Over multiple decades, Wall Street is fairly predictable. According to an extensive dataset from Crestmont Research that was back-tested to 1900, there hasn't been a rolling 20-year period in more than a century when the S&P 500 didn't generate a positive total return, including dividends.
However, there are no guarantees for the stock market over shorter time lines. In less than four years, the major stock indexes have teetered back and forth between bull and bear markets on a couple of occasions. While short-term traders might be unnerved by this volatility, patient investors understand that "volatility" is just a fancy word for opportunity.
Image source: Getty Images.
What's great about putting your money to work on Wall Street is that most online brokerages have removed prior barriers to investment. More specifically, commission fees and minimum deposit requirements have mostly been shelved. This means any amount of money -- even $1,000 -- can be the ideal amount to put to work.
If you have $1,000 that's ready to invest, and you're absolutely certain this is cash you won't need to pay bills or cover emergencies if they arise, the following three stocks stand out as no-brainer buys right now.
Visa
The first surefire stock that makes for a genius buy with $1,000 right now is world-leading payment facilitator Visa (V -0.23%).
The most glaring headwind Visa is contending with at the moment is the growing speculation that the U.S. economy could be headed into a recession in the coming quarters. Visa is a cyclical company, which means that it would likely see its sales and profits decline if the U.S. economy contracts and consumers/businesses spend less.
But patience can be quite profitable for long-term investors. Even though financial stocks are almost always cyclical, the U.S. economy spends a disproportionate amount of time expanding. Whereas only three out of 12 U.S. recessions following World War II have lasted at least 12 months, there have been multiple periods of expansion that endured between four and 12 years. Visa is able to benefit from the gradual expansion of the U.S. economy over long periods.
To build on the above, Visa benefits from the conservative approach of its management team. Though it would probably thrive as a lender, Visa is strictly focused on payments and avoids the lending arena. This decision comes in handy during periods of economic uncertainty. Specifically, Visa doesn't have to set aside capital to cover loan loss since it isn't a lender. Not having to worry about these direct impacts caused by recessions explains why Visa's profit margin remains so high (usually north of 50%).
Visa is also enjoying a healthy balance of opportunity domestically and abroad. It controls more than half of all credit card network-purchase volume in the U.S., yet has a multidecade growth runway in underbanked emerging markets (e.g., Southeastern Asia, the Middle East, and Africa). Being able to organically and acquisitively expand its reach should lead to sustained double-digit growth.
The icing on the cake for Visa is that it's historically cheap. Visa shares can be scooped up by opportunistic investors for 22 times forward-year earnings, which is well below its average forward-year multiple of 30 over the past five years.
AstraZeneca
A second no-brainer stock to buy right now with $1,000 is pharmaceutical giant AstraZeneca (AZN 0.19%).
Arguably the biggest knock against AstraZeneca was its failure to truly capitalize on COVID-19 vaccine sales. Though it did develop a COVID-19 vaccine, it proved far less effective than competing vaccines. Backing out what revenue AstraZeneca did generate from COVID-19 has somewhat weighed on its sales growth over the past couple of quarters.
But there's far more to AstraZeneca than just its COVID-19 therapies. This is a company with over three dozen U.S. Food and Drug Administration-approved novel therapeutics spanning five major areas of focus. At the moment, three of these indications are doing most of the heavy lifting.
Oncology, cardiovascular, and rare disease respectively account for 38%, 23%, and 17% of AstraZeneca's $33.8 billion in total sales through the first nine months of the year. All three of these segments have produced currency-neutral sales growth of at least 12% from the prior-year period.
AstraZeneca's oncology segment is being powered by a quartet of blockbuster drugs (Tagrisso, Imfinzi, Lynparza, and Calquence). Sales of Imfinzi are up 56% on a currency-neutral basis and on track to top $4 billion in full-year sales. Meanwhile, next-generation type 2 diabetes drug Farxiga has grown sales by 40% year over year and could surpass Tagrisso to become AstraZeneca's top-selling drug by year's end.
However, the steadiest growth might be found with the company's rare disease division. The acquisition of Alexion Pharmaceuticals provided AstraZeneca with a path to generate highly predictable, safe cash flow. Therapies targeted to very small pools of patients often face little pushback on list prices from health insurers, and they rarely deal with competing drugs.
Following two decades of tepid growth prospects, AstraZeneca has really stomped on the accelerator over the past five years. With sustained double-digit growth expected through mid-decade, if not well beyond, AstraZeneca looks like a smart buy for patient investors.
Image source: Walt Disney.
Walt Disney
The third no-brainer stock to buy with $1,000 right now is none other than the famed "House of Mouse," Walt Disney (DIS -0.04%).
Disney has faced no shortage of headwinds since this decade began. The COVID-19 pandemic shuttered its theme parks and meaningfully slowed movie production and releases. It's also contending with a weaker advertising environment for its legacy media operations, as well as sizable operating losses as it builds out its direct-to-consumer (streaming) segment.
Despite these challenges, Walt Disney's undisputed competitive advantages and clear signs of operating progress should have long-term investors excited for the future.
Perhaps the best reason to buy shares of Walt Disney is that its collective business can't be duplicated. While there are other theme parks to visit and movies/shows to watch, the scope of Disney's content library and the emotions/engagement it can evoke simply can't be matched by any other company. Moats are incredibly hard to come by on Wall Street -- but Walt Disney has certainly established one in the entertainment industry.
The advantage of being an irreplaceable business can be seen in its pricing power. The admission price at Disneyland in Southern California has outpaced the prevailing inflation by a factor of 10 since the park opened in the summer of 1955. However, the fun factor and engagement Disney's products and services bring to the table have consumers willingly paying higher prices.
Another reason investors can be excited is the company's marked improvement from its streaming segment. Direct-to-consumer (DTC) lost $420 million during the fiscal fourth quarter (ended Sept. 30) compared to a $1.41 billion loss in the prior-year period. Purposeful cost-cutting, enticing new content, and much-needed subscription price hikes are working their magic. The company expects its DTC segment to reach profitability by the fiscal fourth quarter of 2024.
Lastly, Walt Disney is attractively priced. Full-year earnings are expected to more than double over the next four years as cost-cutting makes the company more efficient, the ad climate improves, and DTC swings to recurring profits. It looks like a surefire bargain, and that's no goofing around.
