What a difference a year makes.
Last year, the benchmark S&P 500 regressed by no more than 5%. Meanwhile, in 2022, the S&P 500, iconic Dow Jones Industrial Averageand powered by technology Nasdaq Composite they have entered correction territory with double-digit percentage declines. The latter is mired in a bear market with a recent high of about 30% since mid-November.
Although bear market dips can be unnerving and affect investors’ emotions, history is pretty clear that buying during these major downturns is a smart move. This is because every notable decline throughout history has finally been put in the rearview mirror by a bull market rally. In other words, bargains abound for patient investors.
The recent stock market crash has brought to light quite a few innovative and unstoppable stocks that are up for sale. What follows are five of those unstoppable stocks to buy now and (ideally) hold forever.
The first unstoppable discount stock trader who can buy right now and never sell is the developer of a robotic-assisted surgical system intuitive surgical (ISRG 0.43%). The company’s shares are 39% below their all-time high, which was reached six months ago.
What makes Intuitive Surgical so special is the company’s market dominance and operating model. As for the former, it has installed 6,920 of its da Vinci surgical systems in hospitals and surgical centers around the world over the past 20 years. Not only do none of Intuitive’s competitors even come close to this installation figure, but given the large initial investment associated with da Vinci systems ($0.5 million to $2.5 million), as well as the training provided to surgeons , customers tend to stay customers for a long time. weather.
As for Intuitive Surgical’s operating model, it is geared towards increasing operating margins at a faster rate than sales over time. During its early years, the company generated most of its revenue from the sale of da Vinci systems. Unfortunately, these are intricate and expensive systems to build, which means the margins associated with their sale are only mediocre. But as more systems have been installed, the instruments and accessories sold with each procedure, as well as service, have become the largest part of Intuitive’s revenue stream. The margins associated with these categories are considerably higher.
Da Vinci is still scratching the surface in thoracic, colorectal and other general soft tissue surgical indications. This gives Intuitive Surgical an incredibly long double-digit growth track.
Although bank stocks are not traditionally considered “unstoppable,” the regional banking giant US Bank (USB -0.06%) could change your tone.
The biggest knock against bank stocks is that they are cyclical. This means that when recessions and economic slowdowns loom, banks often see an increase in delinquencies and loan charge-offs.
But this is a two-way street. Although recessions are inevitable, they don’t last long. By comparison, economic expansions last disproportionately longer than recessions. Buying bank stocks like US Bancorp allows investors to take advantage of these extended periods of economic expansion and win the numbers game in the long run.
On a more company-specific basis, arguably no large-scale bank has done a better job of promoting digital banking than US Bancorp, the parent of the more familiar US Bank. At the end of February, 81% of its clients were digitally active, and 65% of all loan sales were completed online or through a mobile app. The latter is up 20 percentage points since the beginning of 2020. Digital transactions are substantially cheaper for banks than interactions in person or over the phone. Therefore, US Bancorp’s digital push is allowing the company to reduce costs and improve operational efficiency through branch consolidation.
With roughly nine times Wall Street’s forward earnings forecast, US Bancorp is deeply discounted and ready to be picked.
A third discounted but unstoppable stock that investors can buy right now and hold forever is the coffee chain. starbucks (SBUX 2.03%).
Although Starbucks is not facing a shortage of headwinds (for example, unionization efforts, rising coffee prices, and COVID-19 lockdowns closing select stores in China), this is a company that has successfully come through many stock market recessions and corrections over the years.
Perhaps the most prominent advantage Starbucks has is its incredible customer loyalty. No amount of inflation or price gouging has scared away the loyal base of the company (myself included). This should allow Starbucks to beat even historically high domestic inflation.
To add to this point, the company’s active Rewards members are an army unto themselves: 26.7 million people, as of April 3, 2022. Rewards members are more likely to order ahead and keep their payment information stored on their smartphones. In other words, they’re helping Starbucks stores be more efficient by moving lines faster.
The company’s innovation cannot be overlooked either. Promoting healthier food options and redesigning self-service ordering boards to suggest high-margin food and beverage pairings should lead to long-term, venti-sized returns for shareholders.
Look up the dictionary definition of “unstoppable” and chances are you’ll find a picture of Berkshire Hathaway (BRK.A 0.10%)(BRK.B -0.03%) CEO Warren Buffett. Since he became CEO of Berkshire in 1965, Buffett has driven his company’s Class A shares (BRK.A) to an average annual return of 20.1%. Put another way, investors have doubled their money, on average, every 3.6 years for the last 57 years.
One of the keys to Buffett’s continued success is his focus on investing in and acquiring cyclical businesses. As noted, periods of economic expansion far exceed the duration of recessions. Instead of trying in vain to second-guess when a recession might strike, Buffett has loaded Berkshire Hathaway’s portfolio with businesses that can thrive on the natural expansion of the US and global economy.
The Oracle of Omaha’s love of dividend stocks has also played a key role in Berkshire’s success. Companies that pay a regular dividend are usually profitable, time-tested, and have transparent growth prospects. In short, they are just the kind of businesses that we would expect to increase in value over time.
Building on a number of recent investments, such as oil giant ChevronWith an annual base pay of $5, Berkshire Hathaway appears to be on track to rake in more than $5 billion in passive income over the next 12 months.
History has shown time and time again that riding Buffett’s coattails during pullbacks is a lucrative move.
Last but not least, there are unstoppable actions of FAANG Metaplatforms (FULL BOARD 1.18%)which is trading at its cheapest valuation since becoming a public company in 2012.
Like Starbucks, Meta has a long list of near-term challenges, including AppleChanges to iOS privacy from iOS, increased metaverse spending (which weighs on earnings), and growing concern that the US is slipping into a recession. However, neither of these headwinds alters the company’s strategy or curbs its double-digit growth potential.
Meta’s competitive advantage is evident when looking at its social media assets and active users. Facebook, Instagram, WhatsApp and Facebook Messenger are consistently among the most downloaded social sites each year. Additionally, Meta ended March with 3.64 billion monthly active users across its entire family of apps. This means that more than half of the world’s adult population visits a Meta-owned asset each month, which is precisely why advertisers will pay a premium to reach these users.
Something often overlooked with Meta is that the company has not even significantly monetized all of its core assets. Virtually all of their ad revenue comes from Facebook and Instagram. When CEO Mark Zuckerberg pulls the lever to monetize Facebook Messenger and WhatsApp, the company’s growth and operating cash flow may shift into gear.
Given Meta’s incredible operating cash flow and its aggressive investments in the metaverse, a P/E ratio of 14 in the future year makes it too tempting for buy-and-hold-forever investors to pass up.