But there are two important facts that all investors should understand about this market. First, every market correction in history has finally been (key word!) Erased by a bullish market rally. Second, we are firmly in a new bull market. In other words, owning innovative, high-quality businesses is beneficial because unlike bear markets, bull markets are almost always measured in years, not months.
As this new bull market finds its legs, consider buying these four unstoppable stocks.
Precision medicine appears to be the hottest trend in healthcare this decade. Instead of one-size-fits-all treatments, anything that personalizes treatment plans or improves individual convenience will be celebrated. That’s why you’re gonna want to own Santé Teladoc (NYSE: TDOC).
Teladoc, as the name suggests, is a burgeoning telemedicine powerhouse that has seen its sales grow at a compound annual rate of around 75% since 2013 (assuming it hits $ 1 billion in annual sales in 2020). Yes, the company took advantage of the 2019 coronavirus disease pandemic (COVID-19), with virtual tours more than tripled in the second quarter. However, there was a value proposition at play long before COVID-19 hit. In fact, telemedicine visits are cheaper for health insurers than office visits, and they are more convenient for patients and doctors.
If Teladoc Health’s story wasn’t exciting enough, it is also in the process of acquiring an applied health signals company. Livongo health (NASDAQ: LVGO) in an $ 18.5 billion cash and stock transaction. Livongo collects copious amounts of data on chronic disease patients and relies on artificial intelligence (AI) to send its members advice and guidance to help them lead healthier lives. Livongo has steadily doubled or nearly doubled its Diabetes membership year over year and is already profitable on a recurring basis, despite saturating just over 1% of the US diabetes market.
When discussing simple investments, cybersecurity should be at or near the top of the list. As more businesses move online or into remote working environments, it is increasingly important to protect sensitive business information. This protection is increasingly falling into the hands of cloud-centric cybersecurity companies like Participations CrowdStrike (NASDAQ: CRWD).
CrowdStrike’s Falcon platform is cloud native and uses artificial intelligence to assess over 3 trillion events every week. Basically, the business platform is getting smarter every day to recognize threats. This is obviously something that CrowdStrike customers have come to appreciate, as the percentage of customers with four or more cloud module subscriptions catapulted from 9% in Q1 of FY18 to 57% in Q2 of 2018. year 2021, i.e. a period of 13 quarters. Getting existing customers to spend more is CrowdStrike’s recipe for rapid margin expansion.
Speaking of expansion, the company’s gross margin has already settled into the long-term target range of 75% to 80%. This is a result of the high margin associated with subscription-based revenue, the fact that existing customers spend more, and CrowdStrike’s triple-digit growth in each of the past three years. CrowdStrike should have little trouble doubling sales a few times this decade.
Did I mention the importance of precision medicine?
There are dominant stocks in a specific sector, then there is Intuitive surgery (NASDAQ: ISRG) in the assistive surgical space. The company has installed 5,865 of its da Vinci surgical systems around the world over the past 20 years. This is far more than any of its competitors on a combined basis. Additionally, some deep-pocketed competitors ran into problems before competing systems were launched. Intuitive Surgical has had 20 years to build relationships with the medical community, and its competitive advantage seems virtually insurmountable.
Additionally, the company’s operating margin is designed to improve over time. During the 2000s, the lion’s share of the company’s revenue came from the sale of its expensive da Vinci system. The problem is, these systems are complex and expensive to build, which means the margins are not that great. However, we have seen the instruments and accessories sold with each procedure and service revenues skyrocket in recent years. These are operating segments with considerably higher margins. In the first nine months of fiscal 2020, these higher-margin revenue channels accounted for 73.2% of total sales.
Over time, Intuitive’s profit growth should have no trouble outpacing its sales growth.
Yes, I just went ahead and included an electric utility stock among a list of fast growing companies that you will want to own for the new bull market. As you will see, NextEra Energy (NYSE: NEE) is just as unstoppable as Teladoc, CrowdStrike and Intuitive Surgical.
What makes NextEra so special is the company’s drive to innovate. No electric utility generates more capacity from solar or wind power than NextEra. While the cost of upgrading its power generation capacity to renewables isn’t cheap, the payoff is bountiful. NextEra’s power generation costs have fallen over time, and its compound annual growth rate has averaged consistently high numbers for the past decade. If Capitol Hill ever lays out clean energy needs for our nation’s utilities, NextEra Energy will be ahead of the curve.
As for the company’s traditional utility operations (ie non-renewable energy), they are regulated. That’s a fancy way of saying that NextEra can’t pass on price increases all the time, but rather needs the approval of the state’s utility commissions. While this may seem like a hindrance, it is not. This ensures that NextEra does not face potentially volatile wholesale electricity prices and makes the company’s cash flow very predictable.