While investing might at first seem like a daunting task, it’s not as complicated as it’s 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 really can be that simple.
In the same vein, if you’re a newbie stock market investor, here are three no-brainer stocks to consider buying right now. I’m sure you are already familiar with these businesses, making the decision to buy them for your portfolio even less intimidating.
1. Home Depot
Home Depot (HD 2.61%) is first on this list. The leading home-improvement chain benefited from a pandemic-fueled demand surge that has largely faded. Gains are still respectable, though, as same-store sales climbed 4.3% in the latest fiscal quarter that ended Oct. 30, 2022, compared to 6.1% growth in the year-ago period.
The business has found remarkable success by serving both professional customers — general contractors and the like — and do-it-yourselfers. In fact, Home Depot generates about half of its revenue from each customer group. Nonetheless, it’s the professionals that are critical to the company’s outstanding profitability.
Compared to its archrival, Lowe’s, Home Depot generates far greater sales from professionals, who tend to visit stores often and spend a lot more than DIY customers. This 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’s.
With shares down 20% over the past year, now might be as good a time as ever to scoop up Home Depot stock. While a weaker housing market is on every shareholder’s mind, this business will have no problem making it through any downturn.
There’s no doubt that Nike‘s (NKE 1.67%) business is facing some problems right now. Inventory soared 43% in the latest fiscal quarter (ended Nov. 30, 2022) and now stands at a balance of $9.3 billion. The Greater China region, usually the company’s fastest growing, has experienced choppy financial results in recent years as a result of strict COVID measures there, not to mention the fact that a possible recession would most likely hurt demand for this top consumer discretionary stock.
However, Nike should have no problem navigating these troubles. The leading athletic apparel maker was still able to increase revenue 17% in the most recent quarter, powered by a 30% gain in North America, the company’s largest market by far.
It’s clear that Nike’s greatest strength is its powerful and globally recognized brand. Not only is this one of the best marketers out there, but it has been leaning heavily on technology and data to drive innovation and growth. Nike digital sales increased 25% last quarter, and management expects this to be a meaningful growth pillar in the years ahead.
Over the past 12 months, Nike’s stock is down 20%. Adding this consumer favorite to your portfolio could be a smart decision.
Leading coffeehouse giant Starbucks (SBUX 0.28%) is the last company on this list for new investors to consider. It, too, has been impacted by a bumpy pandemic recovery, but the business was able to boost revenue 11% in fiscal 2022 (ended Oct. 2, 2022), with same-store sales up 7%. And like Nike, Starbucks possesses a dominant brand that is bolstered by the company’s digital foundation, with 28.7 million loyalty members in the U.S.
Starbucks has also faced issues in China. Lockdown measures hurt growth in the country, as sales are seriously hampered when consumer mobility is restricted. But looking ahead, 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 overall, the goal is to increase the worldwide store count from 35,711 currently to 55,000 by the end of the decade. That’s still a sizable growth runway for a business that many already consider to be ubiquitous.
As of this writing, shares have declined just 2% over the last year. For those who want a no-brainer stock to own and are planning 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 in and recommends Home Depot, Nike, and Starbucks. The Motley Fool recommends Lowe’s Companies and recommends the following options: long January 2025 $47.50 calls on Nike and short January 2023 $92.50 puts on Starbucks. The Motley Fool has a disclosure policy.