Volatility is inescapable on Wall Street. Since start of this decade, investors have watched the three major stock indexes swing between bear and bull markets in successive years. But no matter what's been thrown investors' way, value can always be found.
The ability to buy stocks at a perceived discount is especially noteworthy given that most online brokerages have completely done away with barriers that had previously kept everyday investors on the sidelines. Namely, minimum deposit requirements and commission fees on regular stock trades are no more. For retail investors, it means any amount of money -- even $600 -- can be the perfect amount to put to work.
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If you have $600 that's ready to invest, and you're absolutely certain this isn't cash you're going to need to cover bills or emergency expenses, the following three stocks stand out as no-brainer buys right now.
Enterprise Products Partners
The first genius stock to buy if you have $600 in capital to put to work is energy specialist Enterprise Products Partners (EPD 0.45%). Enterprise is doling out an inflation-crushing 7.6% dividend yield and has raised its base annual distribution for 25 consecutive years.
Admittedly, oil and gas stocks aren't going to be everyone's cup of tea. During the COVID-19 pandemic, demand for energy commodities fell off a cliff and sent the spot price of crude oil and natural gas tumbling. This isn't a memory that energy sector investors have forgotten.
However, Enterprise Products Partners isn't your typical energy stock. It's a midstream energy company that acts as a middleman for upstream drillers, and it's responsible for transporting and storing petroleum and refined products.
What makes Enterprise such a safe investment, regardless of how volatile the spot price is for energy commodities, is the structure of its contracts with upstream drillers. Approximately three-quarters of the company's gross operating margin is derived from long-term, fixed-fee contracts. Having cash-flow transparency gives management the confidence to spend capital on acquisitions and organic projects without having to worry about adversely impacting the company's ever-growing distribution.
Speaking of organic projects, Enterprise Products Partners has up to $6.8 billion invested in nearly one dozen major infrastructure projects that are expected to come on line between the first quarter of this year and the first half of 2026. These ventures, which are predominantly focused on expanding its natural gas liquids exposure, should be accretive to the company's bottom line.
Aside from its market-topping yield, Enterprise Products Partners offers incredible value in what could be considered a pricey market. Shares can be scooped up right now for less than 10 times forward-year earnings and below 7 times forward-year cash flow. Both represent roughly 10% discounts to the company's trailing-five-year averages.
Okta
A second no-brainer stock that's begging to be bought by patient, growth-seeking investors is cybersecurity company Okta (OKTA -0.69%).
Shares of Okta were put through the ringer in October after the company disclosed that its identity verification platform had been hit by hackers. It would later admit that this breach affected all of its customers. It's not uncommon for security breaches to adversely impact revenue growth for cybersecurity companies over the short run.
On the flip side, cybersecurity has evolved into a basic necessity. Any business that has an online or cloud-based presence requires protection from robots and hackers that don't take a day off. In the wake of the pandemic, reliance on third-party cybersecurity providers like Okta has only grown.
What makes Okta such an intriguing investment is its cloud-native, artificial intelligence (AI)- and machine learning (ML)-driven identity verification platform. AI- and ML-focused platforms are designed to become more efficient at recognizing and responding to potential threats over time. Though Okta's recent breach suggests more evolution is needed, the future and functionality for its AI-driven identity verification systems remains bright.
In fiscal 2024 (ended Jan. 31, 2024), Okta was expected to have brought in a little over $2.2 billion in sales. But in 2022, the company's keynote presentation pointed to an $80 billion addressable market in identity verification. Okta is genuinely just scratching the surface with its potential.
The company's acquisition of Auth0, which closed in February 2022, is another long-term game changer. Auth0 gives Okta an inside track to bolster its share of the estimated $30 billion customer identity market. Furthermore, Auth0 is helping Okta cross-sell its solutions in overseas markets.
With Wall Street expecting Okta's earnings per share (EPS) to more than triple by fiscal 2027, this high-growth stock is a lot cheaper than most investors may realize.
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Meta Platforms
The third no-brainer stock to buy with $600 right now is none other than social media titan Meta Platforms (META 0.43%).
The two big worries for current and prospective Meta shareholders are the health of the U.S. economy and the growing losses tied to Meta's virtual and augmented reality segment known as Reality Labs. Meta generates approximately 98% of its revenue from advertising, which means a potential downturn in the U.S. economy would likely result in businesses paring back their ad spending.
But what's important to recognize is that periods of expansion handily outlast recessions. Even though recessions are perfectly normal, they're quite short. Nine of the 12 downturns in the U.S. economy since the end of World War II have lasted less than a year, with the remaining three recessions failing to surpass 18 months. Since most periods of expansion last multiple years, ad-driven businesses tend to thrive over long stretches.
Meta's clear-cut advantage is that it possesses the most desirable social media real estate on the planet. Facebook is the most visited social site in the world, while WhatsApp, Instagram, and Facebook Messenger are consistently among the most downloaded apps. Collectively, Meta's family of apps lures about 4 billion monthly active users. This makes it the undisputed go-to for advertisers wanting to reach as broad of an audience as possible. In short, it gives Meta Platforms exceptional ad-pricing power.
Something else worth noting is that Meta is sitting on a mountain of capital. It closed out 2023 with $65.4 billion in cash, cash equivalents, and marketable securities. It also generated more than $71 billion in net cash from operating activities for the year. Mind you, this $71 billion in net cash generation occurred with Reality Labs losing $16.1 billion for the full year. Meta has a balance sheet that allows it to take chances that few other social media companies are able to.
I'd be remiss if I didn't also mention Meta's shareholder-friendly moves. It's instituting a $0.50-per-quarter dividend and announced a $50 billion share repurchase program. A declining outstanding share count for businesses with steady or growing net income can lift EPS over time.
Finally, Meta's valuation looks like a bargain -- yes, even after more than quadrupling from its 2022 bear market lows. Shares can be purchased for 20 times forward-year earnings and 12.5 times forward-year cash flow estimates. Both figures represent double-digit discounts to Meta's trailing-five-year averages.
