For more than a century, Wall Street has provided a path for everyday investors to become financially independent. But getting from Point A to Point B doesn't occur in a straight line.
Since the start of the decade, the three major stock indexes have traded off bull and bear markets on a couple of occasions. Despite a strong rally in 2023, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite remain well below their record high closings, set roughly two years ago.
Though some investors are liable to be disappointed with Wall Street's negative performance over the trailing two years, history shows that buying these dips tends to work out very well for long-term investors.
Image source: Getty Images.
Something else that has worked out nicely is having online brokerages remove barriers to investment. Most online brokers have completely done away with commission fees for transactions on major U.S. exchanges, as well as minimum deposit requirements. This means any amount -- even $100 -- can be the perfect amount to put to work on Wall Street.
If you have $100 to invest, and you're absolutely certain you won't need this cash to cover emergencies or pay bills, the following three stocks stand out as no-brainer buys right now.
General Motors
The first stock that makes for a phenomenal buy if you have $100 to invest right now is automaker General Motors (GM 0.46%).
GM stock recently hit multiyear lows due to a confluence of headwinds that includes a now-resolved strike with the United Auto Workers, concerns about a weakening U.S. economy (General Motors is a highly cyclical company), and tepid demand for electric vehicles (EVs). While these concerns have merit, the potential downside appears to already be baked into the share price.
NYSE: GM
Key Data Points
Before digging into company specifics, take note that U.S. economic cycles aren't proportional. Whereas only 3 of 12 U.S. recessions since the end of World War II have lasted at least 12 months, there have been multiple periods of expansion that endured between 4 and 12 years. These long-winded periods of expansion encourage consumption and (pardon the necessary pun) fuel GM's growth.
Although cold water has been thrown on the EV industry for the moment, the company appears to be set on two fronts. It has devoted an aggregate of $35 billion through 2025 to grow its EV output and roll out 30 new EVs globally. But it's also generating a boatload of profit from vehicles with internal-combustion engines (ICEs).
While it seems logical that EVs will increase as a percentage of total sales throughout the decade, ICE vehicles are still going to account for a majority of sales for the foreseeable future. The cash flow that GM is generating from its traditional vehicles can power its steady transition to a greener future.
Investors would also be wise not to overlook GM's opportunity in China. Through its 10 joint ventures in that country, it has an established brand that currently generates a profit. Given that China's EV market is still nascent, there's a big-time growth runway for GM in the world's top auto market.
As noted, the valuation is highly enticing, too. Auto stocks are usually valued at 6 to 8 times their earnings per share (EPS), which is a reflection of the industry's highly cyclical nature. Shares of GM can be purchased with $100 right now for less than 4 times current and forward-year earnings. That's historically cheap for a brand-name automaker with over a century of history in its sails.
NASDAQ: YORW
Key Data Points
York Water
A second no-brainer stock you can confidently buy with $100 right now is under-the-radar water utility York Water (YORW 0.12%). It provides water and wastewater services to 54 municipalities in south-central Pennsylvania.
Utility stocks have endured a challenging 2023 for two reasons. First, a hawkish Federal Reserve that's aggressively raising interest rates means future borrowing is going to be costlier for utilities. Most of them finance acquisitions and major projects with debt.
The other issue for utility stocks is that Treasury bond yields have soared as interest rates have risen. Investors often turn to utility stocks for their low volatility and dividend income. If investors can generate higher income from Treasury debt securities, which pose little risk to their principal, it makes companies like York Water less attractive.
However, the utility brings clearly identifiable competitive advantages to the table for its shareholders, which is what makes it such a surefire buy.
If there's one word to describe York Water, it's "predictable." No matter how well or poorly the U.S. economy is performing, homeowners and renters don't change their water use much from one year to the next.
To add to the above, York Water is a regulated utility. This is a fancy way of saying that it can't pass along price increases to its customers without authorization from the Pennsylvania Public Utility Commission (PPUC). Though this might sound like a hindrance to the company's growth potential, being regulated ensures that York isn't exposed to potentially wild wholesale pricing. With the PPUC recently approving a rate hike, York's revenue is expected to jump by 22% this year.
Something else that's predictable with York Water is its dividend. Despite being a relatively unknown small-cap stock, it has paid a dividend continuously for the past 207 years. That's the longest streak among publicly traded companies by more than 60 years.
York is about as rock-solid an addition to long-term investors' portfolios as they come.
Image source: Getty Images.
CVS Health
The third no-brainer stock to buy with $100 right now is none other than pharmacy chain CVS Health (CVS +0.62%).
Pharmacy stocks have been notable laggards this year, with two headwinds to blame. To start with, online pharmacy competition is picking up, which is a direct threat to brick-and-mortar pharmacy chains like CVS. The other "concern" for CVS is that the worst of the pandemic has passed, which means fewer consumers visiting its stores for COVID-19 vaccines and/or testing kits.
Though challenges will persist in the near term for CVS Health, it has the tools and intangibles necessary to thrive over the long run.
As you might imagine, pharmacy giants like CVS are ready to take advantage of an aging baby boomer population. Ensuring the health and well-being of boomers will likely lead to an uptick in prescription drug demand in the coming years and decades. While there will be year-to-year fluctuations in pharmacy sales, the needle for CVS's higher-margin pharmacy segment is pointing skyward over the long run.
NYSE: CVS
Key Data Points
What's even more exciting for CVS Health is the company's vertical push into new treatment channels. In 2018, it acquired health insurance company Aetna for $69 billion. Health insurers usually have strong premium pricing power and generate highly predictable operating cash flow.
More recently, CVS Health enhanced its healthcare services by acquiring primary-care provider Oak Street Health for $10.6 billion in enterprise value. Oak Street operates 169 medical centers in 21 states, with a specific focus on personalizing care for seniors. Aside from potential cost synergies, Oak Street should meaningfully boost CVS' organic growth, and aid its profitability in the second half of the decade.
CVS's valuation is compelling, too. Even accounting for increased online competition and considerably lower COVID vaccination rates, shares can be scooped up for just 8 times forward-year earnings, and less than 7 times Wall Street's consensus EPS in 2026. With its growth rate expected to reaccelerate, CVS Health looks like an incredible bargain for patient investors.
