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3 Surefire Stocks to Buy With Your $600 Stimulus Check

By Sean Williams - Dec 26, 2020 at 5:51AM

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Making money is easy when you're invested in high-quality businesses with clear-cut competitive advantages.

After months of debate, Congress finally got to work this past week and passed an $892 billion stimulus package. Though it pales in comparison to the $2.2 trillion doled out in the CARES Act, it'll be providing more than $280 billion to the Paycheck Protection Program and boosting federal unemployment benefits to the tune of $300 a week though mid-March.

However, the real buzz of the latest stimulus deal is the inclusion of another round of direct payments to American taxpayers. More than 100 million people could qualify for a stimulus check worth up to $600. For reference, this is half of what Capitol Hill doled out via the CARES Act.

For some Americans, a payout of $600 will be used to pay bills or buffer an existing emergency fund. But for those folks who are already on solid financial footing, this might be the perfect opportunity to put that stimulus check to work in the greatest wealth creator on the planet: the stock market.

If you fall into this latter category, here are three surefire stocks to consider buying with your up to $600 stimulus check.

A U.S. Treasury check and one hundred dollar bills surrounded by a folded American flag.

Image source: Getty Images.

Sirius XM

To begin with, investors will want to dial in to satellite-radio operator Sirius XM ( SIRI 0.72% ). Aside from being a legal monopoly in the satellite-radio arena, Sirius XM brings two sizable advantages to the table.

First, Sirius XM's business model is set up quite differently than terrestrial and online radio operators. Whereas terrestrial and online radio are primarily driven by advertising revenue, Sirius XM is a subscription-based business. Through the first nine months of 2020, Sirius XM generated 81% of its sales from subscriptions to its service. This is important because recessions are an inevitable part of the economic cycle, and advertising revenue quickly dries up during periods of contraction.

Satellite-radio subscription revenue actually increased for Sirius XM throughout the coronavirus disease 2019 (COVID-19) pandemic. In other words, Sirius XM is better suited to navigate rough patches than any other radio operator. 

The second advantage for Sirius XM is its relatively fixed transmission costs. No matter how many net subscribers the company has, it's not going to pay extra to provide service to these users. With the only real variance being talent-acquisition costs and royalties, Sirius XM's operating model is set up to deliver improved operating margins over time as its paying-subscriber base grows.

A lab researcher using a pipette tool to place samples under a microscope.

Image source: Getty Images.

Vertex Pharmaceuticals

Investing in businesses that provide game-changing innovation is another great way to earn surefire gains over the long run. That's why specialty pharmaceutical stock Vertex Pharmaceuticals ( VRTX 0.12% ) should be on your buy list.

What allows Vertex to stand out from the crowd is its laser focus on treating cystic fibrosis (CF). CF is a progressive, genetic disease that leads to thick mucus production, which can obstruct a patients' lungs and/or pancreas. CF has no cure, but it's  seen a number of advances over the past decade, thanks in large part to Vertex.

The company's latest advancement is combination treatment Trikafta, which was approved five months ahead of schedule by the U.S. Food and Drug Administration after sailing through a late-stage trial. It usually takes newly launched drugs at least a year before they reach blockbuster status (at least $1 billion in annual sales). For Trikafta, it only took a couple of months. Wall Street believes it has peak annual sales potential of $6 billion, but it looks well on its way to eventually top that estimate. 

Vertex has a promising pipeline beyond CF, as well. Despite discontinuing promising Alpha-1 antitrypsin deficiency (AATD) drug VX-814 in October due to liver toxicity concerns, Vertex has another candidate in studies to tackle AATD. It's also running clinical studies to treat transfusion-dependent beta thalassemia and sickle cell disease, as well as APOL1-mediated kidney diseases.

Given Vertex's track record of clinical success, it has a good chance of coming through for patient investors.

A smiling woman holding a credit card in her left hand, with an open laptop in front of her.

Image source: Getty Images.


Rounding out the list of surefire stocks in which to invest your $600 stimulus check is burgeoning e-commerce company Etsy ( ETSY -8.38% ).

There's no question that Etsy is one of a handful of companies that's received a huge boost from the coronavirus pandemic. Roughly a ninth of the company's sales are coming from face-mask purchases at the moment, with consumers opting to buy products online rather than venture into physical retail stores. However, Etsy should have no trouble pivoting its recent popularity into sustainable long-term growth.

Unlike most other e-commerce platforms, Etsy is all about small businesses and the personalization of the sales process. Being a bridge between small businesses that customize purchases for their clients and a motivated pool of consumers has led to rapidly rising gross merchandise sales (GMS) in its marketplace and a generally loyal base of customers.

Etsy recently noted that half of its 138 million lifetime buyers have made a purchase within the past 12 months. Additionally, existing buyers have increased their GMS spending by 50% from the prior-year period. 

Etsy has plenty of opportunity to increase sales in its higher-margin services segment, too. Beyond just paid promotions on its platform, Etsy is introducing tools designed to keep users more engaged. For example, 1.5 million seller videos were uploaded in the September-ended quarter -- the first quarter where video listings were launched. Video has proved successful in engaging shoppers on other e-commerce platforms and should be helpful here, as well.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Etsy, Inc. Stock Quote
Etsy, Inc.
$228.64 (-8.38%) $-20.92
Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
$204.69 (0.12%) $0.24
Sirius XM Holdings Inc. Stock Quote
Sirius XM Holdings Inc.
$6.29 (0.72%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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