Investors have endured a wild ride since the green flag waved at the start of 2020. Since this decade kicked off, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have all oscillated between bear and bull markets on a couple of occasions.
But if Wall Street offers a practical guarantee for investors -- aside from inherent volatility -- it's that the major indexes put stock corrections and bear markets firmly in the rearview mirror over time. For investors with a long-term mindset, it means any time can be ideal to put their money to work on Wall Street.
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To add to the above, most online brokerages have completely shelved barriers that had previously kept retail investors on the sidelines. Specifically, online brokers have mostly done away with commission fees for common-stock trades on major U.S. exchanges, as well as minimum deposit requirements. For everyday investors, it means any amount of money -- even $50 -- can be the perfect amount to invest.
If you have $50 that's ready to be put to work, and this is cash you're absolutely certain won't be needed to pay bills, the following three stocks stand out as no-brainer buys right now.
AT&T
The first remarkable company patient investors can confidently put $50 to work in right now is none other than telecom titan AT&T (T 2.18%).
AT&T is navigating its way through a challenging period. Most telecom providers are lugging around a sizable amount of debt. With interest rates climbing at their fastest pace since the early 1980s, future refinancing and deal-making could prove costlier for the company.
Furthermore, legacy telecom companies like AT&T were the subject of a July report from The Wall Street Journal that alleged these companies could face sizable cleanup costs and health-related liabilities tied to their use of lead-sheathed cables.
However, it's not all bad news for AT&T. One of the reasons I personally added to my stake in the company shortly after the WSJ report was the clear overreaction to the allegations. In addition to AT&T refuting the WSJ's findings, any financial liability for the company would likely be determined by the notoriously slow U.S. court system. In short, a resolution would be years away.
At the same time, AT&T's balance sheet has demonstrably improved over the past two years. In April 2022, it completed the divestment of content arm WarnerMedia, which was subsequently merged with Discovery to create an entirely new media entity, Warner Bros. Discovery. The "birth" of Warner Bros. Discovery meant this new entity would take on select debt lots previously held by AT&T. In less than two years, AT&T's net debt has declined by $40.1 billion to $128.9 billion. Though there's still more work to do, AT&T's financial flexibility has dramatically improved -- and its 6.4% yield looks safe.
But there's not much need for AT&T to play defense when its growth initiatives are finding the mark. Aggressive investments in its 5G network have resulted in steady wireless service sales growth, historically low churn rates, and six consecutive years of at least 1 million net broadband additions. The 5G revolution has the potential to deliver sustained mid-single-digit earnings growth.
A forward price-to-earnings (P/E) ratio of 7.5, coupled with its aforementioned 6.4% yield, presents a low-risk, high-reward scenario for patient investors.
York Water
A second amazing business that stands out as a no-brainer buy with $50 right now is little-known water utility York Water (YORW 0.14%). York provides water and wastewater services to 56 municipalities spanning four counties in South-Central Pennsylvania.
If there's a knock against utility stocks, it's been the recent surge in Treasury yields. Income investors buy utility stocks because of their predictable cash flow, generally low volatility, and market-topping dividend yields. But when the Fed increased its federal funds target rate by an aggregate of 525 basis points in under two years, it sent short-term Treasury bill yields soaring. Income investors have opted for the relative safety of T-bills instead of utility stocks like York Water.
Over the coming 12 months, we're likely to see a reversal of the Fed's hawkish monetary policy. If short-term Treasury yields retrace, it'll make safe, higher-yielding utility stocks more attractive, once again.
What investors get with York is cash-flow predictability and "Wall Street's Greatest Dividend Stock."
With regard to the former, York is a regulated utility. In simple terms, this means it requires approval from the Pennsylvania Public Utility Commission (PPUC) before it can pass along rate hikes to its customers. Though this might sound like a superficial hassle, it's actually a blessing in disguise. Since York Water isn't exposed to uncertain wholesale pricing, its cash flow tends to be highly predictable and transparent in any economic climate.
It also doesn't hurt that consumers don't change their water consumption habits much from one year to the next. This cash-flow predictability is what gives York's management team the confidence to regularly make bolt-on acquisitions without having to worry about adversely impacting the company's bottom line or dividend.
Meanwhile, York Water has paid a consecutive dividend every year since its founding in 1816. This 208-year streak of consecutive payouts is about 60 years longer than any other publicly traded company in the U.S.
York Water has the look of a long-term bounce-back candidate following a 30% decline in its stock over the past three years.
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Fastly
The third no-brainer stock to buy with $50 right now is edge computing company Fastly (FSLY 0.35%). Fastly is best-known for its content delivery network (CDN), which moves data from the edge of the cloud to end users as quickly and securely as possible.
If you're looking for a fault with Fastly, the company's bottom line provides the answer. Under previous CEO Joshua Bixby, Fastly's stock-based compensation and expensing was far higher than it should have been. The result was wider-than-expected losses that came home to roost during the 2022 bear market. This is why Fastly stock has completely roundtripped over the past four years.
However, current CEO Todd Nightingale appears to be cleaning up a lot of the issues that had previously plagued Fastly. Since taking over on Sept. 1, 2022, Nightingale has focused on trimming costs and lifting the company's margins. In that time, the company's adjusted gross margin has expanded from 53.6% to 59.2%. In short, Nightingale has put Fastly on a path to recurring profitability.
Many of Fastly's key performance indicators (KPIs) also suggest it can sustain a double-digit growth rate. Between March 31, 2022 and Dec. 31, 2023, its enterprise customer count grew 18%, average enterprise customer spend increased by 16%, and annual revenue retention actually improved to 99.2%. This means more of Fastly's customers are sticking with its services.
But the most-telling KPI of all is the company's dollar-based net retention rate (DBNER). Over the past seven quarters, DBNER has come in between 118% and 123%. This signals that existing customers are spending 18% to 23% more on a year-over-year basis. Since Fastly's CDN is a usage-driven platform, this is concrete evidence that Fastly is working its way toward higher gross profit.
Lastly, macro factors are firmly in Fastly's corner. Since the start of the COViD-19 pandemic, businesses have been shifting their data online and into the cloud at an accelerated pace. As user demand for online content grows, so should Fastly's influence.
Wall Street's consensus calls for an average annual earnings growth rate of 30% over the coming five years for Fastly. This makes it a bargain for investors with a long-term mindset.
