Regardless of whether you're a longtime investor or someone who recently began putting their money to work in the stock market, there's nothing that could have prepared you for what 2020 has offered up. The coronavirus disease 2019 (COVID-19) pandemic has completely upended societal norms and pushed the U.S. unemployment rate to levels not seen in nearly nine decades.

But at the same time, periods of extreme fear and panic-selling have always represented a unique opportunity for long-term investors to buy into high-quality companies at a discount. After all, every single stock market correction in history (excluding the COVID-19 bear market) has been erased by a bull market rally. Eventually, the same fate awaits the coronavirus crash.

In short, it means that investors who have cash to put to work right now are setting themselves up for success down the line. Best of all, you don't need to be loaded to make money in the stock market. If you have the ability to invest $1,000, you have more than enough capital to compound your wealth over the long run.

With this being said, here are three of summer's hottest stocks to buy right now with $1,000.

A one hundred dollar bill superimposed on a hill that's being brightened by the sun.

Image source: Getty Images.

Okta

Few industries are hotter right now than cybersecurity. With the pandemic forcing the shutdown of traditional offices, more employees and businesses than ever are being forced to handle their obligations remotely. That means an increasingly important focus on securing enterprise clouds. And that's where Okta (NASDAQ:OKTA) comes into play.

Okta is not a "cheap" company, at least fundamentally speaking. Although it was able to generate positive free cash flow in fiscal 2020, it's valued at more than 330 times cash flow and over 60 times book value. Old-school value-oriented investors who are used to analyzing companies with hard assets will have a tough time wrapping their hands around Okta's valuation. But make no mistake about it, this cloud-focused identify verification company is worth every bit of premium it's been bestowed by Wall Street.

What makes Okta such an intriguing security play is the company's reliance on artificial intelligence and machine learning. Okta's solutions can identity situation where multifactor authentication may be required, yet are built to allow enterprises to add-on additional security solutions without a hassle. Since identity security isn't something that's optional for businesses, Okta has delivered a compound annual growth rate of 44% since 2018 (which includes its estimated full-year sales for fiscal 2021). 

Further, Okta's revenue is almost entirely subscription-based. Subscriptions tend to yield juicy margins and highly predictable cash flow, while keeping enterprises loyal to the brand. With a combined $55 billion total addressable market (i.e., enterprise plus consumer), Okta is really just scraping the tip of the iceberg.

A physician showing a patient information on a tablet during a consultation.

Image source: Getty Images.

Livongo Health

Speaking of red-hot summer stocks to buy, don't overlook healthcare solutions provider Livongo Health (NASDAQ:LVGO), which is one of a small number of stocks to have more than doubled on a year-to-date basis.

Livongo's allure, similar to Okta, is that it's utilizing artificial intelligence -- although in Livongo Health's case it's to improve personalized care outcomes. Livongo aggregates as much data as possible for patients with chronic illnesses and uses artificial intelligence to send these people tips and "nudges" to help them stay on top of their disease. Currently, Livongo is focused on helping patients with diabetes live healthier lives, however, the company plans to branch off to include folks with hypertension, weight management issues, and prediabetes. All told, we're talking about a massive addressable patient pool.

For the past couple of years, Livongo has delivered at least a doubling in Diabetes member patient count, if not better, on a year-over-year basis. During the first quarter, Livongo's member count jumped to more than 328,000, which represents just shy of 1% of the U.S. diabetes market (34.2 million). Yet, the company generated its second consecutive profitable quarter in Q1 2020. What truly amazes me about Livongo Health is that if it's already nominally profitable with less than 1% diabetes market penetration, imagine what'll happen as it adds to its diabetes market share and introduces its platform to other chronic indications.

Additionally, the vast majority of Livongo's revenue is generated from subscriptions. Once again, we're talking about very predictable, high-margin revenue that's allowing management to spend aggressively on innovation, but still maintain profitability.

A customer inserting his credit card into a Square point-of-sale device.

Image source: Square.

Square

It might be hard to believe, but at one point in mid-March, just before the stock market found its bottom, financial technology giant Square (NYSE:SQ) was down almost 40% on a year-to-date basis. But through Wednesday, July 1, it's become one of the hottest stocks on Wall Street, with a year-to-date gain of 85%.

Though the payment processing space has been dominated by the same handful of companies for decades, Square has managed to disrupt this industry and carve out a growing niche in the war on cash. Last year, Square's seller ecosystem handled $106.2 billion in gross payment volume (GPV), with a notable uptick in the amount of GPV coming from larger merchants. Square has traditionally been known for its ability to connect small and medium-sized businesses with consumers. If it's starting to gel with big businesses, too, we could see a serious uptick in fee-based revenue in from the seller ecosystem in the years to come.

Square is also generating incredible growth from its peer-to-peer payment platform Cash App. The company notes that monthly active user growth more than tripled from 7 million to 24 million between December 2017 and December 2019 -- and it's probably surged even more due to the pandemic. With cash transactions being discouraged due to COVID-19, Square has noted that new user activity soared on Cash App in March and April.

During the COVID-19-impacted first quarter, Cash App generated a 115% year-over-year increase in gross profit as the benefits of bank-to-app transfers and investing directly from Cash App were realized by users.

Despite its premium, it's not out of the question that Square doubles its revenue every four or five years.