While investing might seem like a daunting task at first, it is not as complicated as it is made out to be. If you adopt a long-term mindset, stick to profitable companies with competitive advantages, and diversify to avoid single-stock risk, then you’re well on your way to achieving satisfactory returns. It can really be that simple.
In the same way, if you are a new investor in the stock market, here are three no-brainer stocks to consider buying now. I’m sure you’re already familiar with these businesses, making the decision to buy for your portfolio even less daunting.
1. Home Depot
Home Depot (HD 0.26%) is the first in this list. The major home improvement chain benefited from a surge in demand fueled by a pandemic that has largely faded. Earnings are still respectable, however, as same-store sales climbed 4.3% in the latest fiscal quarter that ended Oct. 30, 2022, compared to 6.1% growth in the period of the year ago.
The business has found remarkable success serving professional clients – general contractors and the like – and do-it-yourselfers. In fact, Home Depot generates about half of its revenue from each customer group. However, it is the professionals who are critical to the exceptional profitability of the company.
Compared to its archrival, Lowe’s, Home Depot generates far greater sales from professionals, who tend to visit stores frequently and spend far more than DIY customers. This has resulted in Home Depot’s operating margin expanding significantly in recent years. And the company’s return on invested capital of 43.3% is superb by any industry standard, let alone a retailer.
With shares down 20% over the past year, now might be as good a time as ever to pick up Home Depot stock. While a weaker housing market is on the mind of all shareholders, this company will have no problem to pass any downturn.
2. Nike
There is no doubt that Nike‘s (NO -0.04%) the business is facing some problems now. Inventory grew 43% in the last fiscal quarter (ended November 30, 2022) and now stands at $9.3 billion. The Greater China region, usually the company’s fastest growing region, has experienced financial results in recent years due to strict COVID measures, not to mention the fact that a possible recession will likely hurt demand for this peak. consumer discretionary stock.
However, Nike should have no problem navigating these issues. The leading sportswear maker was also able to increase revenue by 17% in the last quarter, fueled by a 30% gain in North America, the company’s largest market by far.
It is clear that Nike’s greatest strength is its powerful and globally recognized brand. Not only is this one of the best marketers, but it has been relying heavily on technology and data to drive innovation and growth. Nike’s digital sales increased 25% last quarter, and management expects this to be a significant growth pillar in the coming years.
Over the past 12 months, Nike stock has fallen 20%. Adding this consumer favorite to your portfolio could be a smart decision.
3. Starbucks
Leading coffee giant Starbucks (SUB -0.42%) is the the last company in this list for new investors to consider. It too was affected by a bumpy pandemic recovery, but the business was able to increase revenue by 11% in fiscal 2022 (ending October 2, 2022), with same-store sales up by 7%. And like Nike, Starbucks owns a dominant brand that is bolstered by the company’s digital foundation, with 28.7 million loyalty members in the United States.
Starbucks also faced problems in China. Lockdown measures harm growth in the country, as sales are seriously hampered when consumer mobility is limited. But in the future, management is incredibly optimistic about the potential in China, where there are currently about 6,000 Starbucks locations. The plan is to have 9,000 stores open there by 2025.
And for the company in general, the goal is to increase the number of stores in the world from 35,711 currently to 55,000 at the end of the decade. That’s still a considerable growth track for a business that many consider already ubiquitous.
As of this writing, shares are down just 2% over the last year. For those who want a no-brainer stock to own and plan to invest for the long haul, Starbucks deserves a closer look.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Home Depot, Nike and Starbucks. The Motley Fool recommends Lowe’s Companies and recommends the following options: long January 2025 $47.50 call on Nike and short January 2023 $92.50 put on Starbucks. The Motley Fool has a disclosure policy.