The past 18 months have seen bulls run wild on Wall Street. After the bear market of 2022, the timeless Dow Jones Industrial Averagemuch followed S&P 500and driven by innovation Nasdaq Composite have all risen to new record highs.
While some investors are likely waiting for a stock market correction or significant pullback before putting their money to work, it’s important to realize that time has come, possiblywiped out every notable decline in Wall Street’s three major stock indexes. If you’re an investor with a long-term view, any time can be the perfect time to put your money to work.
Best of all, most online brokerages have eliminated the variables that previously kept retail investors from participating on Wall Street. With most commission fees and minimum deposit requirements suspended, any amount — even $300 — can be the perfect amount to invest.
If you have $300 available to invest on Wall Street and you’re absolutely certain you won’t need it to pay bills or cover an emergency (should one arise), then the following three stocks make logical buys right now for the second half of 2024, and perhaps beyond.
Visa
The first phenomenal company that stands out above the rest and would be a fantastic buy at $300 for the second half of 2024 is the leading payment processor Visa (NYSE: V).
The only negative thing that can be said about Visa is that it is a cyclical business. Businesses that are cyclical ebb and flow with the health of the U.S. and global economy. If certain leading indicators prove accurate—for example, if the first decline in U.S. M2 money supply since the Great Depression signals an impending recession—it is not out of the question that consumer and business spending could weaken in the coming quarters.
The economic cycle, however, is not linear. While three-quarters of all U.S. recessions since the end of World War II have resolved in less than a year, the typical expansion period for the U.S. economy lasts for several years. Betting that the U.S. economy will grow over time has been a smart move, and Visa is one company poised to benefit from long-term expansions.
Visa has a commanding lead in credit card network acquisition market share in the U.S. (the world’s largest consumer market). But more importantly, it has a decades-long runway to expand its infrastructure into chronically underbanked emerging markets. It has the operating cash flow and balance sheet to do so organically, or it can make occasional acquisitions to quickly extend its reach, as it did in 2016 with the purchase of Visa Europe.
Additionally, Visa’s management team has avoided riskier revenue channels that could reduce its profit margin by more than 50%. While some of its payment processing peers also lend money, Visa’s management team has focused exclusively on payment facilitation. This deliberate avoidance of lending ensures that Visa does not have to set aside capital during recessions to cover potential loan losses and defaults.
The icing on the cake for investors is that Visa’s stock is cheaper, relative to forward earnings, than it has been in a long time. The company’s forward price-to-earnings (P/E) ratio of 23 represents a 19% discount to the average forward P/E multiple over the past five years.
GSK
A second no-brainer stock that is now begging to be bought for the second half of 2024 at $300 is none other than pharmaceutical giant GSK (NYSE: GSK)the company formerly known as GlaxoSmithKline.
The biggest headwind GSK is currently facing is litigation. The company is facing about 75,000 lawsuits alleging that its now-discontinued heartburn drug Zantac causes cancer. Several analysts estimate that resolving these cases could result in a settlement of $1 billion to perhaps more than $3 billion for GSK. Wall Street is not a fan of uncertainty, and there is no timetable for when this litigation will be resolved.
While a lawsuit overhang is never ideal, it’s vital to recognize that GSK can handle whatever comes its way. The company ended March with nearly £4.1 billion in cash, cash equivalents and equity investments, equating to nearly $5.2 billion US. Further, GSK generated $1.42 billion in cash from operations in the first quarter alone. It has the balance sheet and cash flow to cover a settlement with Zantac, should one be reached.
More importantly, GSK’s medicines portfolio is firing on all cylinders. Excluding currency changes, GSK’s Vaccines segment delivered 16% revenue growth in the first quarter, with Specialty Medicines delivering even more robust 17% revenue growth. All of the company’s core medicines segments, including shingles, HIV, respiratory disease and oncology, delivered double- and triple-digit revenue growth year-on-year.
Improved use cases for its therapies, coupled with strong pricing power and an expanded pipeline, should allow GSK to grow its earnings per share by 10% (or more) annually for the foreseeable future. That makes its shares quite valuable at just 8 times next-year earnings.
The final thing to note about healthcare stocks like GSK is that they are very defensive and recession-proof. Since we can’t choose when we get sick or what ailment(s) we develop, demand for GSK’s products should remain constant in almost any economic climate.
PayPal Assets
The third no-brainer stock to buy now with confidence at $300 for the second half of 2024 is a leading financial technology (“fintech”) company PayPal Assets (NASDAQ: PYPL).
PayPal’s fall from grace has been brutal. Since its peak in 2021, PayPal shares have fallen by about 80%. This decline can be attributed to the waning of investor euphoria following COVID-19, as well as increased competition in the digital payments space. PayPal’s once-high growth rates have slowed dramatically.
But despite these challenges, many of PayPal’s key performance indicators suggest it’s moving in the right direction. For example, total payment volume (TPV) flowing through its networks (primarily PayPal and Venmo) continues to grow at a double-digit rate, excluding currency movements. In the first quarter, payment transactions grew 11% to $6.5 billion year-over-year, with TPV up 14% on a constant currency basis to $403.9 billion. We’re still in the early days of digital payments adoption.
Additionally, the company’s active accounts are becoming more engaged with each passing year. As 2020 came to a close, the company’s active accounts had completed an average of 40.9 payments over the last 12 months (TTM). But in the March 2024 quarter, which ended with a quarter, active accounts had completed an average of 60 payments, just barely over the TTM. Even if new account growth remains tepid, higher engagement from existing accounts can significantly increase the company’s gross profit.
Another upside catalyst for PayPal stock is relatively new CEO Alex Chriss, who came over from intuition‘s Small Business segment. Chriss has a keen eye for cost savings and understands how new sales channels can transform PayPal’s profitability. In late May, for example, the company announced it would roll out an advertising platform, which should benefit from extended periods of economic expansion.
The final piece of the puzzle for PayPal is the company’s historically cheap valuation. Its forward P/E ratio of 12 represents a 44% discount to its trailing five-year forward-earnings multiple.
Don’t miss this second chance at a potentially lucrative opportunity
Ever felt like you missed the boat on buying the hottest stocks? Then you want to hear this.
In rare cases, our expert team of analysts provides a “Double Down” Stocks recommendations for companies they think are about to explode. If you’re worried you’ve already missed your chance to invest, now’s the best time to buy before it’s too late. And the numbers speak for themselves:
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Amazon: if you invested $1,000 when we doubled in 2010, you would have $22,210!*
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Apple: if you invested $1,000 when we doubled in 2008, you would have $40,956!*
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Netflix: if you invested $1,000 when we doubled in 2004, you would have $363,272!*
We are currently issuing “Double Down” warnings on three incredible companies, and there may not be another opportunity like this anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns as of July 2, 2024
Sean Williams has positions in PayPal and Visa. The Motley Fool has positions in and recommends Intuit, PayPal and Visa. The Motley Fool recommends GSK and recommends the following options: short June 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy.
3 No-Brainer Stocks to Buy Now at $300 for the Second Half of 2024 was originally published by The Motley Fool
