Whether you're a novice or someone who's been investing for decades, we can all agree that it's been a wild year on Wall Street. We've witnessed the fastest bear market decline in history, as well as the quickest rebound to new highs from a bear market low of all time.
But there are two important facts all investors should understand about this market. First, every single stock market correction in history has eventually (key word!) been erased by a bull market rally. Secondly, we are firmly in a new bull market. In other words, it pays to own innovative, high-quality businesses, because unlike bear markets, bull markets are almost always measured in years, not months.
As this new bull market finds its legs, consider buying these four unstoppable stocks.
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Teladoc Health
Precision medicine looks to be the hottest trend in healthcare this decade. Instead of one-size-fits-all treatments, anything that personalizes treatment plans or improves individual convenience is going to be celebrated. That's why you're going to want to own Teladoc Health (TDOC).
Teladoc, as the name implies, is a burgeoning telemedicine powerhouse that's seen its sales grow at a compound annual rate of about 75% since 2013 (assuming it hits $1 billion in annual sales in 2020). Yes, the company has benefited from the coronavirus disease 2019 (COVID-19) pandemic, with virtual visits more than tripling in the second quarter. However, there was a value proposition at play long before COVID-19 struck. That's because telemedicine visits are cheaper for health insurers than in-office visits, and they more time-convenient for patients and physicians.
Were the Teladoc Health story not already exciting enough, it's also in the midst of acquiring applied health signals company Livongo Health (LVGO) in an $18.5 billion cash-and-stock deal. Livongo collects copious amounts of data on patients with chronic illnesses and relies on artificial intelligence (AI) to send its members tips and nudges to help them lead healthier lives. Livongo has consistently doubled or nearly doubled its year-on-year Diabetes member counts and is already profitable on a recurring basis, despite only having a little over 1% saturation of the U.S. diabetes market.
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CrowdStrike Holdings
When discussing no-brainer investments, cybersecurity has to be at or near the top of the list. As more and more businesses shift online or into remote work environments, there's growing importance on protecting company-sensitive information. This protection is increasingly falling into the hands of cloud-focused cybersecurity companies like CrowdStrike Holdings (CRWD -0.39%).
CrowdStrike's Falcon platform is cloud-native and uses AI to assess more than 3 trillion events each week. Basically, the company's platform is growing smarter every day in recognizing threats. That's obviously something CrowdStrike's clients have come to appreciate, as the percentage of customers with at least four cloud module subscriptions has catapulted from 9% in fiscal Q1 2018 to 57% in fiscal Q2 2021 -- a stretch of 13 quarters. Having existing clients spend more is CrowdStrike's recipe for rapid margin expansion.
Speaking of expansion, the company's gross margin has already settled into the long-term target range of 75% to 80%. This is the result of the high margin associated with subscription-based revenue, the fact that existing clients are spending more, and CrowdStrike's triple-digit customer growth in each of the past three years. CrowdStrike should have little trouble doubling sales a couple of times this decade.
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Intuitive Surgical
Have I mentioned the importance of precision medicine?
There are dominant stocks within a specific industry, and then there's Intuitive Surgical (ISRG -0.29%) in the assistive surgical space. The company has installed 5,865 of its da Vinci surgical systems worldwide over the past 20 years. That's far more than any of its competitors on a combined basis. What's more, some deep-pocketed competitors have run into snags prior to the launch of competing systems. Intuitive Surgical has had 20 years to build up rapport with the medical community, and its competitive advantage appears virtually insurmountable.
Additionally, the company's operating margin is built to get better over time. During the 2000s, the lion's share of the company's revenue was derived from selling its pricey da Vinci system. The problem is that these systems are intricate and costly to build, which means the margins aren't that great. However, we've witnessed instruments and accessories sold with each procedure and service revenue soar in recent years. These are considerably higher-margin operating segments. Through the first nine months of fiscal 2020, these higher-margin revenue channels have accounted for 73.2% of total sales.
As time passes, Intuitive's earnings growth should have no trouble outpacing its sales growth.
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NextEra Energy
Yes, I just went ahead and included an electric utility stock among a list of rapidly growing companies that you're going to want to own for the new bull market. As you're about to see, NextEra Energy (NEE -0.09%) is every bit as unstoppable as Teladoc, CrowdStrike, and Intuitive Surgical.
What makes NextEra so special is the company's willingness to innovate. No electric utility is generating more capacity from solar or wind power than NextEra. While the cost to upgrade its electric-generating capacity to renewables isn't cheap, the reward is bountiful. NextEra's electric-generation costs have sunk over time, and its compound annual growth rate has consistently averaged in the high single digits over the past decade. If Capitol Hill ever lays out clean-energy requirements for our nation's utilities, NextEra Energy will be ahead of the curve.
As for the company's traditional utility operations (i.e., non-renewable energy), they're regulated. This is a fancy way of saying NextEra can't pass along price hikes anytime it wants, but instead needs the OK from state public utility commissions. While that might sound like an impediment, it's actually not. It ensures that NextEra doesn't contend with potentially volatile wholesale electric pricing, and it makes the company's cash flow very predictable.
