The stock market recovered nicely from last year’s debacle. The Nasdaq Composite Index in particular went from a 34% loss in 2022 to a 29% gain so far this year. Yet even with all the major indexes trading higher than they were at the start of the year, The Dow Jones Industrial Average, S&P 500, and the Nasdaq are all well below their all-time highs of 2021. That suggests investors can still readily find no-brainer stocks to buy if they’re willing to look. And it doesn’t take a lot of money to make money anymore.
Thanks largely to Robinhood (NASDAQ:HOOD), the online brokerage popular with millennials and Gen Z investors, virtually all online brokerages have eliminated the friction costs of buying and selling stock. You can trade now with no fees imposed. If you have only $600 to invest, all of that money can now be put to work. The following three stocks are no-brainer stocks to buy now.
Altria (MO)
Cigarette smoking is in a secular decline, but Altria (NYSE:MO) remains a solid stock to buy-and-hold for the long term. The tobacco giant still holds sway because of its tremendous pricing power. Economists call it price elasticity. No matter how much Altria raises prices, most smokers still buy its cigarettes. It notes that unlike other industries, its business is not impacted by inflation. Altria, of course, owns the dominant U.S. brand Marlboro. Although rising prices have caused a number of smokers to trade down to discount brands, Marlboro still commands a 42.1% share of the market.
It also recently completed the $2.7 billion acquisition of NJOY, the third largest electronic cigarette manufacturer. As the industry prepares for a post-combustible cigarette future, Altria will have a significant role in this new phase of growth. And while marijuana has been more of a hindrance than tailwind, Altria also owns a 41% stake in Cronos Group (NASDAQ:CRON). Should marijuana ever be legalized nationally in the U.S., the tobacco company will have a vehicle to drive future growth.
Altria pays a dividend yielding 8.8% annually, and trades at a deeply discounted eight times the free cash flow (FCF) it generates.
Vertex Pharmaceuticals (VRTX)
Biotech Vertex Pharmaceuticals (NASDAQ:VRTX) is another one of the no-brainer stocks to consider despite considerable risk.
We’ll get the rough stuff out of the way first. Buying Vertex means you’re buying a stock very narrowly focused on treating one disease, cystic fibrosis (CF). The biotech told investors it expects to generate between $9.7 billion to $9.8 billion in revenue this year, all of which comes from its four approved CF therapies. But Vertex is also the 800-pound gorilla in the space. It treats more than two-thirds of the approximately 88,000 people with CF in North America, Europe and Australia.
Importantly, Vertex has a robust pipeline of drugs in trials that will expand its portfolio. The biotech is also investigating therapies for sickle cell, anemia, diabetes, kidney disease and muscular dystrophy.
Like Altria, the biotech exhibits marketplace pricing power. That gives it flexibility to meet customer demand based on ability to pay. With 70% of its operating expenses going to research and development, it needs to recoup profits to continue creating new therapies. It offers flexible options so that patients globally have access to its medicines.
Vertex isn’t a cheap stock, but it is one with a lot of cash on its balance sheet, $11.2 billion at last count, and always adding more. It’s one that will keep growing for years to come.
Walmart (WMT)
Retail king Walmart (NYSE:WMT) is a rather dull stock compared to the other two on the list. That doesn’t mean it doesn’t warrant a closer look.
Comparable store sales in the second quarter rose 6.4% year-over-year. E-commerce sales growth was more than double those of Amazon (NASDAQ:AMZN), 24% compared to 11%. That means it is taking market share from its online rival. It may also be surprising to learn Walmart has an extensive advertising business. Its digital platforms offer extensive reach for advertisers to consumers. It grew 35% in the second quarter. The number of advertisers on its platforms grew 60% from last year. Walmart also generated $9 billion worth of FCF last quarter.
Like Vertex, the retailer’s stock is not cheap. It goes for 22 times forward earnings, four times its estimated earnings growth rate, and 35 times FCF. Yet it’s a solid, consistent producer that pays a healthy dividend yielding 1.4% annually.
On the date of publication, Rich Duprey held a LONG position in MO stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
