There is no doubt that 2020 will be a year that people will talk about for a long time. It has been an especially volatile year for Wall Street and investors.
In a span of approximately four months between mid-February and mid-June, the benchmark S&P 500 experienced approximately 10 years of volatility. It took less than five weeks for the broad-based index to lose more than a third of its value, marking the fastest decline from a all-time high in history. Then, for the next 11 weeks, the stock market rebounded fiercely, erasing much of its losses. In fact, heavy technology Nasdaq compound It has reached multiple closing records.
If there’s one thing the 2019 coronavirus disease pandemic (COVID-19) has taught investors, it’s the importance of long-term thinking. No matter how bleak things may seem, every correction in pre-COVID-19 history has finally been erased by a bull market recovery.
The best part of investing in the stock market is that you don’t need a mountain of cash to get started. If you even have $ 300 that you can set aside for investments that won’t be needed to pay bills or for emergency purposes, you have more than enough to start increasing your wealth. If you have $ 300 (or more) you want to put to work, consider following in the footsteps of smart investors and buy these three stocks.
Sometimes the most interesting long-term opportunities are brand name companies that are hiding with the naked eye. One of those companies that fits the bill like a smart purchase is the pharmacy chain giant CVS Health (NYSE: CVS).
Unlike most healthcare companies, CVS Health is slightly more exposed to the COVID-19 pandemic than its peers. Because CVS has a retail presence and has seen less in preventive services in recent times (for example, vaccines), you could see weak income for much of 2020. But this short-term weakness is exactly what the Smart investors are going to be overlooked because there are a handful of long-term growth catalysts that investors should be excited about.
In 2018, for example, CVS Health completed its acquisition of health insurer Aetna. Generally speaking, health insurance is not a fast growing industry. But when it comes to small retail margins on the front-end of CVS stores, this deal offers a lot of benefits. It will increase CVS’s organic growth rate, provide cost synergies that should raise operating margins, and can help the company keep tens of millions of Aetna members loyal to the CVS brand.
CVS Health is also implementing personalized medicine initiatives, which will include the opening of approximately 1,500 HealthHUB health centers across the country. These neighborhood wellness centers should help drive foot traffic and can help promote brand engagement in an increasingly digital world.
At just over eight times the earnings per share forecast for next year, CVS Health is ready to be chosen.
Smart investors have also been charging into the payment processing giant Visa (NYSE: V) in the midst of market volatility.
Like CVS Health, Visa will experience some problems in the coming quarters. The company has already warned that consumer spending on its network dropped sharply in late March. Additional economic evidence, such as the May US retail sales figures, suggests that while things are improving, the US economy will not recover overnight. That could mean a challenging 2020 for Visa.
But tweak those binoculars beyond 2020 and you’ll see plenty of reasons to get excited about Visa’s future. For example, Visa is a company that generally grows during periods of economic expansion. Although recessions are an inevitable part of the business cycle, the US economy spends a considerably longer period of time expanding than contracting. In other words, a bet on Visa is really a bet on the long-term expansion of the economy and consumption of the United States.
Visa also has many opportunities to spread its wings beyond the borders of the United States. In 2016, it did so inorganically through the acquisition of Visa Europe, reinforcing its merchant count and rate profile. You can also grow organically by expanding your payment processing infrastructure in underserved markets, such as the Middle East and Africa. It is estimated that 85% of all transactions worldwide are still made in cash, so Visa offers sustainable double-digit growth potential.
Finally, keep in mind that Visa acts only as a payment facilitator and not as a lender. During recessions, this means that you are not directly exposed to loan delinquency, which is a great reason why your operating margin is often around 50%.
Smart investors are also buying companies that are off the radar, like the cyber security game Ping identity (NYSE: PING), which was made public in September 2019.
Continuing on the issue, Ping will face some hurdles related to COVID-19 in the short term, as the closure of non-core businesses has likely either minimized the need for certain security solutions or slowed down new affiliates. However, this short-term weakness should be overlooked given the important role that Ping’s solutions will play in the future.
To be clear, cybersecurity was already growing rapidly long before COVID-19. But with companies shifting to remote configurations in the wake of the coronavirus pandemic, the need to protect clouds and business data has grown tremendously. What Ping does is provide smart ID verification solutions for businesses.
What makes Ping Identity stand out from the crowd is the company’s use of artificial intelligence and machine learning. If Ping Identity Solutions detects that something can go wrong with a login attempt, it may require two-factor authentication before granting access. This ability to recognize potential threats and evolve is what should enable Ping to become a cybersecurity giant.
Considering that it is already profitable and fully capable of maintaining annual sales growth of 15-20%, Ping looks like a long-term winner.