The March market crash created some surprising buying opportunities that many investors are probably missing out on. But with the coronavirus pandemic still weighing on the markets, another collapse could occur this year. And if it does, investors could get great deals again. Below are three actions you will want to be ready to jump on if there is another crash:
1. Village farms
Village Farms International (NASDAQ: VFF) It fell as low as $ 2.07 during the March market crash, and the cannabis company’s shares have more than doubled since it hit that low point. It may not reach that level again, but if the markets send Village Farms shares at a price close to that price, investors should not hesitate to buy it.
The company is better than your pot average because profitability is not a pipe dream for the cannabis grower. Village Farms has a 58.7% stake in Pure Sunfarms (Emerald health owns the remaining 41.7% of the joint venture of the companies). The low costs of the British Columbia-based greenhouse help to monetize its operations and often give a boost to Village Farms’ finances.
Image source: Getty Images.
In the first quarter of fiscal year 2020, the growing cost of Pure Sunfarms was just $ 0.64 per gram, which was less than $ 1.04 per gram a year ago. With the greenhouse operating at a higher level, Pure Sunfarms was able to benefit from greater economies of scale. In the first quarter, the company reported sales growth of 22%, and its net income of $ 6.2 million increased 40% year-over-year.
Village Farms ‘top line was flat from the prior year period, but the company was able to post a profit of $ 4.2 million, which included its share of Pure Sunfarms’ earnings. It was the third time in five quarters that Village Farms had made a profit.
Profitable marijuana stocks are not that common, and that’s why if Village Farms stock goes on sale again, it could be a bargain.
2. Costco
Costco (NASDAQ: COST) It may not have the growth potential of a pot stock, but it’s a stable option investors can buy and forget about. In fact, its stability is one of the reasons that stocks don’t go on sale as often. Year-to-date, Costco shares have risen about 3%, while the S&P 500 it is down 3%. And even in March, when the markets plummeted, Costco’s shares were only down about 7% year-to-date at their lowest point (the S&P 500, however, was down more than 30%).
The company has proven resilient during the coronavirus pandemic, and that’s one of the great reasons Costco is a long-term move that can fit any portfolio. Even with the economy in recession, consumers continue to go to Costco.
On June 3, the Washington-based company released its latest sales data. Its net sales totaled $ 12.6 billion in May, and that was 7.5% more than last year. That is also in line with the 7.7% revenue growth Costco has seen over the past 39 weeks. The company is also doing particularly well in e-commerce, as comparable sales for the four-week period ending May 31 increased 106.2% year-over-year and 37.5% during the 39-week period.
Whether online or in-store, the demand for Costco products is still there. The stock is a safe purchase that also pays a quarterly dividend of $ 0.70 that today is around 0.9%. While that is below the S&P 500 Average 2% is a good boost in addition to above-average returns on stocks.
3. Microsoft
Another company based in Washington, Microsoft (NASDAQ: MSFT)It is also a stable investment that investors can buy and forget about. It’s a little more volatile than Costco, and in March, Microsoft shares fell as much as 14% from where they started the year. As of now, however, the stock has recovered further and has increased by around 30% annually to date.
Several areas of the technology giant’s business are producing double-digit growth. In its third-quarter results, which Microsoft released on April 29, sales of its cloud business, Azure, increased 59% from the same period last year. Its office products and cloud services increased at least 13%, and LinkedIn revenue increased 21%. Its Dynamics 365 cloud-based business application platform, which aims to improve many facets of a company’s business, grew at a rate of 47%.
With so many different ways to grow, it’s no wonder investors love Microsoft. Continue to find opportunities to create and deliver quality products and services. The company has also produced a profit margin of at least 30% in each of the last four quarters, generating a solid bottom line amid all that growth.
Microsoft currently pays a quarterly dividend of $ 0.51, which annually pays 1%.
What shares should you buy?
So far, these three actions have had different levels of success in 2020, with Microsoft leading the way:
VFF data by YCharts.
If you’re just looking to add one of these stocks to your portfolio, I suggest going with Microsoft, in case its value declines during another crash.
Village Farms may have more upside potential if it loses value, but it is less secure than the technology stock. And while Costco is doing well amid the recession and pandemic, its growth is still not as impressive as Microsoft’s. For a good combination of stability and growth, Microsoft is the stock it would buy if there were another market crash this year.
