It's been a topsy-turvy year on Wall Street, and it doesn't appear as if heightened levels of stock market volatility are going to let up anytime soon. After the benchmark S&P 500 lost over a third of its value in just 33 calendar days during the first quarter, we've watched the broad-based index produce swings higher and lower in recent weeks that are well above what we're used to seeing.
While volatility can be unnerving, it's also somewhat of a blessing for investors with a long-term mindset. Since the broader market tends to increase over the long run, any significant downside in equities represents an opportunity for investors to put their capital to work.
If you have $1,000 that won't be needed for emergencies or to cover bills, then you have more than enough money to buy these three perfect stocks when volatility strikes.
It's not often you'll come across a stock that does nothing but make its shareholders richer, but that's exactly what you're going to get with payment facilitator Visa (NYSE:V).
Although Visa isn't immune to economic contractions or recessions, it's the type of stock that's going to put long-term investors in the winners' column. Whereas recessions are usually measured in months or quarters, periods of economic expansion tend to last multiple years. Thus, buying into Visa is a smart bet on the U.S. and global economy growing over time.
It's worth noting that Visa isn't a lender. While lending would allow it to double-dip by adding interest income to its revenue stream during periods of robust expansion, it would also directly expose the company to credit delinquencies during periods of recession. With Visa strictly sticking to the processing side of the equation, it's among the quickest financial services stocks to emerge from a recession.
It also doesn't hurt that Visa holds the lion's share of U.S. credit card network purchase volume. Between the end of the Great Recession and 2018, Visa expanded its market share in the U.S. by over 9 percentage points to 53%. The top dog in the leading global economy is a great place for investors to put their money to work, especially in a volatile market.
Another perfect stock to consider buying is vertically integrated multistate operator Trulieve Cannabis (OTC:TCNNF).
Over the past 18 months, North American marijuana stocks haven't been a great place to invest, primarily because the high-growth pot industry is undergoing quite a few growing pains. But Trulieve Cannabis seems not to have gotten that memo. Of all North American marijuana stocks, Trulieve is by far the most nominally profitable. By this, I mean it's generating the highest operating income, sans one-time benefits and fair-value adjustments.
Trulieve's secret to success has been its focus on Florida, where medical marijuana is legal. Whereas most multistate operators have attempted to plant their flag in as many legalized states as is reasonable, Trulieve has 71 operational dispensaries, 66 of which are in the Sunshine State. By absolutely saturating Florida with its retail locations, Trulieve has been able to drive down its marketing costs, effectively build up its brand, and gobble up half the state's medical marijuana market share.
It's also worth mentioning that, by 2024, Florida is expected to be generation the third-highest cannabis sales of any U.S. state ($1.9 billion). Having laid the groundwork with more than five dozen dispensaries, Trulieve appears prepared to usher in recreational legalization in the state by as soon as 2022.
Another perfect stock that should have no issue delivering for its shareholders in spite of a volatile market is semiconductor manufacturer Broadcom (NASDAQ:AVGO).
Although tech stocks have been exceptionally volatile this year, Broadcom brings two catalysts to the table that should calm investors' nerves and steadily expand the company's operating margins.
First up, there's the 5G revolution. All of the major wireless carriers have begun rolling out infrastructure upgrades, but this isn't going to happen overnight. Since this is the first major upgrade to download speeds in a decade, it would be fair to assume that we're going to see strong demand from consumers and enterprises alike to upgrade their devices to be 5G-capable. With a majority of Broadcom's business tied to wireless chips and accessories found in smartphones, this upgrade cycle should be a multiyear growth event for the company.
Along those same lines, Broadcom stands to benefit from the ongoing online push by consumers, and the move into the cloud by businesses. Yes, some of this has been perpetuated by the coronavirus pandemic, which has completely upended the traditional work environment. But even when things return to normal, we're still bound to see an uptick in cloud use by businesses for remote workers. This means growing demand for data centers, as well as the connectivity chips that Broadcom provides to enterprise data centers.
As one final bonus, investors in Broadcom are getting a $13 per share annual dividend ($3.25 per quarter). For some context here, this payout only totaled $0.07 in the fourth quarter of 2010. This is a company that takes care of its shareholders.