A little bit of cash can go a long way when it's working its magic in game-changing businesses.
Over the last four years, investors have been on a wild ride right here on Wall Street. We had the COVID-19 crash in 2020, some crazy optimism in 2021, a bear market in 2022, and a roaring bull market for the past year and then some. It's been a roller-coaster of emotions for investors.
But when it comes down to it, the stock market knows how to reward patient folks. Even though we can never predict when the market will take a hit, how long it'll slump, or how steep the fall will be, history tells us that those major indexes will eventually reach new highs. This means there's always value to be found, no matter if the stock market is killing it or going through a rough patch.
One of the major advantages of getting your money in the game on Wall Street is that a lot of online brokerages have scrapped the hurdles that used to keep regular investors out of the action. Nowadays, most brokers won't demand a minimum deposit, and they won't hit you with commission fees for regular stock trades on the big U.S. exchanges. For the everyday investor, it means any amount of money – even that $10 bill burning a hole in your wallet – is fair game for putting to work.
So, if you've got a crisp $10 bill ready to make moves, here are three stocks that are screaming “no-brainer buys” right now.
Sirius XM Holdings
For a slam-dunk investment with your $10, look no further than Sirius XM Holdings (SIRI 0.60%), the top pick in the stock game.
While traditional radio operators worry about the health of the advertising industry, Sirius XM dances to a different tune. When the U.S. economy shows even a hint of trouble, businesses tend to tighten their belts on ad spending. Yet, Sirius XM stands out because only 20% of its revenue last year came from ads (thanks to its acquisition of Pandora in February 2019).
Here's the kicker – a whopping 77% of Sirius XM's 2023 sales came from subscriptions. Unlike ad revenue, subscription money is way more predictable and subscribers are way less likely to bail during an economic downturn compared to advertisers slashing budgets in a recession. This puts Sirius XM in a prime position to weather any storm the U.S. economy throws at it.
And let's not forget, it's the exclusive licensed satellite-radio operator. While it does compete with terrestrial and online radio providers, being the only satellite-radio player gives Sirius XM some serious pricing power, often outpacing inflation rates.
If you're still on the fence, check out the sweet deal on its valuation. Snagging shares now costs less than 13 times forward-year earnings, a 36% discount compared to its average forward-year earnings multiple over the last five years. It's a steal waiting to happen!
Redfin
Looking for another smart move with your $10? Look no further than Redfin (RDFN -0.08%), the tech-savvy real estate game-changer.
After more than a decade of soaring housing prices and booming home sales, the real estate party hit a snag in 2022. The Federal Reserve went full throttle on interest rate hikes to tackle the highest inflation rates seen in the U.S. in 40 years. As Treasury yields and mortgage rates soared, the once-historically low mortgage rates turned into a 7% range, putting a damper on buying and selling existing homes.
But fear not, because Redfin is built to weather the storm and come out on top. First off, the Fed is likely to kick off a rate-easing cycle later this year. While it doesn't guarantee an immediate drop in mortgage rates, a friendlier interest rate environment is much better for existing home sales than the rate-hiking frenzy we've seen. Translation: the worst may be behind Redfin.
Now, let's talk about Redfin's secret weapons. Cost, for one. Traditional real estate players charge hefty listing fees or commissions, sometimes reaching a whopping 2.5% to 3%. Redfin, on the other hand, charges a lean 1% or 1.5%, depending on your prior business with them. With the national median existing-home price at $379,100 in January, that could mean a cool $7,600 in savings for the average homeowner. That's serious money.
But Redfin isn't just about cutting costs – it's also investing big in its agents and services. Enter Redfin Max, a fresh pay plan for agents aimed at boosting their earnings and attracting top-tier talent. And don't forget about the Concierge service, a game-changer helping homeowners maximize their home's sales price. Traditional real estate outfits simply can't match the personalized touch that Redfin brings to the table. Grab those $10 bills and get in on the action!
Warner Bros. Discovery
For your final $10 play, consider diving into the action with Warner Bros. Discovery (WBD 2.20%), the legacy media heavyweight that's been through the wringer but is showing signs of a strong comeback.
Since its formation in April 2022, Warner Bros. Discovery got hit by a triple punch. First, advertising revenue took a hit as businesses braced for a possible U.S. economic downturn. Second, the weight of rapidly rising interest rates squeezed the company, armed with a hefty debt load. Third, the whole cord-cutting trend pushed Warner Bros. Discovery into the streaming arena, which, let's be honest, has been a bit of a money pit so far.
Despite this rocky start to the merger of WarnerMedia and Discovery, there's a glimmer of hope on the horizon.
First up, the expectation is that advertising is due for a comeback. Not only did the much-feared recession fail to materialize, but it's also an election year. With a double-digit boost in political ad spending compared to the 2020 election cycle, legacy media operators like Warner Bros. Discovery stand to gain.
Then there's the pricing power move in the streaming game. Despite bumping up subscription prices and increasing average revenue per user by 7% in the fourth quarter, the company still saw a jump of nearly 1 million direct-to-consumer subscribers compared to the prior year, including the BluTV acquisition. This suggests the losses in the streaming department are on a path to narrow.
And let's not forget the financial glow-up. Beyond the annual loss, Warner Bros. Discovery pulled in $6.2 billion in free cash flow and slashed net debt by a cool $5.4 billion. While there's more work to be done on the financial front, Warner Bros. has the tools to rake in over $3 per share in annual cash from operations. With the current share price hovering around $8, it's a tempting grab for savvy long-term investors looking to seize an opportunity. Get in while the getting's good!
Should you invest $1,000 in Sirius XM right now?
Before making a move on Sirius XM, here's something worth considering:
The savvy analysts at The Motley Fool Stock Advisor just unveiled their top 10 stock picks, and Sirius XM didn't make the cut. The 10 stocks that did, however, have the potential for monster returns in the years ahead.
Just think about Nvidia – back in 2005, it was one of their recommendations. If you had invested $1,000 at that time, you'd be sitting on a cool $543,470 today!*
Stock Advisor is like a roadmap to success for investors. It gives you a straightforward plan, including tips on building a killer portfolio, regular updates from the analysts, and two fresh stock picks every month. Since 2002, the Stock Advisor service has more than quadrupled the return of the S&P 500*.
So, before you jump into Sirius XM, you might want to check out what Stock Advisor has to offer. It could be your ticket to some serious gains in the market.
*Please note that past performance is not indicative of future results.