The smartest stocks to buy with $ 200 in December

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Despite the volatility that has surfaced over the past two weeks, it has been another exceptional year for the stock market. Until December 6, the benchmark S&P 500 has gained 22% since the start of the year. This essentially doubles the average annual total return, including dividends, of the S&P 500 since 1980 (around 11%).

But just because the broader market is on the rise doesn’t mean there aren’t great deals to be found yet. For patient investors who rely on time as an ally, there are many stocks that can make them richer.

Best of all, you don’t need a mountain of money to build wealth on Wall Street. With most brokerages eliminating minimum deposit requirements and trading commissions, any amount of money – even $ 200 – can be the right amount to grow your portfolio.

If you have $ 200 ready to invest, here are some of the smartest stocks you can buy in December.

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CrowdStrike Holdings

One of the smartest purchases investors can make is to grab some top cybersecurity stocks. CrowdStrike Holdings (CRWD -3.78% ).

Cyber ​​security may not be the fastest growing trend, but there is arguably no more secure double-digit growth opportunity in the middle of the decade. Since hackers and bots don’t take time off just because the US economy or stock market is going through tough times, businesses are increasingly turning to third-party vendors to secure their data and that of their customers.

What makes CrowdStrike special is its cloud-native Falcon security platform. Falcon relies on artificial intelligence to become smarter over time, currently overseeing around 1,000 billion events per day. As a cloud-based platform, Falcon is often better able to recognize and respond to threats than on-premises solutions. While CrowdStrike’s solutions aren’t the cheapest on a nominal basis, the long-term payoff of data protection makes Falcon a more cost-effective platform for businesses.

The proof is in the pudding that customers are thrilled with CrowdStrike’s suite of services. The total number of subscribers has grown from 450 to nearly 14,700 in less than five years, with 68% of its customers purchasing at least four cloud module subscriptions, as of September 30. The latter is up from less than 10% to less than five years ago. The company’s customer retention rate has also hovered around 98% for two consecutive years.

CrowdStrike’s stock doesn’t come cheap using standard fundamental measures. However, a valuation premium is certainly justified with its gross underwriting margin already at its long-term goal so early in its expansion.

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AT&T

Keep in mind that it’s not just growth stocks that are begging to be bought. Value and income play like telecom stocks AT&T (T -0.99% ) are a smart way to put $ 200 to work right now.

To state the obvious, AT & T’s peak of strong growth is long over. But just because the business has matured doesn’t mean there aren’t opportunities for organic growth on its doorstep.

For example, AT&T should benefit greatly from the ongoing rollout of 5G wireless infrastructure. While upgrading its infrastructure doesn’t come cheap, the investment will pay off largely. This is because it has been a decade since wireless download speeds have improved significantly. With 5G becoming widely available, consumers and businesses are likely to undertake a multi-year device upgrade cycle to take advantage of a faster network. Since the bulk of AT & T’s wireless margins are driven by data consumption, 5G is expected to deliver good organic growth until at least 2025.

AT&T is also in the process of splitting its content arm, WarnerMedia, and combining it with Discovery to create a new media center. The new company is expected to have more than 85 million streaming subscribers, a more diverse content library, and it will be able to cut operating costs by more than $ 3 billion annually.

With roughly 7 times the earnings per share expected this year, and a high yielding dividend to boot, AT&T is one of the smartest value and income games to buy right now.

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Exelixis

Another genius buy that investors can make in December with $ 200 is the biotech stock. Exelixis (EXEL -1.78% ).

Exelixis had a somewhat difficult year, with shares down almost 20%. The developer of cancer-focused drugs disappointed Wall Street in late June when it released interim analysis data from the advanced stage Cosmic-312 study in previously untreated liver cancer patients. The company’s flagship drug, Cabometyx, was combined with aezolizumab (better known by its brand name, Tecentriq) in this study. Although the progression-free survival data hit the mark, the company noted that the overall survival data was unlikely to show a statistically significant improvement over Nexavar.

While this was undoubtedly disappointing, as first-line hepatocellular carcinoma (HCC) is an indication that could use more effective treatments, the downside to Exelixis’ actions since this data release appears to be an overreaction. .

Even assuming the Food and Drug Administration doesn’t grant this combination therapy approval in the first-line HCC – the company plans to file an additional new drug application in Q1 2022 – Cabometyx is online for more than one billion dollars in annual revenue from indications for first- and second-line kidney cancer and more advanced cases of HCC.

Additionally, Cabometyx has been tested in nearly six dozen clinical trials. Some failures are to be expected. But if even a handful of those studies lead to opportunities for label expansion, Cabometyx could surpass $ 2 billion in annual sales.

With Exelixis sitting on a whopping $ 1.8 billion in cash, cash equivalents, cash equivalents, and tight investments (which is roughly 35% of its market cap), and the price-to-earnings ratio / business growth well below 1, it has all the characteristics of a garish purchase.

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Alliance of Walgreens boots

One last smart stock that investors can buy with $ 200 in December is the drugstore chain Alliance of Walgreens boots (WBA 1.38% ). Similar to AT&T, this is another value / income game that doesn’t get the love it deserves.

Normally, healthcare stocks are unaffected by economic downturns. Since we cannot control when we get sick or what disease (s) we develop, there is always a demand for medicines, devices and health services. But during the pandemic, Walgreens weren’t so lucky. The reduction in foot traffic hampered initial sales demand and clinic revenues.

This is the bad news. The good news is that Walgreens are insanely cheap after the worst of the pandemic, and that’s already good in a multi-point turnaround plan designed to increase margins and increase its organic growth rate.

Initially, management planned to reduce annual operating expenses by $ 2 billion by the end of fiscal 2022. But cost reduction activities have been much better than expected. Walgreens has achieved more than $ 2 billion in annual cost reductions by the end of fiscal 2021.

However, it is not the cost reduction that should get investors excited. Rather, they are the investments of the company. For example, Walgreens spared no expense when it came to investing in digitization. A greater focus on direct-to-consumer sales is expected to lead to sustainable double-digit online revenue growth.

Walgreens has also partnered with VillageMD to open more than 600 full-service clinics in more than 30 U.S. markets by 2025. These co-located clinics will be staffed with physicians and are expected to play a key role in bringing local residents to health. the company’s higher-margin pharmacy. .

At less than 10 times Wall Street’s expected earnings per share for fiscal 2022, the Walgreens Boots Alliance is a godsend.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Questioning an investment thesis – even our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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