Investment 2020 has been challenging to say the least. In about six months, the stock market stretched at a faster pace than ever before, recovering rapidly to new highs than ever before. We expect movements like this about once a decade, but not squeezed in a couple of months.
But just because stocks have placed the Coronavirus crash March 23 low in the rearview mirror and kept alive a line of erasing all declines in the bear market throughout history, we have not seen the end of volatility. Unemployment is still historically high, there is no certainty about a coronavirus disease 2019 (COVID-19) vaccine, and we have a choice of less than seven weeks that currently provide no guarantees.
However, volatility does not have to be your enemy. It can actually be your ally if you have a long-term investment horizon and a desire to buy high-quality companies at a perceived discount.
Best of all, you do not need to have a mountain of cash to build wealth in the stock market. If you can save $ 300, which is not needed to cover emergencies or pay bills, you have more than enough money to buy the following amazing stock.
When it comes to stable growth trends over the next decade, cloud services and cyber security are probably at the top of the list. So why not buy a superior cybersecurity company whose solutions were built in the cloud? By combining the best of two worlds, I give you CrowdStrike Holdings (NASDAQ: CRWD).
If growth stocks are your thing, you’ll love CrowdStrike. During each of the last three years, the company’s number of customers per year has increased by 176%, 103% and 116%, respectively, with the fiscal operating profit for the second quarter showing an increase of 91% from the previous year. -year. Before you start crying wolf about “slow growth”, remember that the recently concluded quarter was the most challenging for the US economy in decades.
In addition to rapid customer growth, CrowdStrike’s existing customers spend much more. During the first quarter of 2018, only 9% of its customers had four or more subscriptions to cloud modules. As of the second quarter of the financial year 2021 (13 quarters later), this figure is up to 57%. CrowdStrike’s artificial intelligence-assisted platform is built to scale and its margins depend on existing customers spending more.
As a final note, CrowdStrike generates 93% of its revenue from subscriptions. A subscription-based model tends to deliver very transparent and predictable cash flow, while providing little customer churn.
Elanco Animal Health
I’ve said it before and I’ll say it again: Never bet on the American pet industry. It is therefore Elanco Animal Health (NYSE: ELAN) is a company that should be bought by opportunistic investors during periods of increased volatility.
How stable is the US pet industry? According to spending data from the American Pet Products Association, we have not seen a reduction in pet costs of at least a quarter of a year after year. This year alone, an estimated $ 99 billion will be spent on our adopted family members, with $ 30.2 billion on veterinary care and product sales. For three decades, pet ownership has done nothing but increase in the United States, and the industry has proven to be virtually in recession.
What makes Elanco Animal Health so exciting is its recent acquisition of Bayeranimal health unit for $ 6.89 billion in cash and inventory. The deal makes Elanco the second largest animal health care company and brings together the combined company’s product pipeline, which is now expected to have 25 new treatments introduced in 2024.
In addition, the combination of Elanco and Bayer Animal Health should save up to $ 300 million in annual cost synergies and provide a meaningful expansion of the margin, given that half of the company’s sales now come from the pet segment.
When it becomes volatile, investors generally look for investments in safe havens. Over the next few years, few industries could provide protection just like gold stocks, hence my personal favorite SSR Mining (NASDAQ: SSRM) is worth your time.
In all my years of investing in the stock market, the catalysts for the gold market have never been so perfect. Global bond yields have fallen and the Federal Reserve has promised to keep lending rates low for many years to come. To start with, the Fed is also ballooning the money supply with its historically unlimited quantitative easing initiative. This means that we have a balloon-filled amount of money that will push the US dollar and create ways to generate secure incomes that exceed inflation. In other words, gold will have a field day.
More specifically for SSR Mining, it closed its merger of equal to Alacer Gold on Wednesday, September 16. The all-share deal creates a company that can achieve 780,000 ounces of annual gold production, with a healthy net cash and the ability to generate $ 450 million in annual free cash flow until 2022. I suspect we will see a dividend program and / or repurchase program set up in the not so distant future.
In addition, SSR Mining hit quite a lot in August after reporting operating results for the second quarter, which was affected by COVID-19 closures. These closures were cautious, demanded by state regulators and fully anticipated, which means that the lower in the company’s share price seems unjustified. With all the mines currently underway, SSR Mining is poised to surprise Wall Street with its potential.
Green Thumb Industries
Finally, investors should consider taking $ 300 and putting it to work in one of the most promising marijuana stocks in North America. Green Thumb Industries (OTC: GTBI.F).
You may not think of cannabis as a safe place to put your money to work during periods of increased market volatility, but marijuana has served as a consumer product throughout the coronavirus crisis. This suggests that the industry is relatively volatile.
When it comes to Green Thumb, it is a lightning rod for rapid growth. This company operates 48 stores in the United States but has licenses to double the number of stores to 96. In total, it will have retail, processing and / or cultivation in a dozen states, many of which could cost $ 1 billion in annual weed sales by the middle of decade.
In my opinion, Green Thumb’s most exciting growth potential comes from Illinois and Nevada. Illinois is a state-licensed state that opened its doors to the recreational boiler on January 1, 2020. Meanwhile, Green Thumb bought into the Nevada market through the Integral Associates acquisition. By 2024, Nevada could lead the country in cannabis spending per capita.
But what makes Green Thumb most attractive is that almost two-thirds of its sales come from high-margin derivatives (such as foods, vapors, beverages, tinctures and topicals). This product mix is the reason why Green Thumb seems ready to turn the corner on recurring profitability.