It's been a topsy-turvy year for Wall Street and investors. We witnessed the steepest bear market downturn in history when the S&P 500 lost 34% of its value in under five weeks, as well as the most ferocious rebound from a bear market bottom of all time.
However, investors should never forget that no matter how dismal the outlook for equities and the U.S. economy looks, the stock market eventually erases all corrections. As long as you remain invested in high-quality companies for long periods of time, there's a very good chance you'll make money.
The $64,000 question is, "What stocks should you buy?"
If you're looking to make bank this decade and possibly beyond, here are three top stocks that could make that happen.
We're witnessing a digital payments revolution. Cash isn't dead, but younger generations definitely favor plastic and other forms of nontraditional currency for transactions. This trend suggests Square (NYSE:SQ) could be the fastest-growing fintech stock this decade.
Most of you are probably familiar with Square because you've used one of their point-of-sale devices at some point as a consumer. Square has been focused on helping small businesses grow for the past eight years with its seller ecosystem, which provides point-of-sale solutions, data analytics, and loans. Between 2012 and 2019, the gross merchandise volume crossing Square's network grew by a compound annual average of 49%, reaching $106.2 billion in 2019.
However, the long-term growth story for Square is the company's peer-to-peer digital payment platform Cash App. In 2 1/2 years, Cash App's monthly active user count has more than quadrupled to around 30 million. Roughly a quarter of these users also use Cash Card, a traditional debit card that links to a person's Cash App balance. Cash App collects merchant fees, just like the seller ecosystem, but also allows Square to pocket expedited fees from bank transfers, bitcoin exchanges, and investments.
In a decade, Square might be one of the largest financial stocks in the U.S.
Green Thumb Industries
Marijuana stocks haven't given investors much to write home about over the past 18 months, but that's going to change in a big way for a small number of well-positioned U.S. multistate operators. Specifically, I believe investors can make bank with Green Thumb Industries (OTC:GTBIF) over the remainder of the decade.
As a vertically integrated multistate operator, Green Thumb currently has just shy of 50 operational retail stores nationwide. In total, it holds 96 retail licenses in a dozen states, so it still has plenty of organic growth upside as it opens around four dozen new locations in the years ahead.
Green Thumb is intriguing because of the states it's focused on, as well as its revenue mix. Green Thumb has a burgeoning presence in Illinois, Nevada, and New Jersey. Illinois is a limited-license state that opened its doors to adult-use weed sales on Jan. 1, 2020, while Nevada is a tourist-heavy state that could lead the country in cannabis spending per capita by mid-decade. As for New Jersey, it seems on the verge of legalizing adult-use marijuana on Election Day. Each of these three states should be capable of at least $1 billion in annual weed sales by 2024.
As for product mix: Roughly two-thirds of Green Thumb's revenue is derived from high-margin derivatives. Derivatives are alternative consumption options to dried cannabis. They include vapes, edibles, infused beverages, and topicals. Since derivatives are less likely to be oversupplied and commoditized, they're Green Thumb's key to achieving recurring profitability in the fourth quarter of 2020 or early 2021.
In short, this marijuana stock should have its shareholders seeing green.
Don't let its size fool you -- Amazon (NASDAQ:AMZN) is still very much a growth stock despite its nearly $1.7 trillion market cap.
Most people are familiar with Amazon for the company's highly successful marketplace. Although market share estimates vary from source to source, Amazon controls somewhere around 40% of all online sales in the U.S. Retail margins tend to be razor-thin, but there's incredible value in controlling such a large percentage of e-commerce sales in the largest economy in the world.
Further, Amazon has more than 150 million Prime members worldwide. The fees collected from Prime memberships help Amazon undercut brick-and-mortar retailers on price while keeping its customers loyal to the Amazon brand.
However, the long-term growth driver for Amazon will likely be its cloud infrastructure segment, Amazon Web Services. With the coronavirus disease 2019 (COVID-19) pandemic completely altering the way we work and shop, more businesses than ever are moving online and into the cloud to operate effectively. This shift should allow AWS plenty of opportunity to become the cloud service of choice for small- and medium-sized businesses. Keep in mind that AWS reported 29% year-on-year sales growth during the second quarter of 2020, which was the worst quarter for the U.S. economy in decades.
Since cloud margins are considerably higher than those derived from Amazon's other operating segments, the company can expect its operating cash flow to shoot the moon in the years that lie ahead. That should be excellent news for investors.