You don’t need mountains of money to grow your wealth on Wall Street.
In case you haven’t noticed, the bulls have taken complete control of Wall Street. The excitement surrounding the rise of artificial intelligence (AI), combined with a stronger-than-expected U.S. economy and the return of stock split euphoria, has helped the Dow Jones Industrial Average, S&P 500And Nasdaq Composite to multiple record highs in 2024.
While some investors may be naturally wary of investing their money with the major stock indices at or near record highs, history has shown that patience on Wall Street is richly rewarded. With every stock market correction and bear market ultimately being eclipsed by a bull market rally, this means that any time can be an ideal time to invest.
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To make matters even better, most online brokers have removed the barriers that previously kept retail investors from getting involved on Wall Street. In recent years, brokers have eliminated minimum deposit requirements and commission fees on basic stock trades. This means that any amount — even $100 — can be the perfect amount to put to work.
If you have $100 to invest and you know for sure you won’t need it to pay bills or cover emergencies, here are three stocks worth buying right now.
Business Product Partners
The first great company that investors can now confidently add to their portfolio with $100 is energy giant Business Product Partners (EPD 0.21%)Enterprise has an extremely high yield of 7% and has increased its annual base distribution in each of the past 25 years.
Granted, oil and gas stocks aren’t for every investor. Aside from oil and gas companies being considered “sin stocks,” the energy commodity falling off a cliff in the early stages of the COVID-19 pandemic in 2020 is still fresh in investors’ minds.
But while historic spot price volatility battered oil and gas drillers, Enterprise Products Partners remained largely unaffected operationally. That’s because it’s one of America’s top energy intermediaries.
Enterprise operates more than 50,000 miles of transmission pipelines, as well as 26 fractionation facilities. It can also store 14 billion cubic feet of natural gas and more than 300 million barrels of liquids.
What makes midstream operators so attractive is the transparency of their operating cash flow. Enterprise typically signs long-term contracts with upstream drillers that have a fixed fee. A fixed-fee contract removes the effects of inflation and spot price volatility from the equation, allowing Enterprise’s management team to accurately predict cash flow a year or more in advance.
Cash flow transparency is extreme important to midstream energy companies. It’s what has given Enterprise Products Partners’ board the confidence to increase the company’s annual base distribution for 25 years. It’s also the catalyst that has fueled about $6.9 billion in financing for major projects, many of which are earnings accretive and aimed at expanding the company’s role in natural gas liquids.
At just over 7 times expected 2025 cash flow, Enterprise Products Partners appears to be a bargain.
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PubMatic
A second no-brainer stock that’s a genius buy right now at $100 is the fast-growing adtech company PubMatic (PUBM 1.15%).
If there’s a flaw with advertising companies, it’s that they’re inherently cyclical. When companies believe the U.S. or global economy is unhealthy or could contract, it’s not uncommon for ad spending to decline. Right now, a few leading indicators, including a 3.49% aggregate decline in U.S. M2 money supply since April 2022, suggest a downturn is coming.
Fortunately for PubMatic and the advertising industry as a whole, the economic cycle is not linear. While recessions can be temporarily unnerving for employees and investors, they are generally short-lived. Only three of the 12 U.S. recessions since the end of World War II have lasted 12 months. By comparison, most economic expansions have lasted several years, with two expansions lasting a decade. The advertising industry clearly benefits from these long-winded periods of growth.
What makes PubMatic special is its focus: digital advertising. It is a sell-side provider whose cloud-based programmatic ad platform helps publishers sell their digital display space. The majority of its growth comes from video, mobile and connected TV. All three channels have continued double-digit growth potential in digital advertising.
In addition to being at the center of the fastest growing niche within the advertising industry, PubMatic’s management team made the (in hindsight) smart decision to build its own cloud-based programmatic ad platform. While it would have been faster and cheaper to rely on a third-party provider initially, the end result of building its own cloud-based infrastructure is that it can retain more of its revenue as it scales. In other words, PubMatic’s long-term operating margin and cash flow will benefit from this decision.
PubMatic is also a cash flow machine. The company is in its 10th consecutive year of positive operating cash flow and ended the March quarter with $174.1 million in cash, cash equivalents and marketable securities, with no debt. This treasury gives the company enough financial flexibility to weather a short-term downturn. In addition, it has helped the company repurchase more than 5 million shares of its common stock since the beginning of 2023 (through April 30, 2024).
On Wall Street, PubMatic’s earnings per share (EPS) are expected to grow at an average annual rate of 67% through 2028. Now seems like the perfect time for opportunistic investors to pounce.
Pfizer
The third no-brainer stock that is a fantastic buy right now at $100 is none other than leading pharmaceutical company Pfizer (PFE -0.75%)Like Enterprise Products Partners, Pfizer has an ultra-high yield of about 6%!
Earlier this year, Pfizer’s stock price hit its lowest level in more than a decade. The flaw is that it is a victim of its own success.
During the height of the COVID-19 pandemic, Pfizer was one of a select group of pharmaceutical companies that successfully developed a COVID-19 vaccine. (The vaccine is known as Comirnaty.) It also developed an oral treatment, Paxlovid, to reduce the severity of symptoms for patients with COVID-19. Together, these two therapies generated more than $56 billion for Pfizer in 2022. Just two years later, these two drugs are on track to generate about $8 billion in combined sales.
While a $48 billion revenue decline isn’t something to sweep under the rug, you have to take a step back and understand where Pfizer is coming from. In 2020, the company generated $41.9 billion in revenue. Based on the midpoint of its 2024 guidance, which includes $8 billion from its COVID-19 blockbuster duo, Pfizer is on track for $60 billion in net sales. This is a company that’s improving, despite what the stock price movement suggests.
In the first quarter, Pfizer’s non-COVID therapies grew 11% in operating revenue, excluding the impact of currency movements. Blood thinner Eliquis led the way with more than $2 billion in global net sales in the quarter ended March, while the Specialty Care segment collectively contributed 7% in operating revenue growth.
Another exciting development for Pfizer is the $43 billion acquisition of cancer drug developer Seagen, which closed in mid-December. In addition to adding more than $3 billion in annual revenue to Pfizer’s oncology segment, Seagen’s innovation significantly expands Pfizer’s pipeline and offers cost savings through 2025 and beyond. In short, Seagen should be a net positive for Pfizer’s earnings per share starting next year.
The final piece of the puzzle is that Pfizer’s valuation is tempting. Long-term investors can buy shares for about 10 times next year’s earnings, which seems like a good deal for a company that is forecast to grow its EPS at an average annual rate of 14% through 2028.
