For well over a year, Wall Street and investors have been obsessing about the impact of the U.S. elections. That time has now come and gone, which means investors can do what they do best: Buy great companies and wait for their thesis to play out.
History tells us that no matter who is president, the stock market will undergo regular periods of correction, but will, over the long run, head higher as operating earnings expand. This means investors should use any sizable correction in the stock market as an opportunity to buy into innovative companies, or to add to winning stocks.
With Election Day over, investors should strongly consider buying these three surefire stocks.
Life's three certainties:
- Me, mentioning Intuitive Surgical (ISRG 0.25%) when discussing surefire winners
Intuitive Surgical is the company behind the intricate da Vinci surgical system used by surgeons to make precise incisions during soft tissue procedures. One thing that makes this company so special is the 5,865 systems it's installed worldwide (but primarily in the U.S.) over the past 20 years. That may not sound like a lot, but it's more than all of Intuitive Surgical's competitors combined... by a long shot. With some of its competitors running into launch snags with their own surgical systems, it looks as if da Vinci has created a virtually insurmountable edge and will remain the preferred source for assistive surgical systems.
The other factor that makes this company so incredible is its revenue split. In its early days, most of its sales were derived from selling its pricey da Vinci system ($0.5 million to $2.5 million). The problem is that the da Vinci system is costly to manufacture, which means margins aren't all that great. But as Intuitive Surgical's installed base has grown over two decades, its substantially higher-margin segments -- instruments and accessories sold with each procedure, and the servicing of its systems -- have grown into the lion's share of total revenue. As time passes, operating margins should continue to widen for this company, which is what makes it a surefire stock to buy.
Investors looking for rock-solid industries to put their money to work in would be wise not to overlook cybersecurity stocks. Cybersecurity may not be the fastest-growing industry over the next decade, but among high-growth industries might have the safest floor. That's why cloud-native cybersecurity solutions provider CrowdStrike Holdings (CRWD 0.97%) should be in your proverbial shopping cart.
CrowdStrike is one of many tech stocks to benefit from the coronavirus disease 2019 (COVID-19) pandemic. This illness has completely upended the traditional work environment, pushing employees to work remotely, and encouraging consumers to buy from the comfort of their own homes. That means even greater opportunity for cybersecurity companies to protect enterprise and consumer data moving forward.
What makes CrowdStrike so intriguing that virtually all of the company's revenue is derived from cloud-protection subscriptions. During the June-ended quarter, 93% of sales came in the form of high-margin, transparent, and churn-reducing subscriptions. With CrowdStrike more than doubling its subscriber count in each of the past three years, the company has already hit its long-term subscription gross margin target of 75% to 80%, yet remains in the early innings of its growth phase.
Just as important, existing clients are spending a lot more with CrowdStrike as their businesses expand. In the fiscal first quarter of 2018, only 9% of the company's clients had four or more cloud module subscriptions. But by Q2 2021 (13 quarters later), 57% of the company's clients had four or more module subscriptions. The way I see it, CrowdStrike is unstoppable.
Another stock that looks to have surefire winner written all over it is vertically integrated U.S. multistate cannabis operator Cresco Labs (CRLBF -6.09%).
I know what you might be thinking, but it really didn't matter who won the election, or what the political make-up of Congress would look like come January. The simple fact that states are being allowed to chart their own path on cannabis, and the federal government is maintaining a hands-off approach, has proved more than enough reason to buy into high-growth U.S.-focused multistate operators like Cresco Labs.
Keeping with the theme here, there are two factors that really allow Cresco Labs to stand out. First off, it has a burgeoning retail presence in Illinois, which became the first state to approve recreational marijuana for consumption and sale entirely at the legislative level. At the moment, nine of Cresco's 19 operational dispensaries are located in the Land of Lincoln. Since Illinois is a limited-license state, Cresco should have no trouble carving out a healthy share of a market projected to hit more than $1 billion in sales by 2024.
Secondly, Cresco Labs has the chance to become a wholesale powerhouse in the United States. Its acquisition of Origin House (completed in January 2020) gave it access to one of a small number of cannabis distribution licenses in California -- the top marijuana market in the world. Because of this license, Cresco Labs can now place its products into more than 575 dispensaries throughout California.
Suffice it to say, Cresco should be profitable on a recurring basis by as soon as next year.