The stock market is arguably the greatest wealth creator on the planet. Although there have been periods when commodities like gold and assets like homes have outperformed stocks, the market’s average annualized returns over the very long term crush all other investment avenues.
Perhaps the best part about putting money to work in the market is that you don’t need to have Warren Buffett’s or Jeff Bezos’s pocketbook to build wealth. Investing as little as $300 in high-quality companies and giving your investment thesis the proper time to take shape could be all that’s needed to put yourself on the path to financial freedom.
If you have $300 you can spare, which won’t be needed to cover emergencies or pay bills, the following three companies are some of the smartest stocks you can buy right now.
To start with, cloud-based customer relationship management (CRM) solutions provider salesforce.com (NYSE:CRM) has everything needed to make patient investors rich.
Without digging too deeply into the weeds, CRM software is used by consumer-facing businesses to handle simple functions like logging client information and handling service issues and more complex things like overseeing online marketing campaigns and using predictive analysis to suggest which clients might purchase new products or services. It’s of obvious benefit to the service industry, and it is also finding a growing number of clients in manufacturing and finance, to name a few examples.
According to a report from Fortune Business Insights, global CRM revenue is expected to grow from $47.8 billion in 2019 to $113.5 billion by 2027. That’s a healthy 12% growth rate. But salesforce CEO Marc Benioff is thinking bigger. He has salesforce on track to grow its business from $21.2 billion in revenue in fiscal 2021 (the fiscal year that just ended) to $50 billion by fiscal 2026.
If you’re wondering how salesforce can maintain such superior growth rates within the CRM space, look no further than its market share. In the first half of 2020, IDC estimated that salesforce controlled nearly 20% of global CRM market share. That was more than Nos. 2 through 5 in worldwide CRM share combined!
And there’s a very good chance salesforce’s momentum won’t slow, assuming its pending cash-and-stock deal to buy enterprise communications platform Slack Technologies closes. Not only will it benefit from Slack’s growing enterprise platform, but it’ll have a new channel with which to cross-sell its CRM solutions.
Just because salesforce is already a megacap stock doesn’t mean it can’t head significantly higher.
Another outstanding business that would be the perfect place to park $300 right now is online retailer Etsy (NASDAQ:ETSY).
To state the obvious, Etsy was a huge winner of the coronavirus pandemic. With people choosing to stay home, many turned to online retailers to buy basic-need goods or to treat themselves. Last year, gross merchandise sales (GMS) on the company’s platform surged to nearly $10.3 billion, up 107% year over year.
What’s interesting, though, is that it wasn’t all facial coverings that helped Etsy’s GMS soar. The bigger story is how the site’s merchants and products have resonated with new and repeat customers. Habitual buyers — those who make at least six purchases throughout the year and spend a minimum of $200 — delivered nearly 160% purchasing growth in 2020. Meanwhile, 61 million people slotted in as new buyers or reactivated buyers on the platform.
Ultimately, it’s Etsy’s unique approach to retail that plays a big role in bringing back previous purchasers and turning casual shoppers into habitual buyers. Etsy’s focus is on connecting consumers with small merchants that specialize in unique or customizable products. It’s plainly evident that these merchants are more than willing to up their ad spending if Etsy continues to invest in and improve its marketplace.
Speaking of which, Etsy has improved buyer convenience in the U.S. by launching buy-now-pay-later financing options and has been promoting video engagement by introducing listing videos for its merchants.
With Wall Street expecting Etsy to more than double its annual sales by 2024, the sky is the limit.
A final smart stock to buy right now with $300 is payments company Square (NYSE:SQ), which has two fast-growing operating segments.
For nearly a decade, Square’s seller ecosystem has been thriving. This segment is responsible for providing point-of-sale solutions and analytic tools that help businesses facilitate transactions. Chances are you’ve used or come across one of Square’s point-of-sale devices within the past year. Between 2012 and 2019, this seller ecosystem grew the total dollar amount traversing its platform by an average of 49% a year.
The intriguing catalyst for the seller ecosystem is that bigger businesses are beginning to use the platform. In the fourth quarter of 2020, 60% of gross payment volume (GPV) came from businesses with at least $125,000 in annualized revenue. That’s up 8 percentage points from two years prior. Since this is a merchant fee-driven segment, bigger merchants should play a key role in driving gross profit higher.
However, most of the long-term upside potential for this fintech stock rests with digital peer-to-peer payment platform Cash App. After ending 2017 with 7 million monthly active users (MAU), Cash App closed out 2020 with 36 million MAUs. Even better, the company notes that it’s spending less than $5 to acquire new Cash App users but generating $41 in gross profit per user. That’s a heck of a trade-off that Square will take any day of the week.
The beauty of Cash App is that it allows Square to bring in revenue in a variety of ways. It’s collecting merchant revenue, just as it does in the seller ecosystem, as well as bank transfer fees. Further, it allows the company to generate investment revenue, especially from Bitcoin exchange. Revenue from Bitcoin actually rose by a factor of nine to almost $4.6 billion in 2020.
Square is at the heart of the war on cash, which makes it a good bet to outperform for a long time to come.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.