While there are many ways to build wealth, few avenues can offer the financial independence that can be achieved by putting your money into the stock market. Since 1980, the large base S&P 500 made its way through four major bear markets, but generated an average annual total return, including dividends paid, of 11% per annum.
Perhaps the best thing about investing in stocks is that you don’t need a mountain of money to get started. If you have $ 500 on hand, which won’t be needed to cover bills or emergencies, that’s more than enough to take advantage of the following five actions, which seem like obvious purchases.
If growth stocks looking for bargains are your thing, you’ll love biotech stocks. Exelixis (NASDAQ: EXEL). Although Exelixis was recently overwhelmed by less than stellar overall survival data for the flagship drug Cabometyx in a Phase 3 study in previously untreated liver cancer patients, Cabometyx has shown it can generate sustainable double-digit sales growth for the company.
Cabometyx is currently approved to treat first- and second-line renal carcinoma (RCC), as well as advanced hepatocellular carcinoma (liver cancer). These indications alone should enable Exelixis’ flagship drug to generate $ 1 billion or more in recurring sales by 2022 at the latest.
But the company does not stop at these indications. Cabometyx is being tested in about six dozen additional clinical trials as monotherapy or in combination. One of those studies, CheckMate-9ER, which looked at Cabometyx in combination with Bristol Myers SquibbOpdivo, Opdivo’s cancer immunotherapy, has already been approved as a first-line treatment for RCC. If just a handful of those six dozen trials pay off, Cabometyx could turn into a multi-billion dollar drug.
Don’t overlook the Exelixis War Chest, either. Management expects the company to have between $ 1.6 billion and $ 1.7 billion in cash, cash equivalents, cash equivalents and restricted investments by the end of the year. end of the year. That’s more than enough money to cover its internal research and development, as well as to make acquisitions.
If you have a long-term investment horizon, there probably isn’t a bad time to invest in a payment processor. Visa (NYSE: V).
The beauty of Visa’s business model is that the business is cyclical. That is, a growing economy tends to encourage consumers and businesses to spend more, which helps Visa generate higher merchant fees on transactions. Since periods of economic expansion last much longer than contractions or recessions, long-term investors are playing a numbers game that weighs heavily in their favor.
Visa also has an extremely long track to expand its presence. With most of the global transactions being done in cash, Visa has the opportunity to organically enter emerging markets, as well as make acquisitions (e.g. Visa Europe in 2016), to reach new merchants.
You’ll also want to note that Visa sticks strictly to payment processing. You might think that the company’s lack of a loan (i.e. issuing credit cards) is costing it valuable interest and commission income. However, with recessions and economic contractions inevitable, it also means that Visa is not exposed to credit defaults when they arise. Not having to set aside money to cover bad loans is one of Visa’s keys to a profit margin of over 50%.
The original BARK company
It may not be the fastest growing industry in the United States, but the pet industry has proven to be virtually unstoppable. This is why an investment of $ 500 in The original BARK company (NYSE: BARK), which you may know better as BarkBox, can go a long way.
Between 1988 and 2019-2020, surveys by the American Pet Products Association found that pet ownership fell from 56% of all households to 67%. Today, that translates into nearly 85 million households with a pet, including over 63 million with a dog, which is the specific pet that BARK caters to.
Although BARK offers its products in approximately 23,000 outlets in the United States, it is primarily an online business with a monthly subscription basis. This lack of overhead is one of the main reasons it consistently produces a gross margin of around 60%. When you factor in the 91% increase in subscribers to 1.2 million over the past year, you can see why it’s easy to get excited about this business.
However, what will really generate long term gains for BarkBox is the innovation of the company. It introduced a number of new services in 2020 including Bark Home, which sells basic accessories like collars, leashes and beds, as well as Bark Eats, which is a personalized service that works with dog owners. to develop a dry diet. for their puppy. BARK wrote long-term multi-baggers everywhere.
Traditionally, insurance stocks have been slow growing and boring businesses. However, do not tell this to the people of the online insurance market platform Never quote (NASDAQ: NEVER).
According to EverQuote, the entire insurance market will spend $ 154 billion on distribution and advertising spend, with this figure increasing by about 4% per year through 2024. Of that total spend, $ 6.5 billion will be devoted to digital advertising, which is the domain of EverQuote. This digital ad spend is expected to grow at four times the rate (16% / year) of total insurance market spend through 2024.
As an intermediary, EverQuote aims to make life easier for insurers and consumers. With nearly all of the major auto insurers on board, consumers can quickly assess and compare policies. As for insurers, they get more for their money given that EverQuote’s platform attracts motivated buyers. About 1 in 5 consumers who use the EverQuote Marketplace will purchase a policy.
Additionally, EverQuote has entered new insurance verticals. In addition to auto insurance policies, it also has a market for rental, home, life and health insurance. While auto policies still represent the bulk of EverQuote’s sales, the growth of these new verticals has far outpaced the growth in auto channel sales.
Social media giant Facebook (NASDAQ: FB) won’t earn investors any points for its originality, but it is a proven money maker with clear competitive advantages that make it an obvious buy.
If you want to know how dominant Facebook is, take a quick look at its first quarter operating results. It ended the quarter with 3.45 billion monthly active users (MAU) visiting one of its sites on a monthly basis (2.85 billion MAU for Facebook and 600 million unique MAU for Instagram and / or WhatsApp. ). There isn’t a single platform on this planet that gives advertisers access to 44% of the world’s population. Unsurprisingly, Facebook’s ad revenue continued to grow at a double-digit percentage, even at the worst of the coronavirus pandemic.
What’s really amazing about Facebook is that the more than $ 101 billion in ad revenue it projects for 2021, based on its first quarter operating results, comes almost entirely from its site. namesake and Instagram. Even though WhatsApp and Facebook Messenger are two of the most popular social apps, neither have yet been significantly monetized. When monetized, Facebook can expect further increase in sales, cash flow, and growth.
If that weren’t enough to convince you, know that Facebook is trying to become a leading company in virtual reality / augmented reality with its Oculus devices. The company doesn’t specifically detail sales of its Oculus devices in its quarterly reports, but the “Other” category where Oculus sales are reported saw its sales increase 146% in the first quarter.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.