Last year, long-term investors had their resolve tested like never before. The unprecedented coronavirus disease 2019 (COVID-19) pandemic completely upended societal habits, the traditional workplace, and the stock market in a matter of weeks. This panic culminated in the S&P 500 (^GSPC 0.01%) losing as much as 34% of its value in just 33 days during the first quarter.
But if long-term investors have learned anything, it's that putting your trust in an index that tracks 500 of the largest U.S. and multinational companies is historically a smart move. Even with the S&P 500 just a stone's throw away from an all-time high, it's home to a number of amazing growth and value stocks that could make you richer in 2021. Here are four to consider buying right now.
Healthcare stocks are excellent places to put your money to work due to the inherently defensive nature of the sector. Since people don't get to choose when or how they get sick, drug and device makers can expect steady demand in any economic environment. That's one of many reasons why device maker DexCom (DXCM 1.62%) should be on investors' buy lists.
DexCom is a developer of continuous glucose monitoring (CGM) systems for diabetics. DexCom's subcutaneous sensor can communicate with a patients' wireless device of choice to provide real-time readouts of blood-glucose levels. DexCom's numerous generations of devices can also communicate with select insulin pumps to provide optimal glycemic balance.
About 10.5% of the U.S. population has diabetes (34.2 million people). Another 88 million American adults show symptoms of prediabetes. It's unfortunate that both figures are growing, but that growth represents a widening opportunity pool for DexCom. Investors should expect a sustainable 20%+ growth rate going forward.
Just as penny stocks have a low market cap for a reason, Wall Street's biggest companies usually have large valuations because they're doing a lot right. That perfectly encompasses why investors should consider buying one of the S&P 500's largest stocks, Facebook (FB 1.18%).
Being the largest social media company on the planet, Facebook faces criticism from time to time. But think about this for a moment: Where else can advertisers go to get exposure to 2.74 billion monthly active users? Don't think too long, because the answer is nowhere. If you take into account Facebook's other owned assets, such as Instagram and WhatsApp, it has north of 3.2 billion unique monthly family active people. The ad-pricing power is simply too incredible for investors to ignore.
Facebook is estimated to have brought in $84 billion in sales in 2020. Hard though it may be to believe given this figure, Facebook is in the relatively early innings of its growth. It's only monetized Facebook and Instagram for ads, without meaningfully monetizing Facebook Messenger or WhatsApp. These represent four of the six most visited social platforms in the world. The company is also engaged in innovative projects designed to diversify its revenue stream beyond advertising. Facebook offers insane short-term and long-term growth potential.
The logic here is pretty simple. Payment facilitators like Mastercard generate merchant fees based on the volume of payments crossing their network. When the economy is expanding, businesses and consumers tend to spend more. When recessions hit, spending typically dips. What's important to note is that periods of expansion tend to last significantly longer than periods of contraction. We look to be in the early stages of what'll likely be a multiyear economic boom, which should bode well for Mastercard.
Additionally, Mastercard is somewhat shielded from the negative aspects of recessions because it strictly sticks to the processing side of the equation. Though it chooses not to pocket interest income during periods of expansion, it also has no direct exposure to loan delinquencies during recessions. That's why Mastercard's profit margin is among the juiciest in the financial services industry.
Another rock-solid S&P 500 stock that can make investors richer this year is chipmaker Broadcom (AVGO -0.55%). Don't let Broadcom's share price scare you away. This is a company with two very clear catalysts in its sails.
To begin with, Broadcom should benefit immensely from the move to 5G. It's been about a decade since there's been a major upgrade to wireless download speed. It's expected to lead to a multiyear device upgrade cycle in the consumer and enterprise markets. About three-fourths of Broadcom's sales are derived from wireless chips and accessories used in smartphones.
It's also a beneficiary on the consumption front. As more businesses push online and into the cloud, data storage has taken on increased importance. Broadcom is responsible for providing an assortment of connectivity and access chips used in enterprise data centers.
It's perfectly positioned in 2021 (and beyond) to take advantage of a rapid increase in data consumption and storage.