3 bad stocks to buy at $300 now for the second half of 2024

For the past 18 months, the bulls have been wild on Wall Street. After the 2022 market, the ageless Dow Jones Industrial Averagewidely followed S&P 500and powered by innovation Nasdaq Composite all have catapulted to new record-closing levels.

While some investors will likely wait for a stock market correction or significant pullback before putting their money to work, it’s important to recognize that time has, eventually, erased any notable declines in Wall Street’s three major stock indexes. If you’re an investor with a long-term mindset, any time can represent the ideal time to put your money to work.

Best of all, most online brokerages have eliminated the variables that previously prevented retail investors from participating on Wall Street. With most commission fees and minimum deposit requirements now in the drawer, any amount of money – even $300 – can be the perfect amount to invest.

If you have $300 ready to put to work on Wall Street and you’re absolutely sure it’s not cash you’ll need to pay bills or cover an emergency (if one arises) , the following three stocks stay out as a no-brainer buy now for the second half of 2024, if not beyond.

Visa

The first phenomenal business to rise above the pack and make a fantastic buy at $300 for the second half of 2024 is the leading payment processor Visa (V 0.28%).

The only negative that can be said about Visa is that it is a cyclical business. Companies that are cyclical ebb and flow with the health of the US and global economy. If selected predictors prove correct — for example, if the first drop in US M2 money supply since the Great Depression signals a coming recession — it’s not out of the question that consumer and business spending could weaken in next quarters.

However, the economic cycle is not linear. While three-quarters of all recessions in the US since the end of World War II were resolved in less than a year, the typical period of growth for the US economy has lasted many years. Betting that the US economy will grow over time has been a smart move, and Visa is a company poised to benefit from long expansions.

Visa has a commanding lead in US credit card network purchase volume market share (the largest consumer market globally). But more importantly, it has decades of runway to expand its infrastructure in chronically weak emerging markets. It has the operating cash flow and balance sheet to do this organically, or it can make occasional acquisitions to rapidly improve its reach, as it did in 2016 with its acquisition of Visa Europe.

In addition, Visa’s management team has avoided riskier revenue channels that could reduce profit margins by more than 50%. While some of its payment processing peers also lend, Visa’s management team is focused solely on facilitating payments. This deliberate avoidance of lending ensures that Visa does not have to set aside capital during recessions to cover potential credit losses and loan defaults.

The difficulty for investors is that Visa stock is cheaper, relative to future earnings, than it has been in a long time. The company’s forward price-to-earnings (P/E) ratio of 23 marks a 19% discount to its average forward P/E multiple over the past five years.

GSK

A second no-brainer stock begging to be bought now for the second half of 2024 at $300 is none other than the pharmaceutical titan GSK (GSK 0.65%)the company formerly known as GlaxoSmithKline.

The biggest headwind facing GSK is litigation. The company is facing about 75,000 lawsuits alleging that its now-discontinued heartburn drug Zantac causes cancer. Various analysts estimate that the settlement of these cases could lead to a settlement ranging from $1 billion to perhaps north of $3 billion for GSK. Wall Street is not a fan of uncertainty and there is no timeline for when this lawsuit will be resolved.

While litigation overload is never ideal, it is vital to recognize that GSK can deal with anything that comes its way. The company ended March with nearly 4.1 billion pounds in cash, cash equivalents and equity investments, amounting to almost $5.2 billion. It has the balance sheet and cash generation to cover a Zantac settlement, if one is reached.

What is far more important is that GSK’s drug portfolio is firing on all cylinders. Excluding currency effects, GSK’s Vaccines segment delivered 16% sales growth in the first quarter, with Specialty Drugs producing an even stronger revenue growth rate of 17%. All of the company’s major drug segments, including herpes, HIV, respiratory and oncology, produced double- or triple-digit year-over-year sales growth.

Improved use cases for its therapies, along with strong pricing power and a broad pipeline, should allow GSK to grow its earnings per share annually by 10% (or more) for the foreseeable future . That makes its stock quite valuable at just 8 times next year’s earnings.

The last thing to note about healthcare stocks like GSK is that they are very defensive and recession-proof. Since we don’t get to choose when we get sick or what disease(s) we develop, demand for GSK’s products should remain constant in almost any economic climate.

PayPal Holdings

The third no-brainer stock that can be safely bought at $300 now for the second half of 2024 is the leading financial technology (“fintech”) company. PayPal Holdings (PYPL 1.14%).

PayPal’s fall from grace has been nothing short of brutal. Since the peak in 2021, PayPal shares are down roughly 80%. This decline can be attributed to the waning of investment euphoria after COVID-19, as well as increased competition in the digital payments arena. PayPal’s once-high growth rate has slowed decisively.

Despite these challenges, however, many of PayPal’s key performance indicators signal that it is headed in the right direction. For example, total payment volume (TPV) flowing through its networks (mainly PayPal and Venmo) continues to grow at a double-digit percentage rate, excluding currency movements. During the first quarter, payment transactions rose 11% to $6.5 billion from last year, with TPV growing 14% on a constant currency basis to $403.9 billion. We are still in the early days of adopting digital payments.

Moreover, the company’s active accounts are becoming more engaged with each passing year. When 2020 ended, the company’s active accounts had completed an average of 40.9 payments over the trailing 12-month period (TTM). But as of the last quarter of March 2024, active accounts averaged 60 nose payments above TTM. Even if new account growth remains tepid, higher engagement from existing accounts can significantly increase the company’s gross profit.

Another positive catalyst for PayPal stock is relatively new CEO Alex Chriss, who came from intuitionSmall Business Segment. Chriss has a keen eye for cost reduction and understands how new sales channels can transform PayPal’s bottom line. As an example, the company announced in late May that it will launch an advertising platform, which should benefit from long periods of economic expansion.

The final piece of the puzzle for PayPal is the company’s historically cheap valuation. Its forward P/E ratio of 12 represents a 44% discount to its forward five-year earnings multiple.