You might have noticed that the stock market is quite choppy these days. Some of the volatility is due to the uncertainty about whether or not there will be another round of economic stimulus from Washington. But don't let the choppiness fool you: Stocks remain in a new bull market after their major meltdown earlier this year.
Of course, some stocks turn out to be losers even in a rising market, so you still need to be choosy about where you invest. One smart move is to buy leaders that are benefiting from virtually unstoppable trends. Here are three such stocks that are poised to be surefire winners.
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1. Cresco Labs
The U.S. is going green -- and I'm not talking about the environment. The nation's legal cannabis industry is booming and seems likely to gain momentum. That makes Cresco Labs (CRLBF) a company that investors shouldn't ignore.
Cresco ranks as one of the largest cannabis businesses in the U.S., operating 19 retail cannabis stores across nine states, as well as 16 cultivation and production facilities. Its revenues continue to soar, and although it isn't quite profitable yet, it consistently generates positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
Growth shouldn't be a problem for Cresco. Several of the cannabis markets where it operates are still in their early stages -- among them, its home state of Illinois, where recreational marijuana use just became legal in January. Cresco owns 10 additional retail licenses for stores that it hasn't opened yet.
I expect Cresco could be a huge winner on Election Day. The results of the presidential and senate races could greatly improve the prospects that federal laws will be changed to improve the cannabis industry's access to financial services and pave the way for companies like Cresco to list their shares on U.S. stock exchanges. In addition, two key states -- Arizona and New Jersey -- will be among those voting next month on whether to legalize recreational marijuana.
2. PayPal
You've no doubt heard the expression "cash is king." Well, the king's days on the throne are numbered. There's a war on cash that is fueling tremendous growth for fintech stocks, with PayPal Holdings (PYPL 0.70%) standing out as one of the leaders.
The COVID-19 pandemic boosted PayPal's revenue as consumers rapidly shifted even more of their shopping online. The second quarter was the best in the company's history, with revenue jumping by 22% year over year and earnings soaring by 86%.
One big factor behind PayPal's growth is the continued success of its Venmo peer-to-peer payment app. The increasing popularity of Venmo highlights another way that PayPal is winning the war on cash. In Q2, total payment volume on Venmo grew 52% year over year to $37 billion.
But PayPal is also well-positioned to profit from in-store purchases. It added QR code functions to its PayPal and Venmo apps earlier this year that allow customers to buy or sell in person touch-free. CVS Health was the first retailer to support this new capability, but look for PayPal to aggressively expand it to other retailers.
3. Teladoc Health
The pandemic accelerated the rise of another trend -- the use of telehealth services. And as the largest provider of those services in the world, Teladoc Health (TDOC 0.45%) has benefited. In the second quarter, its revenue jumped by 85% year over year as its online visits more than tripled.
It's possible that another rising wave of coronavirus cases across the U.S. this fall could derail Wall Street's bull market. But such a COVID-19 surge would only drive demand for Teladoc's services even higher. Hopefully, that won't happen. The good news is that Teladoc's growth should gain momentum either way: Recent surveys show that many Americans plan to use telehealth services even after the pandemic is over.
Teladoc's planned acquisition of Livongo Health (LVGO) should make the company even more attractive to prospective clients. Livongo's digital health platform helps individuals manage chronic conditions such as diabetes and hypertension, and its services dovetail well with Teladoc's. The combination of the two companies will create a virtual care juggernaut that will be hard to beat.
By itself, Teladoc targets an addressable U.S. market of around $74 billion, and management estimates that Livongo will add another $47 billion to that total addressable market. International markets present even more potential for growth. I think Teladoc will be a surefire winner as it targets these opportunities.
