3 No-Brainer Stocks to Buy With $100 Right Now

3 No-Brainer Stocks to Buy With 0 Right Now

In the long term, Wall Street is a veritable wealth-creating machine. But when you narrow the goal down to just a few months or years, the outlook is much less predictable.

Since the beginning of this decade, the Dow Jones Industrial Average, S&P500And Nasdaq Composite have traded bear and bull markets on several occasions. Following the 2022 bear market, which saw the growth-oriented Nasdaq Composite lose 33% of its value, all three major indexes reached new all-time highs.

Although some investors might be hesitant to invest their money while indexes are at or near an all-time high, patience and perspective are invaluable allies. Over time, every stock market correction and bear market was eventually put in the rearview mirror by a bull market rally. This means that long-term investors can always find value, regardless of what the broader market perceives as a price at any given time.

3 No-Brainer Stocks to Buy With 0 Right Now

Image source: Getty Images.

Additionally, most online brokerages have made it easier than ever for retail investors to put their money to work on Wall Street. Many have eliminated minimum deposit requirements and commission fees on common stock transactions. This means that any amount of money – even $100 – can be the ideal amount to invest.

If you’re willing to invest $100 and you’re sure it’s money you won’t need to pay your bills or cover emergency expenses, the following three actions stand out as purchases obvious at the moment.

Starbucks

The first phenomenal stock that is an awesome buy if you have $100 ready to go right now is the coffee chain. Starbucks (NASDAQ:SBUX).

Although Starbucks has been as stable as it gets in the restaurant business for decades, it’s officially going through a rough patch. In the quarter ended in March, the company reported a 4% decline in global same-store sales and notably reduced its sales forecast for the year to “low single digits” from a previous forecast that called for sales growth of around 10%.

Although there’s no sugar coating it was just about the worst quarter imaginableStarbucks has clear competitive advantages that it can use to right the ship and meet the expectations of its patient shareholders.

For starters, Starbucks has historically demonstrated exceptional pricing power through customer loyalty. The company did not hesitate to increase the price of its beverages and food to compensate for rising labor and material costs.

Another reason investors should expect Starbucks to rebound significantly is its Rewards membership. The company closed March with 32.8 million active Rewards members in the United States, representing a modest 6% increase from the year-ago period.

Rewards members are more likely than non-Rewards customers to have larger ticket sizes, use mobile ordering, and/or store their credit card information on their smartphone. In other words, these are customers that Starbucks has effectively “trained” to expedite the ordering process and quickly move in-store and drive-thru lines. As long as the number of Rewards members increases, Starbucks is in great shape.

Don’t overlook Starbucks’ capacity for innovation either. During the COVID-19 pandemic, the company completely revamped its drive-thru experience to personalize interactions with video on its order boards. It also introduced new food and drink pairings to its menu to encourage higher margin purchases. While some of its new drinks may not have caught on with consumers in the last quarter, the company has a history of product innovation that produces far more winners than losers.

Opportunistic investors can pounce on Starbucks stock for 19 times annual earnings, representing a 32% discount to its average annual earnings multiple over the past five years.

PubMatic

A second obvious stock currently asking to be bought with $100 is the cloud-based programmatic ad tech company. PubMatic (NASDAQ:PUBM).

The primary concern of any advertising-driven business is the health of the U.S. economy. Although economic data continues to point toward modest expansion, some predictive indicators, such as the first decline in the U.S. M2 money supply since the Great Depression, suggest that the U.S. economy may be on the verge of some turbulence. If the U.S. economy fell into recession, advertising revenue would almost certainly decline.

On the other hand, economic expansions and recessions are not linear events. While no recession since the end of World War II has lasted more than 18 months, there have been two periods of growth that exceeded the decade mark. Advertising-supported stocks tend to be great investments for patient investors.

What makes PubMatic so attractive is that its home turf, digital advertising, is the fastest growing niche of the advertising market. PubMatic helps publishing companies sell their digital display space across video, mobile and connected TV channels. All of these segments have the potential to generate sustained double-digit sales growth.

Another factor working in PubMatic’s favor is the decision its management team made years ago to create its own cloud-based programmatic advertising platform. Although expensive and time-consuming, the decision not to rely on a third-party platform means that as PubMatic’s sales increase, it will be able to retain more of its revenue. Translation: PubMatic’s operating margin is expected to be higher than many of its peers.

It’s a company that’s also flush with cash. PubMatic has been generating positive cash flow for more than nine years and closed March with $174.1 million in cash, cash equivalents and marketable securities, with no debt. It was able to use some of this cash to buy back its shares, which should boost its earnings per share (EPS).

Although PubMatic’s forward price-to-earnings (P/E) ratio of 56 may seem unsightly, consensus estimates call for an annualized EPS growth rate of 67% over the next five years. In short, PubMatic remains a good deal for investors looking for growth.

A person pressing a button on their vehicle's dashboard to access Sirius XM satellite stations.A person pressing a button on their vehicle's dashboard to access Sirius XM satellite stations.

Image source: SiriusXM.

Sirius XM Holdings

The third obvious stock you can confidently buy with $100 right now is a satellite radio operator. Sirius XM Holdings (NASDAQ:SIRI).

Like PubMatic, the health of the U.S. economy is paramount to Sirius XM’s success. Most radio operators rely on advertising to pay their bills. In addition to advertisements, Sirius XM relies on promotional subscriptions accompanying the purchase of new vehicles to translate into self-paying subscribers. If the U.S. falls into a recession or new vehicle sales decline, it will likely lead to a decline in self-pay conversions.

Wall Street is currently down on Sirius XM as the company reported a decline of about 359,000 subscribers (about 1% of its base) in the March quarter. While it’s not what current management or investors want to see, there are multiple reasons to believe that Sirius XM has the potential to double from its current stock price.

Perhaps the most obvious reason to trust Sirius XM as an investment is its pricing power. As the only licensed satellite radio operator, it has had no difficulty in raising subscription prices for its members from time to time.

In addition to being the only satellite radio operator, Sirius XM generates revenue differently than other radio providers. While most terrestrial and online radio providers earn the bulk of their sales from advertising, Sirius generated only 19% of its first-quarter revenue from advertising. The majority (78%) of its revenue comes from subscriptions. The benefit of subscriptions is more predictable operating cash flow in any economic climate.

Another competitive advantage for Sirius XM is the transparency of its cost structure. While content and revenue sharing costs will fluctuate from quarter to quarter, equipment and transmission expenses tend to remain fixed and/or predictable, regardless of the number of Sirius XM subscribers. net – and Wall Street. love predictability.

The feather in Sirius XM’s cap is its attractive valuation and 3.5% yield. Investors can buy shares now for just over 9 times the coming year’s earnings. This represents a historically low forward earnings multiple for Sirius XM.

Should you invest $1,000 in Starbucks right now?

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Sean Williams holds positions in PubMatic and Sirius XM. The Motley Fool posts and recommends PubMatic and Starbucks. The Motley Fool has a disclosure policy.

3 Obvious Stocks to Buy with $100 Right Now was originally published by The Motley Fool

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