Over the past 19 months, Wall Street and investors have experienced an epic stock rally. Since the very followed S&P 500 hit on March 23, 2020, the benchmark doubled in value. This is the strongest rebound in history from a bear market bottom.
Yet the value can still be found. As long as you approach your investments with a long-term mindset, a number of great companies can be picked up today at what might look like bargain prices years away.
Plus, you don’t need a mountain of cash to start or continue your journey to financial freedom. If you have $ 250 ready to invest that won’t be needed in an emergency or to cover bills, the following companies are some of the smartest stocks you can buy right now.
The exceptionally smart first buy with $ 250 is biotech stock BioMarin Pharmaceutical (NASDAQ: BMRN). While it has significantly underperformed the broader market over the past couple of years, better days may be ahead.
To start with the basics, BioMarin is a healthcare company. In general, health care stocks tend not to be affected by the ebb and flow of the US economy and stock market. Since we don’t have a choice of when we get sick or what disease (s) we develop, the demand for medicines, devices and health services is fairly constant throughout the year. Essentially, patients don’t stop needing care just because Wall Street or the US economy is going through tough times.
In addition to being in a very defensive sector, BioMarin has the particularity of targeting ultra-rare diseases. While developing treatments for small patient pools is risky, the payoff is bountiful. The company often faces minimal or no competition, and the high list prices it passes on to brand name drugs are seldom lowered by health insurers.
Right now, BioMarin has half a dozen therapies approved by the Food and Drug Administration (FDA), many of which are still increasing sales by a double-digit percentage. For example, sales of Vimizim, Naglazyme and Brineura grew by 30%, 16% and 16% respectively in the first half of 2021. Together, these double-digit sales drivers accounted for 64% of BioMarin’s net revenue. income this year.
But Wall Street should also be excited about two late-stage candidates who have a good chance of securing US approval. The first is BMN 111, a treatment for achondroplasia in children which has been approved in the European Union and is marketed under the name Voxzogo. While estimates vary wildly, peak sales of BMN 111 should easily exceed $ 500 million.
The second promising drug is hemophilia A candidate BMN 270, better known as Roctavian. Although initially rejected by the FDA due to a lack of data regarding its long-term effectiveness, BioMarin is expected to have all the data needed for an FDA review in 2022.
Between these two promising drugs and the company’s existing product portfolio, a doubling of sales over the next five years is an obvious possibility. This is all the more reason to join BioMarin Pharmaceutical’s growth story.
A second smart stock that investors can buy right now with $ 250 is a hydroponic and organic retail gardening chain GrowGeneration (NASDAQ: GRWG).
The GrowGen story is really all about cannabis. According to marijuana analysis company BDSA, cannabis sales in the United States are expected to grow an average of 14% per year and reach $ 47.6 billion by 2026. This accounts for the bulk of global cannabis sales. , which the BDSA estimates will reach $ 62.1 billion in 2026..
The advantage of the American pot industry is that federal legalization is not necessary. Although the Schedule I classification of marijuana at the federal level creates troublesome operational inefficiencies – cannabis cannot be transported between states (even legal states) – that hasn’t stopped 36 states from legalizing pot. in a certain way. With the Justice Department maintaining a hands-off approach, individual states are free to regulate their own cannabis industries, allowing direct and indirect players to thrive.
GrowGeneration might just be the first ancillary marijuana stock to own. GrowGen’s rapidly expanding retail and wholesale operations cover everything from hydroponics and soil and nutrient options to lighting, fans and humidifiers. In other words, it’s perfectly positioned to help growers of all sizes maximize their yields in a rapidly growing market.
What made GrowGen so fascinating was the company’s focus on inorganic growth. While same-store sales growth has consistently ranged between 48% and 73% over the past eight quarters (ended June 2021), management has relied on acquisitions to expand the reach of the business. As an example, the number of garden centers in GrowGen more than tripled at the end of June compared to the previous year. While acquisition-based growth may result in higher costs in the short term, GrowGen should have no problem translating those buyouts into larger long-term profits.
What investors should really like about GrowGeneration is the reduction in the company’s shares since the start of the year. With hopes of federal legalization once again on the back burner, GrowGen’s stock has been cut by more than half. But at its current valuation, investors now have the option of recovering stocks at less than three times Wall Street’s forecast sales for 2022. With the company firmly profitable on a recurring basis, now is the time to leap up.
A third and final stock that smart investors can buy right now and that offers plenty of âtemptation pawsâ is a manufacturer and retailer of natural pet food and treats. Freshpet (NASDAQ: FRPT).
The growth rate of the pet industry is overshadowed by cloud computing, cybersecurity, and even cannabis. But when it comes to steady, recession-resistant growth, the pet industry is about as stable as it gets.
According to data from the American Pet Products Association, the number of U.S. households with pets has increased from 56% in its first survey in 1988 to 70% in its 2021-2022 survey. This equates to 90.5 million households that are poised to spend nearly $ 110 billion on their furry, feathered and scale family members this year.
Perhaps even more impressive is the fact that year-over-year spending on pets in the United States has not declined for over a quarter of a century. No matter how severe the recession or how terrifying the downturn, pet owners will continue to spend a lot of money on ensuring the health and well-being of their pet families. And at the top of that spending budget is pet food and treats.
Just as grocery stores embraced the organic and natural food movement in the 2000s, companies like Freshpet realized that pet owners would pay a higher price if they could buy better quality foods and treats. for their dog or cat. Incidentally, higher prices generate better margins for Freshpet.
Although the company has a booming online presence – e-commerce sales have skyrocketed in the wake of the pandemic – most of its sales come from physical stores. At the retail level, the dollar speed of Freshpet’s wet and dry dog ââfood brands is the highest among more than a dozen other pet food brands in the United States.
In simpler English, Freshpet is seeing its pet food fly off the shelves faster than its peers. At the moment, the company has around 40,000 of its Freshpet refrigerators in retail stores.
What’s even more amazing is how quickly Freshpet’s sales have grown, given that it’s still relatively early in its advertising boom, designed to increase brand awareness.
It is a company on the cusp of recurring profitability that could reasonably generate sustainable sales growth of 20 to 40% per year until the middle of the decade. Suffice it to say that Freshpet is owned by investors’ portfolios.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.