It does not matter how long you have been an investor – nothing could have prepared you for the volatility we saw in 2020.
The 2019 coronavirus disease pandemic (COVID-19) has killed the U.S. economy, eventually sending unemployment levels to levels not seen consistently since the 1930s and paving the way for the fastest and steepest bear market correction in the history. It took just 33 calendar days for the benchmark S&P 500 To lose 34% of its value.
But the thing about anxiety, panic and anxiety is that they are an excellent time to put your money to work. Even though equities have come in full force since the bottom of March 2020, history suggests that bull markets tend to hold for substantially longer periods than bear markets. This means that a patient investor who allows their dissertation to play out over years or decades could be well rewarded.
The big question is, as always, what to buy?
Image Source: Getty Images.
The answer may simply be the following three major precautions. Not only do these companies have the potential to make money for investors, but I believe they have the innovation and intangible assets needed to make millions from investors in the long run.
Square
One of the most powerful growth trends we will witness in the coming years and decades is the drive for cashless transactions. While Fisa en Mastercard will continue to play a vital role in facilitating the move to credit and debit-based transactions, it is Square (NYSE: SQ) which offers the most promising growth and share price on top.
People are probably most familiar with Square’s point-of-sale platform. The company’s vendor ecosystem has seen gross payment volume (GPV) on its platform grow from $ 6.5 billion in 2012 to $ 106.2 billion in 2019. For those who keep your score at home, this is a compound annual growth rate of 49%.
Even with GPV likely to take a hit in 2020 due to the pandemic, there are two trends that suggest that vendor sales ecosystem is still in great shape. First, economic expansions last significantly longer than contractions, which means good spending. And second, Square’s GPV is increasingly being diverted from larger companies (defined as those with at least $ 125,000 in annual GPV). Square’s has been known for years as the facilitator for small business. If it can make inroads with larger companies, then the sky is the limit for its trading costs.
Even more exciting is Square’s peer-to-peer payment platform Cash App. Between December 2017 and June 2020, the monthly app active user (MAU) of Cash App increased from 7 million to more than 30 million. Square generates revenue from Cash App when users purchase goods or services using the App or Cash Card – a traditional debit card linked to an individual’s Cash App balance – when balance transfers are accelerated or when users exchange or trade bitcoin.
In the last quarter, the gross app for Cash App rose by 167% to $ 281 million, and it is probably the key segment for Square’s long-term profitability.
Image Source: Pinterest.
Running a successful social media business is not as simple as it sounds. Investors have witnessed too many instances where user growth as a sales force for a few years is higher than outflows. That does not seem to be the case Pinterest (NYSE: PINS), which shoots on all cylinders and offers truly multibagger potential.
The proof of Pinterest’s success can be seen in the company’s MAUs. In the past year and including at least four months directly affected by COVID-19, Pinterest has added 116 million users, pushing its MAUs to 416 million (an increase of 39%).
What is remarkable is that more than 90% of these new users come from international markets. Although the average revenue per user (ARPU) in the US is much higher than in overseas markets, the other way to look at the company’s international ARPU data is that it can be doubled many times over. Last year, Pinterest actually more than doubled international ARPU.
Clearly, an ad-targeted platform like Pinterest is not well-suited for a recession, but recessions usually do not last very long. This means that these overseas users are an expected source of significant long-term growth.
Perhaps the most intriguing catalyst for Pinterest is its growing e-commerce presence. The company already provides a platform for users to share their interests, so it makes sense for Pinterest to try to connect these users with small businesses that specialize in selling products and services tailored to those interests. In addition to collaborating with Shopify, which should be a wish for small businesses selling products to the Pinterest user base, the company has rolled out a host of features on its site, designed to entice users into action, such as clickable store buttons and fascinating video ads on pin boards.
I believe Pinterest consistently has double-digit annual growth potential and could easily surpass $ 100 billion in market value by 2030.
Image Source: Getty Images.
Teladoc Health
Finally a telemedicine giant Teladoc Health (NYSE: TDOC) needs all the tools to make you a millionaire.
There is no question that Teladoc has been one of the clear beneficiaries of the coronavirus crisis. Doctors want to keep sick people and people with chronic health conditions out of the offices as much as possible during the pandemic. This has led to a rapid increase in telehealth visits for subscribers and only fee users (i.e. non-subscribers) on the Teladoc network. In the quarter to the end of June, total visits doubled more than three million to 2.8 million, with total paid U.S. memberships increasing by 92% to 51.5 million.
But it is also important to understand that precision medicine was a good trend for COVID-19. Between 2013 and 2019, total revenue for Teladoc skyrocketed from $ 20 million to $ 553 million, and there is a chance it would sustain $ 1 billion by 2020. Not only does telemedicine provide a more convenient experience for patients, but it is generally cheaper for insurers, providing incentives for future use.
Also exciting is the fact that Teladoc Health and Livongo Health (NASDAQ: LVGO) merge into a cash-and-share deal. Livongo’s healthcare solutions help patients with chronic health conditions live healthier lives. It does this by aggregating vast amounts of patient data and relying on artificial intelligence to provide tips and nudges to change the behavior of people with chronic illnesses so that they do a better job of staying on top of their illnesses.
The number of members of Livongo’s diabetes has consistently doubled on an annual basis, and the company has generated three consecutive quarterly profits, despite the fact that it accounts for only 1.2% of all diabetics in the United States. As Livongo organically registers new patients for diabetes and expands into new indications (hypertension and weight management), its potential patient pool will run severely higher.
This combination of Teladoc and Livongo may take a few quarters to get used to, but it represents the future of prescription drugs.
