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Starbucks Corp(SBUX-Q)
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The Best Stocks to Buy With $100 Right Now

Motley Fool - Tue Jun 28, 10:45AM CDT

The market looked like it was in better shape last week although the S&P 500 is still down 18% year to date. Perhaps investors feel like it's bottomed out, and many stocks seem undervalued and ripe for the picking. That doesn't mean we're in for a roaring bull market just yet, but it may stem investor fears about how low it can go.

Regardless of where the market is going right now, you can still buy great long-term stocks at cheap prices. Starbucks(NASDAQ: SBUX) and PayPal Holdings(NASDAQ: PYPL) are two proven leaders with sunken prices that you can pick up today for less than $100 per share.

1. Starbucks

Starbucks is going through some painful changes right now, and investors don't typically want to get involved in sticky situations. That makes a lot of sense, except where the challenges look short term and the company in question has a solid history of growth with a winning model.

Yet, this year is off to a good start with the company seeing a 15% revenue increase in its fiscal second quarter (ended April 3). It also opened more than 300 net new stores for a total of more than 34,000 -- and plans to reach 55,000 by 2030. Starbucks was able to manage through difficult pandemic closures through its strong, digitally focused model, including an improved loyalty program as well as its agility, allowing it to offer more drive-thrus and curbside ordering.

Aside from continued closures in certain regions, such as China, Starbucks is in a great place. So what's the problem? CEO Kevin Johnson left in March, and founder Howard Schultz is back for his third stint in the top role. In his first conference call back at the company as interim CEO, Schultz detailed how the company has fallen out of touch with new trends and isn't meeting demand in the post-pandemic world.

Schultz revived the company when he came back for the second time, turning the chain's stores into a "third place" for people to hang out after home and work. But the environment is fostering a new way to sip that's less about nursing a cup of coffee and more about quick, functional service. He plans to recruit a new CEO who can lead the company into a digitally powered wave of its next iteration.

Starbucks' stock is down 33% this year, but it's been holding more or less steady for a few months, suggesting it might have bottomed out. That could be because shares are quite cheap for a company with its potential, at 21 times trailing 12-month earnings -- and astute investors can see the bigger picture.

2. PayPal Holdings

PayPal was one of the earlier companies to announce 2022 first-quarter results, and its disappointing outlook was a harbinger of the retail sector's spending slowdown. Many companies made similar announcements afterwards, exacerbating an already shaky market.

The first quarter was a slowdown from pandemic highs, but the company still posted double-digit growth in total payment volume (TPV) and a 7% increase in revenue. That was on top of a record first quarter last year. It added 2.4 million net new active customers, for a total of 429 million. Earnings per share (EPS) declined year over year, but profitability was still strong, with earnings per share of $0.88. As for the outlook, management expects TPV to increase about 14% in 2022, with revenue increasing about 12%.

PayPal may not be the growth stock it once was. But as it transitions to a value stock, it offers reliability with growth opportunities. According to the U.S. Department of Commerce, global e-commerce is expected to grow at a rate of 8% annually through 2024. PayPal's dominance in this area gives it plenty of opportunity to continue growing its business and adding customers.

PayPal also has a culture of innovation. It regularly launches improvements to its platform, such as the recently announced "pay monthly" checkout option, which complements its entry into the "buy now, pay later" space. It has also made several acquisitions to solidify its business, and it has lots of cash to make others that can help it grow.

PayPal stock is down almost 60% this year, and the shares have become too cheap to ignore, trading at 25 times trailing 12-month earnings. It's a great deal at this price, and a great option for long-term gains.

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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal Holdings and Starbucks. The Motley Fool recommends the following options: short July 2022 $85 calls on Starbucks. The Motley Fool has a disclosure policy.

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