Volatility has been the name of the game for investors in 2020. The widely followed S&P 500 has lost as much as 34%, regained it all back, and then some, and once again neared official correction territory. The idea that short-term market moves are predictable on a recurring basis has been thoroughly debunked.
However, one investing strategy that continues to pay dividends is buy-and-hold. With every single bear market and stock market correction eventually being erased in full by a bull market rally, it pays for investors to buy great companies and hang onto them for long periods of time.
The prevailing question is usually, "Which companies to buy?"
The simple answer is to stick to unstoppable stocks. Companies with clear-cut competitive and innovative advantages tend to outperform over the long run. If you have, say, $5,000 that won't be needed to pay bills or cover emergencies, you have more than enough capital to build wealth with these five unstoppable stocks.
It's impossible to think about the rapidly growing social media space without mentioning Facebook (META 1.26%). Despite some recent bad press regarding the company's oversight practices of hate speech, there's pretty much no way it gets unseated as the most dominant force in social interaction.
When the June quarter ended, Facebook had 2.7 billion monthly active users visiting its flagship site, and 3.14 billion family monthly active users -- i.e., users that are visiting its other owned assets, such as WhatsApp and Instagram. Advertisers understand that there isn't any social platform they can turn to where they're going to get access to so many targeted eyeballs. Facebook might rile folks up from time to time with its practices, but it's the clear go-to for advertisers, and will thusly maintain superior ad-pricing power.
The crazy thing about Facebook is that it hasn't even fully opened its revenue gates yet. The company has been monetizing Facebook and Instagram with ads, but hasn't done much at all with Facebook Messenger or WhatsApp. That's four of the seven most-visited social platforms, and only two of the four are generating substantive recurring revenue for Facebook.
Put simply, Facebook looks unstoppable as a social media company.
American Eagle Outfitters
Generally speaking, retail isn't something that's often considered "unstoppable." It tends to be a highly commoditized industry with plenty of ebbs and flows. But that's not been the case for teen and intimates retailer American Eagle Outfitters (AEO 0.94%), which has regularly shown that it has clear-cut advantages over its peers.
One edge American Eagle Outfitters brings to the table is its blend of brand-name merchandise and value. It's no secret that consumers flock to brand-name clothing and accessories. In the case of Abercrombie & Fitch, the high price point makes parents scoff. As for the bankrupt Aeropostale, merchandise was cheap but the brand had little staying value. American Eagle has found success at an affordable price point in-between these two companies that hasn't cheapened its brand.
The company's Aerie intimates segment has also been unstoppable. Victoria's Secret's struggles, coupled with having the right merchandise in stores and online, led Aerie's sales higher by 32% during the coronavirus-impacted quarter, ended Aug. 1, 2020, with digital sales more than doubling.
Retail is traditionally not exciting, but American Eagle consistently one-ups its peers.
To modify the famous words of American sportscaster Dan Patrick, you can't stop edge cloud platform services provider Fastly (FSLY 0.71%) -- you can only hope to contain it.
Fastly, which helps businesses quickly and securely get digital content to end users, has been a significant beneficiary of the pandemic. With the traditional office environment and consumption disrupted, more businesses and consumers than ever are turning online for their needs. This means more opportunity for Fastly to showcase its security solutions, while also maintaining a leading role in facilitating content to users. Not surprisingly, Fastly has become the preferred edge cloud platform for a small army of brand-name companies, including Pinterest, Twitter, TikTok, Shopify, and Etsy.
The key to Fastly's long-term success will be in getting existing clients to spend more. In the most recent quarter, the company's dollar-based net expansion rate of 137% was actually 4 percentage points higher than the sequential first quarter. Essentially, its enterprise clients spent more even as the U.S. economy faced its biggest economic contraction in decades.
Fastly is a beast that could see its full-year sales more than triple by 2023.
Although marijuana stocks haven't exactly had investors seeing green over the past 18 months, there are a few exceptions to the rule. The most nominally profitable pure-play pot stock in the world, Trulieve Cannabis (TCNNF -1.22%), is a perfect example.
Whereas most vertically integrated multistate operators are trying to lay their footprint in as many legalized states as possible, Trulieve has been laser-focused on the Florida market. Of the company's 61 operational dispensaries, 59 of them are located in the Sunshine State. By saturating medical marijuana-legal Florida, Trulieve has been able to effectively build up its brand, keep its marketing costs down, and has gobbled up about half of the state's market share. Assuming Florida legalizes recreational cannabis in 2022, it'll be well-prepared to stake its claim to the lion's share of the adult-use market, too.
Trulieve's single-state focus has kept its expenses low, which is what's allowed the company to be profitable on a recurring basis without the aid of one-time benefits or fair-value adjustments. Through the first six months of 2020, Trulieve Cannabis has generated $216.8 million in sales and $89.8 million in operating income, sans fair-value adjustments.
At this rate, Trulieve could top $1 billion in annual sales by 2024.
A final unstoppable stock investors can buy with $5,000 is payment facilitator Visa (V -1.05%).
The first thing you should know about Visa is that it's a cashless payment facilitator and not a lender. Even though some of its peers lend money, Visa has wisely avoided this lure. You see, when economic contractions and recessions inevitably occur, lenders are directly impacted by rising credit delinquencies. Since Visa isn't a lender, its 50%-plus profit margin remains unaffected, and it bounces back from recessions much faster than its peers.
Visa also happens to hold the biggest share of credit card network purchase volume in the United States (about 53%). The next-closest competitor is approximately 30 percentage points behind. This is noteworthy given that the U.S. is the largest economy in the world, and it's driven by consumption.
Visa has a long runway of potential double-digit growth ahead as it expands into underbanked regions of the world and take advantage of organic consumption opportunities in developed markets.