I've noticed something with this bear market. Most of the people that I've interacted with (not in person, of course, but via phone, text, or videoconference) aren't fleeing from the stock market in panic. Instead, they're viewing the coronavirus-caused market crash as an opportunity. And for those with some available cash, they're wondering which stocks are great picks to buy right now.
The best stocks to buy vary by individual. A given stock could be well suited for one type of investor but not for another. But I think that there are some stocks that are smart alternatives for nearly any kind of investor. If you've got $3,000 to invest, or even less, here are three stocks that could be just what you're looking for.
Bristol Myers Squibb
Whether you're a growth investor, an income investor, or a value investor, Bristol Myers Squibb (NYSE:BMY) should be right up your alley. The big pharma stock fell hard during the market meltdown last month, but it's bouncing back in a big way as well.
The consensus among Wall Street analysts is that BMS will grow its earnings by an average of more than 18% annually over the next five years. Bristol Myers Squibb's blockbuster drugs Eliquis and Opdivo are both projected to rank in the world's five top-selling drugs in 2024. With the acquisition of Celgene, the company now has even more growth drivers, such as multiple myeloma drug Pomalyst, blood disease drug Reblozyl, and multiple sclerosis drug Zeposia.
Bristol Myers Squibb's dividend should also appeal to income investors. Its dividend currently yields over 3%. The company has increased its dividend payout every year since 2008.
Despite its strong growth prospects and attractive dividend, BMS stock is a bargain. Its shares trade at less than nine times expected earnings. With a solid product lineup and a pipeline loaded with potential winners, Bristol Myers Squibb should deliver outsized total returns over the next decade.
For investors looking to buy a stock that got hammered more than was warranted during the market sell-off, I think that Mastercard (NYSE:MA) should be a top choice. Shares of the payment processor tanked as much as 41% from previous highs at one point in March. Even though Mastercard has rebounded somewhat, the stock is still well below where it traded prior to the coronavirus crisis.
Mastercard is one of the top stocks that I personally bought in recent weeks. I like this stock for two primary reasons -- its business moat and its tremendous growth prospects.
If you're not familiar with what a business moat is, think about the castles of medieval times. They had a moat surrounding them to protect against invasion. Businesses also have moats that protect their market share against competition. Mastercard's moat is its vast payment processing network. It enjoys a duopoly with Visa that isn't likely to be toppled.
As for Mastercard's growth prospects, I view the company as a key beneficiary of the "war on cash." This term refers to the massive shift from physical currency such as cash and checks to electronic forms of payment. The social distancing and quarantines during the COVID-19 outbreak have intensified the war on cash as consumers turned even more to online purchases. I think the trend is an unstoppable one -- and I think Mastercard will be a big winner from it.
Some investors might prefer to buy a stock that has performed well during the stock market crash and is positioned to keep its momentum going once things return to normal. Teladoc Health (NYSE:TDOC) is a great example of just such a stock.
Shares of Teladoc have soared while most stocks sank. Telehealth quickly became a must-have with people seeking to visit healthcare professionals remotely instead of risking the possibility of being infected with the novel coronavirus while waiting in a doctor's office.
I suspect that a lot of people will like the convenience of using telehealth and want to continue even after the COVID-19 crisis is in the rearview mirror. Teladoc is an obvious winner if I'm right. The company ranks as the largest telehealth services provider in the world and offers the widest range of services in the industry.
Teladoc Health could more than double its number of users simply by capturing more business with its existing clients, which include 40% of the Fortune 500. Even though it's the biggest player in the telehealth field, Teladoc still has only around 1% of the addressable market in highly developed countries.
I think that the adoption of telehealth will increase significantly, with Teladoc Health's growth shifting into a higher gear over the next few years. Buying the stock of a leader in a fast-growing sector is a smart move for any investor.