When examined over extremely long periods, Wall Street stands head and shoulders above all other asset classes in terms of annualized returns. This means any downturn in the broader market can be used as a surefire buying opportunity for long-term-minded investors.
Although the Dow Jones Industrial Average recently powered to a record close, the growth-driven Nasdaq Composite still sits roughly 7% below its all-time high, which was set in November 2021. In short, bargains are still available for investors willing to seek them out.
Image source: Getty Images.
What's particularly encouraging about investing on Wall Street is you don't need a boatload of money to start growing your wealth. Most online brokerages have completely done away with commission fees as well as minimum deposit requirements. It means any amount of money -- even $200 -- can be the perfect amount to invest.
If you have $200 ready to put to work, and you're absolutely certain this isn't cash you're going to need to pay bills or cover emergency expenses, the following three stocks stand out as no-brainer buys right now.
Johnson & Johnson
The first genius stock to add to your portfolio right now if you have $200 ready to invest is healthcare conglomerate Johnson & Johnson (JNJ -0.46%), which is better known as "J&J."
While the iconic Dow managed to climb to a record high in 2023, J&J was mostly left in the dust. Its underperformance can primarily be traced to ongoing litigation that alleges its now-discontinued talc-based baby powder causes cancer. J&J has attempted to settle these roughly 100,000 collective lawsuits on two occasions but had both settlements thrown out in court. This legal overhang has been something of a cement weight tied around J&J's proverbial ankles.
However, this litigation isn't as problematic as J&J's stock performance makes it appear. This is one of only two publicly traded companies to sport the highly coveted AAA credit rating from Standard & Poor's (S&P), a division of the more familiar S&P Global. Whatever ultimate settlement puts this litigation in the rearview mirror, J&J's pristine balance sheet and abundant cash flow will be able to handle it.
What investors should be focused on is the steady earnings growth that J&J brings to the table. Prior to the COVID-19 pandemic, J&J had delivered 35 consecutive years of adjusted operating earnings growth. Since people don't get to choose when they become ill or what ailment(s) they develop, demand for prescription drugs and medical devices remains constant in virtually any economic climate.
One reason J&J is such a success is its shift toward pharmaceuticals. Even though brand-name drugs have finite periods of exclusivity, they provide substantial pricing power and juicy margins to J&J.
Furthermore, you can count on two hands how many CEOs J&J has had since its founding in 1886. Continuity in key leadership positions ensures that strategic initiatives are being implemented properly from start to finish.
The cherry on top for J&J is that its forward price-to-earnings (P/E) ratio is lower than at any point over the previous 10 years. It's an absolute bargain for patient investors.
Okta
The second no-brainer stock that's begging to be bought with $200 right now is cybersecurity company Okta (OKTA -0.69%).
Shares of Okta were clobbered in October after the company disclosed a breach of its security platform. The company would later admit that all of its clients had data exposed to hackers. Anytime a breach of this magnitude occurs, it's not uncommon for the cybersecurity company in question to lose some of its customers in the short run.
But it's also important for investors to recognize that cybersecurity has grown into a basic-need service. No matter how well or poorly the U.S. economy and stock market are performing, hackers and robots don't take time off from trying to steal sensitive data. As businesses continue to shift their data, and that of their customers, online and into the cloud, third-party providers are being relied on more than ever before.
Okta is building its niche as a provider of identity-verification solutions. The company's platform is cloud-native and reliant on artificial intelligence (AI) and machine learning (ML) to protect its customers. Although the latest breach demonstrates that the platform can be improved, AI and ML will allow Okta's solutions to become smarter and more effective than on-premise tools at recognizing and responding to potential threats over time.
What's intriguing about Okta is just how massive the runway is in identity verification. The company estimates its addressable market to be $80 billion, yet it's pacing just an estimated $2.24 billion in full-year sales in fiscal 2024, which is set to end on Jan. 31, 2024.
Furthermore, Okta should benefit immensely from its acquisition of Auth0, which completed in early 2022. While the higher-than-anticipated integration costs of this buyout have left a bad taste in investors' mouths, Auth0 will play a key role in gobbling up share in the $30 billion customer-identity market. To add, Auth0's presence will help Okta cross-sell its identity-verification solutions outside the borders of the U.S., which is critical to the company sustaining a double-digit growth rate.
NextEra Energy is the world's leading provider of solar capacity. Image source: Getty Images.
NextEra Energy
The third no-brainer stock to buy with $200 right now is none other than the largest U.S. electric utility by market cap, NextEra Energy (NEE -1.36%).
Utilities are typically one of the steadiest and least volatile sectors to invest in; but in 2023 the sector was abysmal. A rapid increase in Treasury bond yields encouraged income seekers to pull their money out of utilities and put it to work in low-risk bonds.
Additionally, higher interest rates will make future projects and/or the refinancing of existing debt costlier for utilities. NextEra Energy had certainly leaned on cheap capital to finance some of its projects. Higher interest rates could lead investors to question whether NextEra can sustain its superior operating performance.
The good news is that both of these concerns look overblown for NextEra. With the Federal Reserve forecasting three rate cuts in 2024, access to future capital will become cheaper, and Treasury bond yields are liable to decline. The latter will make utility stocks more attractive to income seekers.
What's far more important is that NextEra's operating performance has shown no signs of deteriorating even amid higher interest rates. As of Sept. 30, the company had 70 gigawatts (GW) of total capacity in operation, with 34 GW deriving from renewables. The 23 GW of capacity generated from wind and 6 GW from solar are high-water marks for all utilities worldwide. Though clean-energy projects can be costly, they've demonstrably lowered NextEra Energy's electricity-generation costs and helped the company generate nearly 10% annual adjusted earnings-per-share growth since 2012.
NextEra isn't planning to let off the accelerator anytime soon, either. Between the start of 2023 and end of 2026, the company anticipates bringing 32.7 GW to 41.8 GW of renewables online.
Something else for investors to consider is that demand for electricity doesn't change much from one year to the next. Similar to businesses needing cybersecurity protection in any economic climate, homeowners and renters need electricity to power their appliances and potentially their home heating and cooling systems. This means NextEra is going to bring home highly predictable operating cash flow every year.
Lastly, NextEra Energy's forward P/E ratio of 17.6 marks its cheapest valuation since 2015. This time-tested company is ripe for the picking by opportunistic investors.
