For the past 18 months, the bulls have been out in full force on Wall Street. Following the 2022 bear market, which saw the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite lose anywhere from 20% to more than a third of their respective value, all three major stock indexes have soared to fresh record-closing highs in the new bull market.
Although some investors might be skittish about putting their money to work with the indexes at or near an all-time high, history shows that patience and perspective pay off handsomely on Wall Street. Over time, every correction, bear market, and crash in the Dow, S&P 500, and Nasdaq Composite has eventually been wiped away by a bull market rally. This means any time can be ideal for everyday investors with a long-term mindset to invest on Wall Street.
Image source: Getty Images.
What's more, online brokerages have cleared a path to make it easier than ever for retail investors to put their money to work. In recent years, most brokers have tossed aside minimum deposit requirements and commission fees on common stock trades. Any amount of money -- even $300 -- can be the perfect amount to invest.
If you have $300 that's ready to put to work, and you're absolutely sure this isn't cash you're going to need to pay bills or cover emergency expenses when they arise, the following three stocks stand out as no-brainer buys right now.
PayPal Holdings
The first spectacular stock that makes for a genius buy if you have $300 to put to work right now is financial technology ("fintech") leader PayPal Holdings (PYPL +0.46%).
PayPal skeptics are primarily concerned about growing competition in the digital payment space and what that might do to the company's margins. We've certainly witnessed some modest margin erosion in previous quarters, which has somewhat justified the 80% drawdown PayPal has endured since the irrational exuberance investors exhibited in 2021. However, this headwind is nowhere near strong enough to hold an industry leader like PayPal down for long.
NASDAQ: PYPL
Key Data Points
To state the obvious, digital payments have an extraordinarily long growth runway. In May 2023, the analysts at Boston Consulting Group estimated global fintech revenue would grow by a factor of six to $1.5 trillion between 2022 and 2030. A $1.5 trillion industry provides a large enough pie that multiple businesses can be successful.
More importantly, PayPal's key performance indicators are almost universally pointing higher. Total payment volume on a constant-currency basis rose by 14% during the first quarter and has sustained a double-digit expansion rate throughout the decade.
Even better, engagement among active accounts keeps climbing. On a trailing-12-month (TTM) basis, the average active account completed 60 payments, as of March 31, 2024. By comparison, the average active account at the end of 2020 had completed just 40.9 payments on a TTM basis. We've witnessed almost a 50% increase in utility among active accounts in just a little over three years. This is incredibly important given that PayPal is predominantly a fee-driven businesses. More engagement should equate to higher gross profit.
Don't overlook PayPal's beefed-up capital-return program, either. The company has returned a hearty $5.1 billion via common stock repurchases over the TTM, which retired roughly 81 million shares. Companies with steady or growing net income and a declining share count often enjoy an increase to earnings per share (EPS). PayPal has retired approximately 11% of its outstanding shares over the last three years.
A forward price-to-earnings (P/E) ratio of 13 is a bargain for a time-tested leader that can sustain double-digit growth.
NYSE: BABA
Key Data Points
Alibaba
For growth and value investors with an appetite for a bit more risk, let me introduce China-based e-commerce behemoth Alibaba (BABA +3.98%) as another no-brainer stock that can be bought with $300 right now.
There are two drawbacks to investing in China stocks. The first is the unpredictability of the country's government, which can occasionally lead to stringent oversight on publicly traded companies.
The other concern is that China's rebound from its sweeping COVID-19 lockdowns has been far bumper than first imagined. Weaker-than-anticipated sales growth in a number of consumer-driven industries has weighed down many of the largest China-based stocks, including Alibaba.
On the other hand, there's no denying that Alibaba's Taobao and Tmall are, on a combined basis, the most-dominant online retail players in the world's No. 2 economy by gross domestic product. Last year, the International Trade Administration pegged Taobao and Tmall as controlling just over a 50% share of China's online retail sales. Gross merchandise volume traversing these platforms increased by a double-digit percentage during the March quarter, which signals that China's consumer may be back following a bumpy reopening process.
What's even more exciting is Alibaba's Cloud Intelligence segment. Alibaba Cloud ranks No. 1 in China among cloud infrastructure service spending, per tech-analysis firm Canalys. Enterprise cloud spending is still in its early stages of ramping in the world's No. 2 economy, which should allow this substantially higher-margin segment to meaningfully boost Alibaba's cash flow in the coming years.
Lastly, Alibaba's valuation, when taking into account its treasure chest of cash, is jaw-droppingly cheap. The company closed out March with $85.5 billion in cash, cash equivalents, and various investments. While some of this capital is being used to fund share buybacks, the rest gives Alibaba the ability to invest for its future.
A forward P/E of less than 9 with $85.5 billion in cash, cash equivalents, and various investments, is unbelievably cheap.
Image source: Getty Images.
Airbnb
The third no-brainer stock you can confidently buy with $300 right now is stay-and-hosting platform Airbnb (ABNB +0.26%).
Although the travel industry is ripe for disruption, even innovators like Airbnb contend with challenges. The biggest concern for Airbnb is the health of the U.S. economy and housing market. The first decline in M2 money supply since the Great Depression threatens U.S. economic growth, while the steepest rate-hiking cycle in four decades from the nation's central bank has brought existing home sales to a crawl. If the consumer gets pinched in any meaningful way, it could be bad news for Airbnb.
On the bright side, Airbnb undeniably benefits from non-linear boom-and-bust cycles for the U.S. and global economy. Even though recessions are a normal part of the U.S. economic cycle, they're historically short-lived -- no U.S. recession since World War II has topped 18 months in length. On the other hand, most periods of growth stick around for multiple years and occasionally hit the 10-year mark. These long-winded periods of expansion encourage consumers to spend their money on vacations.
NASDAQ: ABNB
Key Data Points
Another macro factor working in Airbnb's favor is the seemingly permanent shift we've witnessed in the labor force since the worst of the COVID-19 pandemic. More people than ever are choosing to work remotely, which has given rise to Airbnb's fast-growing long-term stays category. This is the category that accounts for stays of at least 28 days.
Like PayPal, Airbnb's key performance indicators are moving in the right direction. It now has more than 5 million hosts on its marketplace (this represents just a small fraction of potential homes that could be rented out) and saw gross booking value increase by 12% to $22.9 billion in the March-ended quarter.
Furthermore, Airbnb has a multidecade opportunity to expand its reach beyond stays and into other key spending categories within the travel industry. It's already been doing this with Experiences, which allows local experts to lead travelers on adventures. Four weeks ago, Airbnb introduced the world to Icons, which in many instances allows purchasers to enjoy unique experiences with celebrities.
Although Airbnb's forward P/E ratio of 28 might feel a bit daunting next to ultra-cheap stocks like PayPal and Alibaba, it's growing at the fastest pace of the three and has consistently outpaced Wall Street's expectations. An annualized earnings growth rate of 20% over the next five years is perfectly reasonable and makes Airbnb stock quite the deal.
