptocurrencies falling into a bear market -- Block is a popular destination for Bitcoin exchange and trading -- and Wall Street becoming less tolerant of outsized valuations all weighed on Block stock. But with shares down nearly 80%, it looks like a bargain for long-term-minded investors.
To begin with, Block's foundational operating segment (still known as the "Square ecosystem") is humming along. The March-ended quarter saw $46.2 billion in gross payment volume (GPV) traverse its network. That's up 55% in just two years and demonstrates the power of digital payment adoption.
More importantly, we're seeing bigger businesses adopt digital payment technology. The percentage of businesses with $500,000 or more in annualized GPV accounted for 38% of GPV in the first quarter of 2023. That's up from just 30% of total GPV in the first quarter of 2021. Since this is predominantly a fee-driven platform, bigger businesses should drive an increase in transactions and gross profit for Block.
The other key growth driver for Block is Cash App. In December 2017, approximately 7 million people were using Cash App. As of March 2023, there were 53 million active users, with 38% of these active users also using Cash Card -- a debit card that's linked to a user's Cash App account. The cost to acquire new Cash App users has historically been far less than the gross margin Block brings in from active users.
Block can also facilitate long-term growth via its purchase of Afterpay. While it can be argued that the company overpaid for Afterpay, the end result should be a bridge that connects the Square retail ecosystem to Cash App, as well as fuels growth for merchants through the addition of buy now, pay later options.
With Wall Street calling for annualized earnings growth of nearly 40% over the coming five years, Block's forward-year price-to-earnings ratio of 28 is quite reasonable, if not downright cheap.
