Investing in 2020 has been an adventure, especially if you're new to the investing world. During the first quarter, the coronavirus pandemic created levels of panic and uncertainty that were never seen before, leading the broad-based S&P 500 to lose 34% of its value in less than five weeks. At the same time, we also witnessed the strongest rebound from a bear market low to new all-time highs in stock market history.
If there's one key theme that stands head and shoulders above the wild volatility we've witnessed in 2020, it's that long-term investing is a winning strategy. Since its inception, the S&P 500 has eventually put every single bear market and correction in the rearview mirror. In other words, patience pays off on Wall Street.
Another thing that almost always pays off is investing in game-changing, explosive growth stocks. Since they can offer so much long-term upside, you don't need to begin with a fortune to make one. With that being said, if you have $5,000 that you can devote to game-changing growth stocks, these are the three you'll want to buy now.
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Teladoc Health
Yes, the technology sector is home to many game-changing investment opportunities. But don't discount the healthcare sector or telemedicine giant Teladoc Health (TDOC -4.64%).
A lot of folks like to point to COVID-19 as the reason behind surging virtual health visits, and to some extent they're correct. Teladoc's June-ended quarter saw total visits up by 203% from the prior-year period, with physicians wanting to keep high-risk patients out of offices and hospitals as much as possible.
But there's more at work here than just the pandemic driving virtual visits. Teladoc was already seeing explosive growth well before the pandemic hit. Between 2013 and 2020, full-year revenue could jump from $20 million to as high as $1 billion, which is good enough for a compound annual growth rate of 75%.
The thing to know about telemedicine is that it's a win for the entire healthcare space. Telemedicine visits are generally less costly than in-office visits, which save insurers money. Furthermore, they allow physicians to fit more patients into their schedule, and provide superior convenience to patients who can speak to their doctor from the comfort of home.
Teladoc is also in the process of acquiring applied health signals specialist Livongo Health (LVGO) in a cash-and-stock deal worth $18.5 billion. All Livongo has done is consistently double its diabetes members on a year-over-year basis, and report three consecutive quarterly profits while delivering triple-digit sales growth. Livongo's focus on people with chronic illnesses, and its reliance on artificial intelligence to aid those folks by sending them tips and nudges to make lasting behavioral changes, will meld perfectly with Teladoc's precision-medicine operating model.
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Cresco Labs
Although the marijuana industry has faced some serious growing pains over the past 18 months, we're seeing a clear bifurcation between the U.S. and Canada. The latter remains a mess, whereas the former is a hot long-term investment opportunity. That's why vertically integrated multistate operator Cresco Labs (CRLBF) should be on investors' buy list.
What's worth noting here is that the U.S. is the largest marijuana market in the world, and it'll remain that way even if the federal government chooses not to legalize cannabis. About two-thirds of all states have given the green light to medical marijuana, with 11 also waving the green flag on adult-use consumption. In November, we'll have another five states voting on a legalization initiative. The federal government has made clear that it's going maintain a hands-off approach, thusly rolling out the proverbial green carpet for U.S. marijuana stocks.
More specific to Cresco Labs, it has two expansive growth opportunities. First, there's the company's wholesale operations. Traditionally, cannabis wholesale is a relatively low-margin business. But Cresco's acquisition of Origin House, completed in January, is going to give the company the volume needed to make these margins worthwhile. That's because Origin House is one of a select few companies to hold a cannabis distribution license in California, the most lucrative marijuana market in the world by annual sales. Holding a distribution license in the Golden State gives Cresco the ability to place pot products into more than 575 dispensaries.
Second, Cresco Labs has a burgeoning retail operation. Even though the company has nowhere near the license count of some other multistate operators, it's looking to claim significant share in Illinois, which opened its doors to adult-use weed on Jan. 1, 2020. With nine locations open in the state, and the Land of Lincoln expected to top $1 billion in annual sales by 2024, Cresco is set to bask in the rewards of rapid U.S. cannabis growth.
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CrowdStrike Holdings
Among tech stocks, there are a number of explosive growth industries to choose from, such as cloud computing, artificial intelligence (AI), and the Internet of Things. But when push comes to shove, few offer the reliability of cybersecurity. That's why CrowdStrike Holdings (CRWD -3.09%) makes for such an intriguing buy.
To be clear, CrowdStrike isn't cheap. It's valued at nearly 27 times next year's sales, which is nosebleed territory for value-focused investors. But this is also a company that'll likely triple its revenue over the next two years and see its operating margins soar as time passes.
The beauty of CrowdStrike's operating model is twofold. First, we've watched cybersecurity become a basic-need service. No matter how poorly the U.S. economy is performing, hackers and robots don't take time off. With businesses being forced online and/or into the cloud as a result of the pandemic, we're seeing greater emphasis placed on cloud protection, and that's great news for CrowdStrike.
The other important component here is that CrowdStrike is seeing a big uptick in spending from existing clients. While signing up new clients is important, and not particularly difficult to do during the pandemic, what matters most is that existing clients are growing and purchasing additional cloud module subscriptions. Existing clients spending more will be responsible for driving up CrowdStrike's margins.
As of the July-ended quarter, CrowdStrike saw the number of current clients with at least four cloud module subscriptions hit 57%. That's up from 55% in the sequential quarter (Q1 2021), and just 9% in the fiscal first quarter of 2018 (i.e., 13 quarters ago). This is big-time growth indicative of a well-liked, AI-based, cloud-native cybersecurity platform.
