You wouldn’t understand it by looking at the results of major US indexes so far, but this is one of the most volatile years in history. Widely based S&P 500 set a record for the fastest descent into the territory of the bear market in the first quarter and opposed this by organizing the fastest rally from the bottom of the bear market to a new peak in the last five months.
Despite this instability, which has troubled a number of investors, it is actually a good thing. You see, the stock market has a history that has moved higher in the long run as operating profits increase. This means that any previous adjustment in the stock market or bear market has proved to be an excellent purchase option for investors.
The thing is, anytime can be the perfect time to put your money into work, if you invest, the time horizon is measured in years. If you have, say, $ 2,000 that won̵
In the financial space, a stock that, at first sight, cannot be retained for a significant period of time is the facilitator of payments. Mastercard (NYSE: MA). Mastercard shares have risen nearly 1700% over the next 10 years, but still offer an incredible impact for patient investors.
The beauty of the Mastercard model is threefold. First, Mastercard is not a lender. Instead, it acts only as a facilitator of payments for credit and debit transactions. Although this means it cannot double by generating interest income and trade fees during a growing economy, it also ensures that the company is not directly exposed to loan crimes during economic contractions and recessions. This lack of bad loan exposure is a key reason why Mastercard’s regular profit margin is around 45%.
Second, Mastercard is a business model that allows you to bet on the well-being of the United States and the global economy. Although recessions are an inevitable part of the economic cycle, the United States and the world economy spend much more time expanding than shrinking. This allows Mastercard’s sales and profits to grow for years at a time. And as an added bonus, Mastercard holds the second largest share of the volume of purchases in the credit card network in the US consumer-oriented market.
Third, and finally, Mastercard is still just scratching the surface in terms of cashless transactions. With more than 80% of global transactions still in cash, Mastercard has an extremely long track to turn cash buyers into credit or debit card users. In Southeast Asia, the Middle East and Africa, Mastercard has ample opportunities to potentially expand its business from a high single-digit to a low double-digit rate for a long time to come.
Another absolutely unstoppable stock that you can confidently buy now if you have a long-term investment horizon is the developer of surgical systems. Intuitively surgical (NASDAQ: ISRG).
One of the most amazing things about Intuitive Surgical is the company’s dominant presence in the surgical environment with assisted robotics. As of the end of June, the quarter had 5,764 of its da Vinci surgical systems installed worldwide. It is far away more than any of its competitors on a combined basis. This makes the da Vinci system a de facto choice for hospitals and surgical centers and virtually eliminates any concerns about customer outflow.
Perhaps the most enticing aspect of Intuitive Surgical is that it is a razor-shaped business with a razor and a blade. The da Vinci system, although expensive ($ 0.5 to $ 2.5 million per system), generates only mediocre margins because it is so complex to build. When the company generates most of its margin from the sale of tools and accessories with each procedure and from the regular maintenance of the installed systems. The da Vinci system is the razor, while the tools and high-margin service are the blades. As the number of systems installed increases worldwide, the percentage of revenue generated by these higher-margin channels continues to grow.
Also, don’t overlook the fact that Intuitive’s soft tissue surgical system has a lot of surgical market share that it can gain. Although it is already the dominant system used for urological and gynecological surgeries, the company’s management believes that the da Vinci system has a solid future as a major player in thoracic, colorectal and general soft tissue surgical procedures.
In other words, the double-digit growth rate is a very realistic expectation for the whole decade, if not longer.
Finally, when you think of the irresistible, do you think of … an electrical supply? I know it may sound weird, but NextEra Energy (NYSE: NEE) offers everything investors could wish for in an irresistible stock.
The most obvious lure of utility stocks is the associated high level of demand predictability. This means that if you own a home or rent, you need basic utilities such as electricity or natural gas and water. No matter how well or poorly the economy performs, the demand for these basic services does not change much. This predictability plays a key role in helping utilities decide how much money they want to spend on capital projects (ie equipment maintenance, upgrades and expansion).
But what sets NextEra Energy apart is the company’s focus on renewable energy. No electrical program generates more capacity than solar energy or wind than NextEra. On the downside, these were expensive pre-investments. But the long-term payoff is as clear as day. NextEra’s energy generation costs should be well below its competitors, which will lead to superior profit growth in the otherwise slow-growing sector.
It also doesn’t hurt that the Federal Reserve chooses to keep record low interest rates on loans. If NextEra continues to invest aggressively in solar and wind projects, it will be able to do so by paying a minimum interest rate.
In addition, NextEra’s traditional electrical operations are regulated. This is a sophisticated way of saying that it cannot raise the prices of its customers without the approval of the state commission for communal services. This may sound like an obstacle, but it’s actually good news because it means that NextEra is not exposed to potentially volatile wholesale electricity prices.