For nearly three months now, Wall Street and investors have had their resolve tested like never before due to the spread of the coronavirus disease 2019 (COVID-19). Although the stock market has rebounded quite a bit off of its lows, it doesn't overshadow the record-breaking volatility we witnessed in March, or the 34% decline in the benchmark S&P 500 in a span of just 33 calendar days.
But where there's panic on Wall Street, there's also opportunity. That's because every single stock market correction and bear market in history has proved to be a buying opportunity for long-term investors. While not every correction is erased in a matter of weeks or months, the organic growth of high-quality businesses over time tends to push stock market indexes higher.
Put simply, every correction is eventually put in the rearview mirror by a bull market rally. This means long-term-minded investors have an opportunity right now to invest in trends that could make them rich, potentially at a discount.
What's more, you don't need to have Bill Gates' wallet to get rich on Wall Street. If you have even $2,000 in cash at your disposal that isn't needed for bills or an emergency fund, that's more than enough to jump-start your road to riches. Keep in mind that investing in the stock market is easier than ever these days with most online brokerages removing commission fees and lowering or removing deposit limits.
The question is, where to put your disposable cash to work? Over the coming decade, there may not be three more unstoppable industries to consider investing $2,000 into than the following.
If we've learned anything about the COVID-19 pandemic, it's that there's going to be no stopping the shift toward telemedicine.
We were already seeing growth in telemedicine visits long before the coronavirus coerced people to stay in their homes. With constraints on time for most physicians, telemedicine provided a quick and easy way for patients and doctors to connect. It also doesn't hurt that telemedicine tends to be cheaper for insurance companies than a standard office visit, so health-benefit providers are more than willing to open virtual doors for their members. According to Grand View Research, the U.S. telemedicine market could be worth as much as $155 billion by 2027.
The obvious and most popular name that stands out here is Teladoc Health (TDOC 3.43%). In the March-ended quarter, total telemedicine visits rose 92% year over year to almost 2.05 million, with total revenue up 41%. Most notably, Teladoc's paid membership grew 61% to 43 million in the U.S., with visit-fee-only access jumping 89%. With Teladoc Health investing heavily in its platform, it's going to be a few years before the company pushes toward profitability. But with momentum picking up, investors are willing to overlook some near-term red ink.
Just keep in mind there are other less-obvious ways to approach the growth in telemedicine. Think of a healthcare solutions provider like Livongo Health (LVGO), which is leaning on data aggregation and artificial intelligence to help patients with chronic conditions take better care of themselves. Livongo's primary focus for the time being is on its more than 328,000 Diabetes Members, which represents a rough doubling in subscriber count from the prior-year period. By allowing diabetics to wirelessly relay important information about their health to physicians, thereby keeping the immunocompromised out of doctor's offices, Livongo Health is playing its role in keeping those with chronic conditions healthy.
The next industry that looks virtually unstoppable over the next decade (or beyond) is cybersecurity. Based on estimates provided by Statista, this is an industry that's capable of growing by more than 10% on a compound annual basis, and it could reach $248 billion in worldwide sales by 2023.
While we often think of food, electricity, and waste removal as basic necessities, it's often overlooked just how much of a basic need cybersecurity is to businesses of all sizes. No matter how well or poorly the economy is performing, sophisticated hackers don't take time off. That means cloud-protection solutions are necessary in any economic environment for all businesses.
Probably my favorite name in the entire space is Palo Alto Networks (PANW -1.21%). Although Palo Alto provides hardware and subscription-based services, it's primarily leaning on these subscriptions to drive its growth. That shouldn't come as a surprise given the higher margins and considerably better cash-flow predictability that comes with subscription-based services, relative to hardware sales. Palo Alto probably looks a bit pricey on a fundamental basis, but that can mostly be attributed to aggressive investments in expanding its suite of cloud-protection services. Via organic growth and acquisitions, this is a company with double-digit annual growth potential over the long run.
But don't overlook the importance of identity verification companies, such as Ping Identity (PING). What separates Ping Identity from a crowded field is the company's use of artificial intelligence and machine learning algorithms to keep enterprise clouds safe. For example, Ping's cybersecurity solutions can identify instances when multifactor authentication may be required, which would keep hackers and computer programs out of a company's prized cloud. In the first quarter, Ping's sales increased 22% from the prior-year period, with subscriptions accounting for a whopping 93% of revenue. That leads to a high level of cash flow predictability and little customer churn.
A third and final industry to invest in, which may have the most robust growth prospects of them all, is the cloud-computing space. Leaning again on an analysis provided by Grand View Research, the global cloud-computing market is expected to grow from $266 billion in sales in 2020 to more than $700 billion by 2027. That's a compound annual growth rate of almost 15% over the next seven years.
The thesis here is pretty simple. As companies move behind personal computing and into a realm where work can be conducted more efficiently, the cloud has gained relevance. The proliferation of COVID-19 has further validated moving data into the cloud and expedited this transition with more employees working from home.
Feel free to call me a bit boring, but infrastructure-as-a-service cloud plays are a really smart way to put your money to work. Here you have three really logical choices: Amazon (AMZN -0.59%), Microsoft (MSFT 1.05%), and Alphabet (GOOG -0.19%) (GOOGL -0.15%). Though most folks know Amazon for its e-commerce segment, Microsoft for its Windows operating system and Office, and Alphabet for its dominant Google search engine, Amazon Web Services (AWS), Microsoft Azure, and Google Cloud are quickly growing into behemoths.
In their recently reported quarters, AWS delivered 33% year-on-year growth, Azure provided 61% constant-currency sales growth, and Google Cloud delivered 52% revenue growth from the prior-year period. Microsoft is a bit secretive about Azure's total sales, but Google Cloud is now pacing closer to $11 billion in extrapolated annual sales, with AWS north of $40 billion on an extrapolated annual basis. Given the high margins associated with cloud services, cash flow for all three companies should expand heartily as cloud infrastructure services becomes a greater source of total sales.