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Unpredictability is one of Wall Street's few givens. When examined over short timelines, it can be virtually impossible to accurately predict directional moves in the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite. Over the previous four years, these three major stock indexes have oscillated between bear and bull markets in successive years.
But the beauty of putting your money to work on Wall Street is that it overwhelmingly favors the patient. Stocks have handily outpaced the annualized long-term returns of bonds, commodities, housing, and bank certificates of deposit (CDs). In other words, every notable downturn in the stock market has served as a buying opportunity for long-term-minded investors.
Image source: Getty Images.
To make things even better, most online brokerages have completely done away with barriers that had previously kept retail investors on the sidelines. Specifically, a lot of brokers have eliminated minimum deposit requirements and commission fees for common stock trades completed on major U.S. exchanges. This means any amount of money -- even $100 -- can be the ideal amount to put to work.
If you have $100 that's ready to invest, and there's no question this cash won't be needed to pay bills or cover emergency expenses when they arise, the following three stocks stand out as no-brainer buys right now.
The first sensational stock that's begging to be bought with $100 right now is none other than America's largest electric utility by market cap, NextEra Energy (NEE +0.00%).
Investors usually flock to utility stocks because they offer low volatility and dividend yields that handily outpace the broader market. However, with the Federal Reserve aggressively raising rates over the past two years, Treasury bond yields have soared. With bonds presenting investors with a safer path to income, utility stocks like NextEra Energy paid the price. Thankfully, this weakness looks to be short-lived and represents the perfect opportunity to buy into a world-leading electric utility on the cheap.
To begin with, NextEra should benefit from the Federal Reserve pumping the brakes on rate hikes. As the yield curve normalizes and short-term yields fall, traditional utility stocks are likely to become attractive, once again, to income seekers.
Don't overlook the predictability of NextEra's operating cash flow, either. Virtually all homeowners and renters need electricity to power their appliances and/or HVAC systems. This leads to consistent demand for electricity year after year. Being able to accurately forecast its cash flow one or more years in advance is what's afforded management the confidence to undertake new projects, make acquisitions, and maintain average annual dividend growth of more than 10% over the past decade.
But the premier catalyst for NextEra Energy continues to be its industry-leading renewable energy portfolio. As of Sept. 30, the company had 70 gigawatts (GW) of operating capacity, 34 GW of which derived from renewables. The company's solar (6 GW) and wind (23 GW) capacity is higher than any other electric utility in the world.
Despite green-energy projects being costly, they provide NextEra with an easily identifiable competitive edge. Wind and solar are helping to demonstrably lower electricity generation costs, which, in turn, is translating into sustained high-single-digit adjusted earnings growth in an industry known for low-single-digit expansion.
Though NextEra stock has averaged a forward-year earnings multiple of 26 over the trailing-five-year period, opportunistic investors can grab shares right now for a forward-year earnings multiple of just 15.
A second phenomenal stock that's itching to be added to investors' portfolios with $100 right now is China's No. 2 e-commerce company, JD.com (JD +0.03%).
JD.com has been in a nearly three-year funk, with shares of the company shedding about 80% of their value. Growing online competition in the world's No. 2 economy by gross domestic product, coupled with China's stringent COVID-19 mitigation measures, has put JD's operating performance under a microscope. But following its sizable pullback, JD appears to be a phenomenal bargain.
Similar to NextEra Energy, macro factors are working in JD's favor. Chinese regulators abandoned the country's controversial "zero-COVID" mitigation strategy in December 2022 following three years of unpredictable lockdowns. Though it's going to take time to work out various supply chain issues, China's economy should be able to find its stride sooner rather than later.
Compared to most developed countries, China's e-commerce segment is still in a relatively early growth stage. The country's burgeoning middle class is in the process of discovering and utilizing online ordering. Considering that China has historically grown at a faster pace than most developed countries, e-commerce should enjoy a long growth runway.
Despite playing second fiddle to Alibaba in e-commerce market share in China, JD offers a more favorable margin outlook. Whereas Alibaba has relied heavily on third-party sellers on its online marketplace, JD plays the part of a true direct-to-consumer (DTC) company. It handles the inventory and logistics of getting purchased products to consumers. Having more control over the DTC process should lead to a more robust operating margin.
In addition to its investments in artificial intelligence (AI), JD.com's plan to spin off its industrial and property units and list each segment on the Hong Kong stock exchange should help unlock shareholder value. Spinoffs typically make it easier for investors to understand how a complex business makes money.
JD.com is also historically cheap. Shares are currently valued at a little north of 7 times Wall Street's consensus earnings for 2024. That's the lowest earnings multiple for JD.com since it became a publicly traded company in 2014.
Image source: Getty Images.
The third top-notch stock that makes for a no-brainer buy with $100 right now is social media company Pinterest (PINS +0.00%).
Pinterest has faced a bit of a double whammy over the past two years. First, its monthly active user (MAU) count began retracing after an initial surge during the early stages of the COVID-19 pandemic. Social media stocks are often superficially judged by their user growth. The other issue has been a challenging advertising environment, with a couple of predictive indicators and money-based metrics pointing to a U.S. recession.
With regard to the latter, time has a way of healing all wounds for ad-driven businesses. Even though recessions are an inevitable aspect of the economic cycle, downturns are short-lived. While no recession has surpassed 18 months in length since the end of World War II, there have been two periods of growth that reached the 10-year mark. Disproportionately long periods of growth allow ad-fueled businesses like Pinterest to thrive.
As for Pinterest's MAUs, the company is growing, once more. It closed out 2023 with an all-time high 498 million MAUs. The more eyeballs the company can attract, the likelier it is to be able to command impressive ad pricing power.
Despite a less-than-favorable advertising environment, Pinterest delivered low-single-digit average revenue per user (ARPU) growth globally in 2023, which came on the heels of low-double-digit ARPU growth in 2022. Regardless of what's happened with Pinterest's MAUs, it's had no trouble monetizing its user base.
What makes Pinterest a particularly attractive investment for growth seekers is that it's well protected from data-tracking changes implemented by app developers. The purpose of Pinterest's platform is for users to willingly and freely share what things, places, and services interest them. This vital info can be presented to merchants on a silver platter. It also serves as the logical jumping-off point for Pinterest to further edge its way into e-commerce in the years to come.
Lastly, the valuation makes sense. Wall Street's consensus calls for average annual earnings growth of 23% over the next five years. With a forward-year earnings multiple of 21, Pinterest represents a bona fide bargain.