For the past two months, Wall Street and investors have been given a wake-up call. A subtle reminder, if you will, that stocks can just as easily go down as they can go up.
Through March 1, both the growth stock-dependent Nasdaq Composite and widely followed S&P 500 were respectively down by a double-digit percentage from their all-time highs. While moves lower in the market can be swift, and at times scary, they’re historically a great time to put your money to work — especially if your investment horizon is measured in years and not weeks or months.
The best thing about putting your money to work on Wall Street is you don’t need Warren Buffett’s pocketbook to build wealth. Any amount of money — even $300 — is the right amount to invest in your future.
If you’ve got $300 ready to invest, which won’t be needed to cover emergencies or pay bills, the following trio of no-brainer stocks would make for perfect buys as the market corrects lower.
Walgreens Boots Alliance
Although all eyes have been on growth stocks over the past decade, the ongoing correction has put value stocks back into focus. One of the most exciting, time-tested, and defensive value stocks investors can put $300 to work in right now is pharmacy chain Walgreens Boots Alliance (NASDAQ: WBA).
The great thing about most healthcare stocks is that their operating models are virtually impervious to stock market fluctuations. Since we can’t control when we get sick or what ailment(s) we develop, there’s a constant demand for pharmaceutical products, medical devices, and healthcare services.
However, there was a bit of an exception to this rule with Walgreens during the early stages of the pandemic. Since pharmacy stocks rely heavily on foot traffic, both front-end sales and clinical revenue fell during periods of lockdown. It’s provided the ideal opportunity for bargain seekers to buy into a company that has a rich history of making a lot of money.
As a Walgreens Boots Alliance shareholder, I’m intrigued by the company’s multipoint turnaround strategy, which involves trimming the fat and spending on faster-growing initiatives. For example, Walgreens reduced its full-year operating expenses by more than $2 billion a full year ahead of schedule. In spite of these significant cost cuts, management has spent aggressively on digitization efforts to drive its online and drive-thru pickup business. Even though online sales represent only a small percentage of total revenue, Walgreens wisely realizes this is an area of sustainable double-digit growth potential.
Walgreens has also gone all-in on personalized services. It’s partnered with and invested in VillageMD to open co-located full-service health clinics. The differentiator here being “full service.” Physician-staffed clinics should draw a wider gamut of patients, which increases the likelihood of repeat visits and boosts demand for Walgreens’ pharmacy. By mid-decade, over 600 of these clinics are expected to be open in more than 30 U.S. markets.
Walgreens looks like an absolute steal at only nine times estimated earnings per share in fiscal 2022.
Another no-brainer stock begging to be bought with $300 during this correction is cannabis multi-state operator (MSO) Trulieve Cannabis (OTC: TCNNF).
Before diving into what makes Trulieve so great, let’s tackle the elephant in the room: Congress’s lack of cannabis reform at the federal level. Though reforms would certainly aid marijuana stocks by improving their operating efficiency, federal legalization isn’t necessary for most MSOs to succeed. With 37 states having legalized weed in some capacity, this is more than enough opportunity for a company like Trulieve Cannabis to rake in the green.
What’s made Trulieve such a unique pot stock has been its approach to expansion. Whereas most MSOs played their own version of hopscotch and planted their proverbial flags in legalized states all over the U.S., Trulieve has focused most of its attention on medical marijuana-legal Florida. By 2024, Florida should be one of the three top-selling cannabis markets in the U.S.
Trulieve has in the neighborhood of 160 operating dispensaries nationwide, 112 of which are located in the Sunshine State. Saturating the Florida market has allowed the company to gobble up about half of the state’s dried flower and oils market share. Further, it’s kept the company’s marketing costs way down, which has helped it produce a recurring profit for more than three years.
Trulieve Cannabis also made waves with the largest U.S. cannabis acquisition in history last year. Purchasing Harvest Health & Recreation gave Trulieve a presence in the mid-Atlantic region of the country, and more importantly provided it with the leading share of the Arizona market. Arizona legalized recreational pot in November 2020 and began selling adult-use weed two months later. The Grand Canyon State could soon surpass $1 billion in annual pot sales.
Taking into account its recurring profitability, sustained double-digit growth rate, and Wall Street’s estimated price-to-earnings ratio of a little over 22 for 2022, Trulieve checks all the right boxes for opportunistic investors.
A third no-brainer stock investors can confidently put $300 to work in as the market moves lower is payment-processing giant Visa (NYSE: V).
Arguably the biggest concern for Visa at the moment is how its business could be disrupted by the Russia-Ukraine conflict. As a company that depends on increased spending by consumers and businesses, economic sanctions imposed on Russia could send negative ripples throughout the region or world.
But this is a relatively shortsighted worry for Visa. Over the long run, the company’s cyclical ties are one of its best attributes. By “cyclical,” I mean Visa tends to perform well when the U.S. and global economy are firing on all cylinders, and it struggles when recessions rear their head. The important thing is that recessions typically only last a few months to a couple of quarters, whereas periods of economic expansion are measured in years. Buying Visa is a smart way for investors to take advantage of the natural expansion of the U.S. and global economy.
Speaking of the latter, Visa has an extended runway with which to grow by a high single-digit or low double-digit percentage. Many parts of the world, such as the Middle East, Africa, and Southeast Asia, remain underbanked. Visa has the ability to organically expand its payment infrastructure into these markets, or can lean on acquisitions to make its mark (e.g., the Visa Europe buyout in 2016).
Also of note, Visa is purely a payment processor and not a lender. You might be scratching your head and wondering why it doesn’t dip it toes into the lending market. After all, long periods of economic expansion would allow lenders to generate interest income and fees. However, lending would also expose Visa to potential credit/loan delinquencies. Avoiding lending altogether means Visa doesn’t have to set capital aside to cover losses, which allows it to bounce back from recessions and economic contractions faster than most financial stocks.
10 stocks we like better than Walgreens Boots Alliance
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.