Following an 11-year bull market, the past three months have been highly unnerving for investors. Since the broad-based S&P 500 hit an all-time closing high exactly three months ago, on Feb. 19, 2020, we've witnessed the highest volatility reading in the CBOE Volatility Index's history, and saw the S&P 500 decline 34% in just 33 calendar days. This was the fastest drop into bear market territory (as well as the quickest 30% decline) ever recorded.
But the thing about bear markets is that they offer abundant opportunity to patient investors who are willing to put their money to work. We may not know when a stock market correction will end, or how steep of a pullback we could see, but historical data has shown that every single previous correction in the S&P 500, no matter how steep, was eventually erased by a bull market rally. One day in the future, that'll be the case for the coronavirus disease 2019 (COVID-19) bear market.
With the S&P 500 historically averaging a 7% annual gain, inclusive of dividend reinvestment, the stock market remains the best pathway for investors to use to get rich. If you dream of financial freedom, consider buying these three stocks to help get you there.
I know I've made the analogy before, but if you missed the boat on Facebook and have been kicking yourself ever since, you're probably getting a second chance with Pinterest (NYSE:PINS). Pinterest may not have 2.6 billion monthly active users (MAU) or own four of the seven most-visited social media platforms in the world (there is a reason Facebook is setting the standard among social media companies), but its platform to share interests and ideas offers more growth potential than you might realize.
A lot of focus is obviously placed on Pinterest's U.S. subscriber count, which has been growing in the mid- to high-single-digits over the past year. The reason is that U.S. eyeballs merit considerably higher average revenue per user (ARPU) for Pinterest than international users.
But the true growth story for this company exists beyond the borders of the United States. International MAU growth jumped 71 million year over year, or 34%, to 277 million users in the recently ended quarter, with revenue from overseas users rising 136% and ARPU jumping 76%. It's not out of the question that overseas ARPU could grow from the $0.54 reported for full-year 2019 to perhaps north of $2 within the next 10 years. That would be huge if Pinterest can simply keep growing its international MAUs by a strong double-digit percentage.
Another significant growth catalyst for Pinterest is going to be the company's e-commerce segment. By using its platform as a basis for interests and engagement, Pinterest can allow small-and-medium-sized businesses to capture consumer dollars, assuming they act on their interests. Imagine combining eBay's marketplace with the homey feel of Etsy. That's where Pinterest's e-commerce future may lie.
Featuring a long runway of double-digit sales growth potential, and nearing recurring profitability, Pinterest has all the makings of an investment that make can folks rich.
Green Thumb Industries
Investors have been burned badly by marijuana stocks over the past 13-plus months, with everything from supply issues to high tax rates and COVID-19 wreaking havoc on the industry. But there's no denying the opportunity for growth with tens of billions of dollars conducted in the illicit markets every year. That why U.S. multistate operator Green Thumb Industries (OTC:GTBIF) is a logical choice to make you rich.
Why Green Thumb? First of all, it's operating in the United States. The U.S. hasn't had nearly as many dispensary license delays as its northerly neighbor, Canada. Further, the U.S. is the largest marijuana market in the world by annual sales, which makes vertically integrated companies (i.e., those who control the seed-to-sale process) such as Green Thumb the ones to own going forward.
Secondly, Green Thumb is one of the few cannabis stocks that's actually well-capitalized. According to its first-quarter operating results, the company ended March with $71.5 million in cash and cash equivalents, with only $0.2 million of its $92.9 million in debt due within the next 12 months. Green Thumb has also leaned on sale-leaseback agreements with Innovative Industrial Properties to bolster its cash position without diluting its shareholders through share issuances.
Third and finally, the company's expansion strategy and unique brands seem to be hitting the mark with consumers. Green Thumb currently has 44 operational dispensaries, along with licenses to open an additional 52. It generated $102.6 million in Q1 sales (that's up 268% from the previous year), with positive adjusted EBITDA of $25.5 million. Although it still lost a bit of money on its bottom line, Green Thumb, like Pinterest, is ready to turn the corner to recurring profitability very soon.
There aren't too many industries with faster growth potential this decade than marijuana, making Green Thumb a hot pot stock that can make you rich.
Sticking with the general theme of the previous two companies, Square isn't exactly cheap if you look at it using traditional fundamental metrics. The company's selling platform has been hit hard by the COVID-19 pandemic, and it's likely to report a relatively nominal profit in 2020, along with potentially menial sales growth. But it's not about the present for Square. It's about what the company's Cash App and seller ecosystem bring to the table.
Most folks are probably familiar with the seller ecosystem, which provides merchants with point-of-sale solutions to allow credit transactions to process. What's most interesting about the seller side of the business is that it continues to attract larger and larger merchants, as evidenced by annual gross payment volume (GPV) totals. In the first quarter two years ago, merchants with less than $125,000 in annualized GPV made up 53% of seller ecosystem sales. Today, 53% of sales are made up by sellers with more than $125,000 in annual GPV. While I still expect Square's point-of-sale platform to resonate with smaller businesses, it's evident that its seller ecosystem is no longer just a small-business platform.
Then there's Cash App, which has seen its member count more than triple over the past two years. The ability to invest directly from Cash App has spurred interest, as has the need to avoid contact during the COVID-19 pandemic. Users can send and receive money (including their stimulus checks) directly through Cash App. Square expects Cash App and usage of its associated Cash Card (which links to your Cash App balance) to be massive growth drivers in the years to come.
Don't be surprised if Square's sales triple between 2020 and 2024, with profit per share multiplying many times over.