Investors have taken quite a beating over the past four years. All three major Wall Street stock indices – the Dow Jones Industrial Average, S&P 500And Nasdaq Composite – have traded between bear and bull markets in consecutive years since the start of this decade.
But if history has taught investors anything, it’s the value of patience and foresight. Although corrections in the stock market are unpredictable, this is the case with every downturn in the Dow Jones, S&P 500 and Nasdaq Composite ultimately (keyword) has been pushed into the background by a bull market rally. For investors with a long-term mindset, this means that any time can be the ideal time to invest your money in the stock market.
Another great thing about building your wealth on Wall Street is that most online brokers have removed hurdles that previously kept retail investors on the sidelines. More specifically, the lion’s share of brokers have made common stock trading commission-free and eliminated minimum deposit requirements. This means that any amount of money – even $200 – can be the perfect investment amount.
If you have $200 ready to put to work and you’re confident you won’t need that cash to pay bills or cover emergency costs if they arise, the following three stocks are a no-brainer right now.
Enterprise Products Partner
The first phenomenal business patient that $200 investors can now confidently add to their portfolio is high-yield energy stocks Enterprise Products Partner (NYSE:EPD).
Let me start by saying that oil and gas stocks won’t be for everyone. In the early stages of the COVID-19 pandemic, an unprecedented drop in demand literally plunged energy commodities such as oil and natural gas into the depths. Because this memory is still fresh among investors, some people may be wary of putting their money into energy stocks.
However, Enterprise Products Partners is not your typical oil and gas company. While poor investor sentiment during the pandemic still weighed on the stock, the company’s operations were only minimally impacted. Its not-so-subtle secret to success is that it is one of our country’s largest midstream energy companies.
Midstream providers are effectively energy intermediaries. They are responsible for the transportation and storage of petroleum and refined products. Enterprise operates more than 50,000 miles of transportation 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 drilling companies. The majority of contracts are long-term and have fixed prices. With a fixed-price contract, Enterprise Products Partners can accurately predict their operating cash flow for years to come. This cash flow visibility is critical as the company spends billions of dollars on major infrastructure projects (most notably to expand its natural gas liquids segment) and bolt-on acquisitions.
Macroeconomic factors also have a positive impact on the company. Years of underinvestment by global energy companies during the pandemic and Russia’s ongoing war with Ukraine have led to a shortage of global oil supplies. When the supply of a commodity in demand is limited, it is not uncommon for the price of that commodity to increase. A higher spot price for crude oil will only encourage domestic drillers to increase their production.
Enterprise Products Partners’ superior 7.2% yield and relatively stable mid-single-digit earnings per share (EPS) growth can result in a total annual return of more than 10% for patient investors.
Fiverr International
A second obvious stock currently waiting to be bought at $200 is the online services market Fiverr International (NYSE:FVRR).
Fiverr is navigating two headwinds. First, the company’s 2024 growth forecast fell short of Wall Street’s consensus expectations. Fiverr expects revenue growth of 6% at the midpoint, which is below Wall Street’s expected revenue growth of about 11%.
The other concern is that artificial intelligence (AI) could make some jobs on Fiverr’s freelance marketplace redundant. However, Fiverr has embraced AI and used the technology to increase the gross merchandise value transacted on its marketplace by 4% by 2023. While AI is undeniably a transformative tool for American businesses, it doesn’t look like it’s going to upend Fiverr’s well-being. defined competitive advantages.
One clear reason why Fiverr can shine is that the job market has undergone lasting changes following the COVID-19 pandemic. In some ways, even though some workers have returned to the office, more people are working remotely than ever before. This fits perfectly with Fiverr’s freelance-oriented operating model.
Transparency is another catalyst that has allowed Fiverr’s business to grow steadily. While freelancers on most online service marketplaces offer their scope of work on an hourly basis, freelancers on Fiverr offer their tasks at a flat rate. While the number of active buyers fell 5% to 4.1 million in 2023, average spend per buyer continued to increase (from $262 as of December 31, 2022 to $278 as of December 31, 2023). It’s clear that businesses value the cost transparency that Fiverr’s platform offers.
Most importantly, Fiverr’s adoption rate is superior to other freelance marketplaces. The “Take Rate” represents the percentage of each deal that Fiverr is allowed to keep as revenue, including fees. Fiverr’s take rate rose 160 basis points to a rapid 31.8% in the December quarter.
A forward price-to-earnings ratio of 9 simply doesn’t do justice to an innovator like Fiverr International.
Johnson & Johnson
The third obvious stock that is currently a surefire buy at $200 is nothing more than a healthcare monopoly Johnson & Johnson (NYSE:JNJ)which is commonly known as “J&J”.
Johnson & Johnson has significantly underperformed major stock indexes over the past 16 months, with the backlog of litigation being the main reason. J&J faces about 100,000 lawsuits alleging its now-discontinued baby powder causes cancer. Despite denying and contesting these claims, J&J has attempted to resolve this litigation twice. Both attempts were rejected in court.
While Wall Street is no fan of legal uncertainty, there are only a handful of publicly traded companies that can handle whatever comes their way. Johnson & Johnson creates this exclusive list. It is one of only two publicly traded companies to be awarded the highest credit rating (AAA) by Standard & Poor’s (S&P). S&P has no doubt that J&J can service its outstanding debts and cover any settlement liabilities.
What makes Johnson & Johnson such a great company is that both business segments are perfectly positioned for long-term success. For years, the company has shifted its focus to pharmaceuticals as novel drugs offer strong pricing power and juicy margins. J&J has not shied away from investing aggressively in novel research and collaborating with other drug developers.
Johnson & Johnson is also one of the largest medical device manufacturers. An aging global population should steadily increase 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 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 that the company’s growth plans remain 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 publicly traded companies work on a long series of continuous annual dividend increases.
Johnson & Johnson shares are historically cheap at just 13 times next year’s consensus earnings.
Should you invest $1,000 in Enterprise Products Partners now?
Before you buy Enterprise Products Partners stock, consider the following:
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Sean Williams holds positions at 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 Easy Stocks to Buy Right Now for $200” was originally published by The Motley Fool