Over long periods, Wall Street has proven to be a bona fide wealth creator. But when examined over shorter timelines, directional moves in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite are no more certain than a coin flip.
Since this decade began, all three major stock indexes have bounced back and forth between bull and bear markets. Despite a relatively strong showing through the first nine months and change of 2023, all three stock indexes remain well below their record-closing highs, set between November 2021 and January 2022. For patient investors, it means bargains still abound.
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The great thing about plain-as-day deals on Wall Street is that you don't need a mountain of cash to take advantage of them. Most online brokerages have done away with investment barriers, such as minimum deposit requirements and commission fees for trades executed on major U.S. exchanges. For everyday investors, it means any amount of money -- even $100 -- can be the perfect amount to put to work.
If you have $100 ready to invest and won't need this cash to pay bills or cover emergencies, the following three stocks stand out as no-brainer buys right now.
Nio
The first seemingly surefire stock that investors can confidently buy with $100 right now is China-based electric-vehicle (EV) manufacturer Nio (NIO 3.23%).
Nio is a relatively new entrant in the automotive space -- and like all new entrants, it's dealing with some growing pains. It doesn't possess the branding power that legacy automakers bring to the table, and it's on track to lose in excess of $2 billion this year as the company ramps up production.
Additionally, Nio contended with more than three years of supply chain disruptions caused by the COVID-19 pandemic and China's zero-COVID mitigation strategy. The good news is that China abandoned its controversial COVID-19 strategy in December, which is steadily easing supply chain issues and paving the way for Nio to increase production.
NYSE: NIO
Key Data Points
On a macro scale, EVs have the look of a no-brainer growth opportunity. With many of the world's global powers pushing to reduce their carbon emissions, EVs are an easy pivot toward a greener future. This vehicle replacement cycle could go on for decades, which is music to the ears of EV manufacturers -- especially those based in the world's No. 1 auto market, China.
What can fuel Nio's gains is the company's traditional and out-of-the-box innovation. With supply chain issues easing, Nio averaged nearly 18,500 EV deliveries per month during the third quarter. Management has previously hinted that the company could quickly ramp production without supply disruptions, and we appear to be seeing this prognostication take shape.
In particular, Nio's all-new NT 2.0 platform is enticing buyers. This second-generation platform comes with improved advanced driver assistance systems. The EVs incorporating NT 2.0 have been accounting for the lion's share of Nio's deliveries in recent months.
Nio's out-of-the-box innovation includes offering battery-as-a-service subscriptions to its EV buyers. Subscription services generate high-margin, recurring revenue. More importantly, they're a smart tool that should keep early buyers loyal to the brand.
Lastly, Nio is sitting on a boatload of cash. Even with sizable losses expected this year, it closed out the June quarter with approximately $4.3 billion in cash, cash equivalents, short-and-long-term investments, and restricted cash. The key point is that Nio has the funding necessary to endure its growing pains.
NASDAQ: FSLY
Key Data Points
Fastly
A second no-brainer stock that's begging to be bought with $100 right now is edge computing company Fastly (FSLY +4.53%).
If there's a knock against Fastly in the current economic environment, it's that the company is still losing money. With multiple economic data points and predictive tools pointing to a slowdown in the U.S. economy in the coming quarters, investors are likely to focus their attention on profitable, time-tested businesses.
Furthermore, the worst of the pandemic is now in the rearview mirror. The work-from-home movement during the pandemic fueled speculation that content delivery and security providers like Fastly would see a massive, sustained uptick in usage. While this proved true for a couple of quarters, a return to some semblance of normal has slowed Fastly's growth rate.
While Fastly does have some hurdles to clear to prove to Wall Street that it's a long-term winner, most of its key performance indicators are moving in the right direction. For example, Fastly has gained more than 200 total customers since Sept. 30, 2021, with average enterprise spend per customer jumping from roughly $698,000 to $809,000. Though this is slower than the growth observed during the height of the pandemic, it still represents a clear push toward higher usage of Fastly's services and content delivery network.
Even more important, Fastly's dollar-based net expansion rate (DBNER) has consistently hovered between 118% and 123% in each of the past eight quarters. What DBNER shows is that existing clients are spending between 18% and 23% more on a year-over-year basis. Since Fastly is predominantly a usage-driven operating model, having existing clients increase their usage is exactly what you'd want to see.
To add to the above, Fastly isn't having any trouble retaining its existing clients. In 2021 and 2022, the company reported a 99.2% annual revenue retention rate.
The appointment of Todd Nightingale as Fastly's CEO a little over a year ago shouldn't be overlooked, either. Nightingale came over from Cisco Systems, where he'd been the executive vice president of Cisco's Enterprise Networking and Cloud segment. Nightingale is a no-nonsense leader who's reduced Fastly's nonessential spending and put the company on track to reach recurring profitability by as soon as next year.
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NextEra Energy
The third no-brainer stock to buy with $100 right now is none other than beaten-down electric utility NextEra Energy (NEE 1.53%).
NextEra's recent struggles can primarily be tied to rapidly rising interest rates and bond yields. With Treasury bond yields rising to their highest point in well over a decade, they've become a preferred (and perceived-to-be safer) investment, relative to dividend-paying utility stocks.
Higher interest rates also mean that financing new projects will be costlier for NextEra Energy. A cumulative 525-basis-point increase in the federal funds rate since March 2022 suggests margin compression may be in NextEra Energy's future.
The other concern for NextEra is having its wholly owned subsidiary, NextEra Energy Partners (NEP 1.00%), slash its dividend growth guidance. With NextEra Energy Partners expected to rely on fewer drop-down transactions from parent NextEra, there's the belief that this signals weaker growth on the horizon for both companies.
While these are, indeed, tangible headwinds, they overlook NextEra's competitive advantages, history of premium growth, and the company's now attractive yield and valuation.
NYSE: NEE
Key Data Points
Before digging into company specifics, consider the operating predictability of electric utility providers like NextEra. Electricity is a basic necessity service for homeowners and renters, meaning demand doesn't change much from one year to the next. Further, most electric utilities operate as monopolies or duopolies in the areas they service. This leads to consistent operating cash flow in any economic climate.
What makes NextEra Energy so special is its clean-energy portfolio. As of late September, the company had 68 gigawatts (GW) in operation, nearly half of which was devoted to renewables. NextEra is generating more capacity from solar and wind power than any other utility in the world. Though these have been pricey investments, the end result is substantially lower electricity generation costs and an adjusted earnings growth rate that's consistently outpaced its peers.
Higher interest rates aren't dissuading NextEra Energy from investing in a green future. From the start of 2023 through the end of 2026, the company anticipates completing between 32.7 GW and 41.8 GW of clean-energy projects, with a heavy emphasis on solar, wind, and energy storage. These projects should help further reduce its electricity generation costs and keep adjusted earnings growing in the 6% to 8% range on an annual basis.
Finally, NextEra's valuation makes sense. The company's forward price-to-earnings ratio of 16 is its lowest since 2013, and its 3.4% dividend yield is more than double that of the benchmark S&P 500.
