In a year where societal habits and the traditional workplace have been completely upended, there appears to be light at the end of the tunnel.
In November, two coronavirus disease 2019 (COVID-19) vaccine developers announced stellar results from interim analyses of their large phase 3 studies. While researchers were expecting a vaccine efficacy (VE) of between 50% and 60%, Pfizer/BioNTech and Moderna produced respective VEs of 95% and 94.5% in their interim data. With an end to the pandemic now in sight, the benchmark S&P 500 might end 2020 higher by a double-digit percentage. That's hard to believe, considering the S&P 500 lost 34% in a matter of weeks during the first quarter.
The end of the pandemic wouldn't just be a win for humanity -- it would be a big win for the investing community. A number of high-growth trends have flourished in recent quarters, and that could continue at an even more accelerated pace once the U.S. and global economy are fully reopened.
In other words, it's the perfect time to put money to work in the stock market. If you've got $10,000 ready to invest, which won't be needed to cover bills or emergencies, I'd suggest ending the year right by purchasing the following three top stocks.
One of the smartest ways to make money is to buy into companies that have virtual monopolies. A perfect example is surgical robotics system developer Intuitive Surgical (ISRG -0.70%).
As of the end of September, Intuitive Surgical had installed 5,865 of its da Vinci systems worldwide over the past 20 years. In doing so, it's developed priceless rapport with the medical and surgical community. You can add up all of the competing robotic surgical systems available, and they wouldn't even come close, on a combined basis, to the 5,865 systems installed by Intuitive Surgical. This two-decade runway has made it very unlikely that any competitor will pose a serious challenge to Intuitive Surgical's soft tissue procedure share anytime soon.
Intuitive Surgical is also built to become more operationally efficient over time. In its early days, the company generated the bulk of its revenue from selling its da Vinci systems. These are intricate and costly to build, so the margins associated with their sale aren't that great. But as time has passed and the number of installed systems has grown, the percentage of sales derived from higher-margin instruments and accessories with each procedure, as well as servicing, has grown dramatically. This should allow for earnings growth to continue to outpace sales growth going forward.
When the pandemic is officially over, there'll be no more constraints on elective procedures, and thus a wide-open path for Intuitive Surgical to grow by a double-digit percentage.
Green Thumb Industries
It's time to face the facts: The U.S. cannabis industry is legit, and Green Thumb Industries (GTBIF 1.60%) has the makings of a real long-term winner.
A lot of hoopla has made in recent weeks concerning President-elect Joe Biden's victory in November, and the House of Representatives expected vote on the MORE Act to decriminalize marijuana at the federal level. However, the real story is that residents in five states overwhelmingly passed cannabis initiatives/amendments in the November election. Green Thumb's success doesn't depend on federal legalization. As long as the federal government allows states to make their own decisions on cannabis, companies like Green Thumb can thrive.
In particular, Green Thumb has been smart about the states it's chosen to focus on. It's bought its way into the limited license state of Illinois and tourist-reliant Nevada. It'll also see benefits from New Jersey residents giving the green light to recreational pot. By 2024, it's expected that all three states will be generating north of $1 billion in annual cannabis sales, with Nevada leading the country in per-capita cannabis spending.
Another catalyst in Green Thumb's sails is its reliance on derivatives. Alternative consumption options, such as edibles, vapes, and infused beverages, generate much higher margins than dried flower. With roughly two-thirds of the company's sales derived from these high-margin dried flower alternatives, it should have no trouble turning the corner to recurring profitability very soon.
Green Thumb Industries is the perfect marijuana stock to buy if you want to end 2020 on a high note and begin 2021 with a bang.
Buying shares of e-commerce giant Amazon (AMZN 1.29%) won't win you any points for originality, but it has an exceptionally good chance to make you money -- and that's what really matters.
Most folks know Amazon as their trusted online source for pretty much everything. Independent analytics company eMarketer forecast in March that Amazon would control 38.7% of all online sales in the U.S. in 2020, and further expand its share of domestic e-commerce to 39.7% in 2021. For some context here, no other company is within 33 percentage points (in terms of online share) of Amazon's online share of sales.
The downside, if we want to be nitpicky, is that retail margins are often razor thin. However, Amazon has been able to use its e-commerce dominance to encourage more than 150 million people worldwide to sign up for a Prime membership. The fees collected annually from these memberships, coupled with the company's lower overhead costs of operating online, allow it to consistently undercut brick-and-mortar retailers and keep consumers loyal to the brand.
The coronavirus pandemic has also accelerated growth for cloud infrastructure service providers like Amazon Web Services (AWS). Even when the pandemic fades and life returns to normal, businesses will still be spending big bucks on cloud-based solutions. Since cloud margins are considerably higher than retail margins, AWS is expected to provide the lion's share of operating income and cash flow growth for Amazon throughout the decade.