If 2020 has taught Wall Street and investors anything, other than the fact that stock market crashes are an inevitable part of the investment process, it’s that staying on track with big business is a smart move.
Uncertainty linked to unprecedented pandemic of coronavirus disease 2019 (COVID-19) initially sent the benchmark S&P 500 Yelling is down 34% in a matter of 33 calendar days. However, it only took 11 weeks for the broad-based index to recover approximately 80% of what it lost, with heavy technology. Nasdaq compound pushing a new all-time high. While there is no doubt that the US stock market and economy are not always tied to fashion, there is clear value in thinking long term and buying solid growth stocks with a proven track record over the periods. panic.
When the next stock market crash hits, here are three solid growth stocks that would be wise to own.
Although the social media giant Facebook (NASDAQ: FB) It is an advertising-driven business, and each previous recession has shown a short-term pullback in corporate ad spending, ignoring its social dominance due to one or two-quarters of ad instability would be a huge mistake.
Facebook ended its most recent quarter with a whopping 2.6 billion monthly active users and 2.99 billion monthly active people. This last figure takes into account the unique eyeballs that Facebook generates from all its social platforms. To put this in perspective, 33% of the world’s population uses Facebook every month, and 38% of the world logs on to a Facebook-owned social platform every month. That is incredible! It’s also a ton of eyeballs that advertisers will pay through the nose to reach.
Also, as I mentioned, Facebook has a family of products that extends beyond its most popular platform. In addition to the social website Facebook, it owns Instagram, WhatsApp and Facebook Messenger, which are combined as four of the seven most visited sites in the world (not in the order in which I have presented them). Of these sites, only Facebook and Instagram are significantly monetizing. Facebook has only just begun to scratch the surface on how it will drive WhatsApp and Facebook Messenger growth.
Because Facebook remains in the relatively early innings of its monetization of these assets, a double-digit growth rate seems sustainable for a long time to come.
Another rock-solid growth stock to add to your shopping list when the stock market crashes is the chipmaker. Broadcom (NASDAQ: AVGO). Again, while consumer habits may remain a little choppy for a few quarters during a recession, Broadcom has all the tools necessary to prosper.
Easily the biggest catalyst for the company is the continuous deployment of 5G networks. We are talking about the first actual wireless infrastructure upgrade in about a decade, and this implementation is not going to happen overnight. This benefits Broadcom to a great extent, as it generates about three-quarters of its revenue from wireless chips and other solutions used in smartphones. And this will not be a yearlong increase in Broadcom 5G sales. On the contrary, you are likely to see a multi-year technology upgrade cycle that generates strong demand for your smartphone solutions.
The other factor that will drive Broadcom’s double-digit earnings growth is companies’ continued move to the cloud. Although Broadcom provides infrastructure solutions for a variety of industries, its role in manufacturing the connectivity and access chips associated with data centers should play a key role in its growth throughout this decade. The COVID-19 pandemic is only accelerating this work-from-home trend and will likely force companies to spend aggressively to strengthen their data centers.
And in case this wasn’t enough to convince investors of how solid a Broadcom investment is, the company has increased its quarterly dividend by more than 4,500% to $ 3.25 per share in the past 10 years.
Investors are also encouraged to look to the healthcare sector to find growth and stability during stock market dips. In particular, developer of drugs for rare diseases Alexion Pharmaceuticals (NASDAQ: ALXN) It appears to be the perfect match for long-term investors.
A clear differentiating factor between Alexion and most other drug developers is this focus on rare diseases. For Alexion, this is what might be called ultra-rare indications. Although there is a great risk involved in attacking small groups of patients, successful therapy in an ultra rare disease can become a source of income for a drug developer. Generally, insurers will have little choice but to cover a therapy approved by the U.S. Food and Drug Administration, and competition often doesn’t exist. It is this formula that allowed the rare disease drug Soliris, at one time the most expensive drug in the US, to become a box office hit.
But the most exciting thing about Alexion is not necessarily Soliris’ potential. Instead, it is the opportunity for the successor drug Ultomiris. Wall Street was concerned that an eventual loss of patent exclusivity for Soliris could expose Alexion’s main drug to generic competition. So Ultomiris entered, left stage. Ultomiris is a recycled protein that only needs to be injected every eight weeks, compared to every two weeks for Soliris, meaning any generic Soliris challenger will likely trample on easily due to the patient’s better quality of life. Put another way, Ultomiris has just given Alexion a new lease on his cash flow for probably another decade, if not more.
Despite the low double-digit sales growth potential, Alexion is currently valued at less than 10 times Wall Street’s forecast earnings for 2021. That makes it a great growth offer to take advantage of any major pullbacks in the stock market. .