With the stock market soaring to new all-time highs, investors may be hard-pressed to find new stocks for their portfolios. Many companies' valuations are stretched, and investors may not be able to achieve the returns from some stocks that they've managed in the past.
But not every stock has participated equally in the current market rally. Some companies have seen their share price beaten down due to short-term challenges while the long-term outlook remains strong. These stocks could provide outsized returns going forward as they put those near-term hurdles behind them and the market starts weighing their long-term potential more heavily.
Finding a stock like that can be a challenge, especially if you only have a small amount of cash to invest, like $100. Luckily, many online brokerages have eliminated minimum deposits and commission fees, and some allow fractional share trading. That means you can invest your $100 in any common stock. Still, there's something about owning at least a full share of a stock that can make you feel like a real owner in the business.
Here are three no-brainer stocks to buy now for $100.
Image source: Getty Images.
1. Starbucks
Starbucks (SBUX +0.67%) has a traffic problem. Same-store sales declined 4% in its most recent quarter, driven by a 6% decline in transactions.
The company is aiming to reinvigorate traffic with new drinks and improve throughput for drive-thru and mobile pickup orders. Mobile Order & Pay accounts for more than 30% of transactions, and the company's put a growing focus on its drive-thru operations. Over time, those efforts should help improve traffic among casual Starbucks customers.
NASDAQ: SBUX
Key Data Points
But there are two things that make Starbucks a great long-term investment.
First, it has an extremely large number of loyal customers. Its Starbucks Rewards loyalty program counts 32.8 million active members, up 6% year over year. These customers account for the bulk of sales and traffic. In other words, Starbucks' core customer base remains strong and growing.
Second, Starbucks is well positioned to keep growing its store count, innovating its processes, and creating new drinks in the current challenging environment. The company still plans to open 3,000 new stores globally this year. It expects to reach 45,000 stores by the end of 2025 and 55,000 stores by the end of 2030.
Ultimately, that ability to keep investing, combined with a growing core customer base, should drive strong sales growth over time. Shares fell sharply after its disappointing second-quarter earnings report, but that's made for a great opportunity for investors to pick up shares.
2. CarMax
CarMax (KMX +1.09%) is another company facing a challenging environment. High interest rates and inflation have made it less affordable to buy a car. On top of that, supply chain constraints from the first few years of the pandemic put pressure on used car inventory for CarMax. Both factors should put near-term pressure on CarMax's revenue growth.
Those pressures have forced management to adjust its long-term forecast. It still expects to reach 2 million in annual unit sales, but it's pushed the timeline out to 2030 from 2026. The company expects to reach its long-term forecast of $33 billion in annual revenue sooner than that, though. It also aims to take 5% of the 0- to 10-year-old used vehicle market, but it no longer has an exact time frame as it's prioritizing profitability. Its market share was 3.7% last year, down from 4% in fiscal 2022, as a result of that focus.
NYSE: KMX
Key Data Points
As CarMax overcomes the near-term hurdles, it could see significant bottom-line growth. It's investing in omnichannel delivery, which could reduce overhead and commissions paid to salespeople. It also means less need to focus on increasing store count. Its financing arm has room to grow as well, especially as rates come down and more people are willing to take auto loans. A recovery in revenue and margin expansion should result in healthy bottom-line growth.
While management's updates to its forecast sent shares lower, long-term investors should see it as an opportunity to buy up some shares on the cheap.
3. Walt Disney
Walt Disney (DIS 0.49%) is in the middle of a shift from linear TV to streaming, and that's weighed heavily on its results. Disney's linear network business is extremely profitable. That puts pressure on it to grow its new direct-to-consumer business in a profitable manner as cable subscribers decline.
To that end, Disney achieved positive operating income between Disney+ and Hulu in the second quarter. ESPN+ dragged down profits, resulting in an overall loss across the entire streaming business. Still, there are signs Disney should produce operating profits across its entire portfolio of streaming services in the current quarter and for the full year. It's seeing strong subscriber growth and higher average revenue per user due to price increases and ad sales.
NYSE: DIS
Key Data Points
While cord-cutting will continue to weigh on Disney's linear network segment and profits, the company is better positioned than most media companies to manage the transition. Disney's intellectual property, including the ESPN brand, makes it a staple in customers' homes. That gives it pricing power with pay-TV distributors, as well as in the direct-to-consumer space. While that focus on profits could curb its subscriber growth, it could still result in greater overall revenue and profit margins.
Meanwhile, Disney's experiences segment, which consists mostly of its parks and cruises, has made a full recovery from pandemic impacts and once again generates the bulk of the business' operating profits. That gives the company a lot of cash to invest in supporting its entertainment and sports segments.
Management is taking a slow and steady approach. It cut back on its content investments over the past two years. That should result in better free cash flow going forward, especially as the streaming business scales. Investors have punished Disney stock amid the transition, but the core competitive advantages of Disney haven't changed.
