Investors have been taken for quite the ride over the previous four years. All three of Wall Street’s major stocks indexes – the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite — have traded off bear and bull markets in successive years since this decade began.
But if history has taught investors anything, it’s the value of patience and perspective. Though stock market corrections are unpredictable, every downturn in the Dow Jones, S&P 500, and Nasdaq Composite has eventually (key word) been put into the back seat by a bull market rally. For investors with a long-term mindset, it means anytime can be the ideal time to put your money to work in the stock market.
Something else great about building your wealth on Wall Street is that most online brokers have removed barriers that had previously kept retail investors on the sidelines. More specifically, the lion’s share of brokers made common stock trades commission-free, and have eliminated minimum deposit requirements. This means any amount of money — even $200 — can be the perfect amount to invest.
If you have $200 that’s ready to be put to work, and you’re sure you won’t need this cash to pay bills or cover emergency expenses if/when they arise, the following three stocks stand out as no-brainer buys right now.
Enterprise Products Partners
The first phenomenal business patient investors can confidently add to their portfolios with $200 right now is ultra-high-yielding energy stock Enterprise Products Partners (NYSE: EPD).
Let me preface that oil and gas stocks aren’t going to be everyone’s cup of tea. During the early stages of the COVID-19 pandemic, an unprecedented drop-off in demand sent energy commodities like oil and natural gas off the proverbial cliff. With that memory still fresh in investor’s minds, some folks might be leery of putting their money to work in energy stocks.
However, Enterprise Products Partners isn’t your typical oil and gas company. While poor investor sentiment still weighed on its stock during the pandemic, its operations were minimally impacted. Its not-so-subtle secret to success is that it’s one of our nation’s largest midstream energy companies.
Midstream providers are effectively energy middlemen. They’re responsible for transporting and storing petroleum and refined products. Enterprise operates more than 50,000 miles of transmission pipeline, can store 14 billion cubic feet of natural gas and more than 300 million barrels of liquids, and has 26 fractionation facilities.
What makes this company special is the structure of its contracts with upstream drillers. The bulk of its contracts are long-term and fixed-fee. With a fixed-fee contract, Enterprise Products Partners can accurately forecast its operating cash flow years into the future. This cash-flow transparency is critical with the company outlaying billions of dollars for major infrastructure projects (primarily to expand its natural gas liquids segment) and bolt-on acquisitions.
Macroeconomic factors are working in the company’s favor, too. Multiple years of capital underinvestment from global energy majors during the pandemic, coupled with Russia’s ongoing war with Ukraine, has tightened the global supply of oil. When the supply of an in-demand commodity is constrained, it’s not uncommon for that commodity to increase in price. A higher spot price for crude is only going to encourage domestic drillers to up their production.
Enterprise Products Partners’ supercharged 7.2% yield and relatively steady mid-single-digit earnings per share (EPS) growth can translate to an annualized total return for patient investors of greater than 10%.
Fiverr International
A second no-brainer stock that’s begging to be bought with $200 right now is online-services marketplace Fiverr International (NYSE: FVRR).
Fiverr is navigating its way through two headwinds. First, the company’s growth guidance for 2024 came in shy of Wall Street’s consensus expectations. Fiverr anticipates sales growth of 6% at the midpoint, which was below the roughly 11% revenue growth Wall Street had been expecting.
The other worry is that artificial intelligence (AI) could make some jobs on Fiverr’s freelancer marketplace obsolete. However, Fiverr has embraced AI and used the technology to increase gross merchandise value transacted on its marketplace by 4% in 2023. While AI is an undeniably transformative tool for corporate America, it doesn’t look as if it’ll upend Fiverr’s well-defined competitive advantages.
One clear reason Fiverr can shine is because the labor market has endured permanent changes following the COVID-19 pandemic. Though some workers have returned to the office, more people than ever are working remotely, in some capacity. This plays right into Fiverr’s freelancer-driven operating model.
Transparency is another catalyst that’s allowed Fiverr’s business to steadily grow. Whereas freelancers on most online-service marketplaces list their scope of work at an hourly rate, Fiverr freelancers present their tasks at all-inclusive cost. While the number of active buyers fell 5% in 2023 to 4.1 million, average spend per buyer continued to move up (from $262, as of Dec. 31, 2022, to $278, as of Dec. 31, 2023). It’s plainly evident that businesses appreciate the cost transparency Fiverr’s platform is providing.
Most importantly, Fiverr’s take rate is superior to other freelancer marketplaces. The “take rate” represents the percentage of each deal Fiverr gets to keep as revenue, inclusive of fees. Fiverr’s take rate expanded by 160 basis points in the December-ended quarter to a scorching-hot 31.8%.
A forward price-to-earnings ratio of 9 simply doesn’t do justice to an innovator like Fiverr International.
Johnson & Johnson
The third no-brainer stock that makes for a surefire buy with $200 right now is none other than healthcare juggernaut Johnson & Johnson (NYSE: JNJ), which is commonly known as “J&J.”
Johnson & Johnson has vastly underperformed the major stock indexes over the past 16 months, with litigation overhang being the primary culprit. J&J is facing in the neighborhood of 100,000 lawsuits that allege its now-discontinued baby powder causes cancer. Despite denying and challenging these claims, J&J has attempted to settle this litigation on two separate occasions. Both attempts were tossed in court.
While Wall Street is never a fan of legal uncertainty, there are only a handful of publicly traded companies that can handle whatever is thrown their way. Johnson & Johnson makes this exclusive list. It’s one of only two publicly traded companies to be anointed with Standard & Poor’s (S&P’s) highest credit rating (AAA). S&P has no doubt that J&J can service its outstanding debt and cover any settlement liabilities it may face.
What makes Johnson & Johnson such a great company is that both of its operating segments are perfectly positioned for long-term success. It’s been shifting its focus to pharmaceuticals for years, because novel drugs provide strong pricing power and juicy margins. J&J hasn’t been shy about aggressively investing in novel research and collaborating with other drug developers.
Johnson & Johnson is also one of the largest medical-device makers. An aging global population should steadily improve demand for the company’s medical technology solutions and improve its pricing power over time.
Another catalyst that shouldn’t be overlooked is Johnson & Johnson’s management team. You’ll only need the fingers on your hands to count the number of CEOs J&J has had since its founding in 1886. Avoiding turnover at the top ensures the company’s growth plans stay on track.
The icing on the cake for investors is that J&J has increased its dividend for 62 consecutive years. Only a small handful of public companies are working on a longer streak of continuous annual dividend hikes.
Johnson & Johnson stock is historically cheap at just 13 times forward-year consensus earnings.
Should you invest $1,000 in Enterprise Products Partners right now?
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Sean Williams has positions in Fiverr International. The Motley Fool has positions in and recommends Fiverr International. The Motley Fool recommends Enterprise Products Partners and Johnson & Johnson. The Motley Fool has a disclosure policy.
3 No-Brainer Stocks to Buy With $200 Right Now was originally published by The Motley Fool
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