Despite being taken on a wild ride in 2020, long-term investors have been rewarded for their patience. At one point, the tech-heavy Nasdaq Composite bounced nearly 106% off of its bear-market lows, set on March 23, 2020, while the broad-based S&P 500 gained as much as 77%.
The great thing about long-term investing is that you don't need a fortune to make one on Wall Street. If you own great companies, time is the only ally you need to build significant wealth.
With this being said, if you have $500 at the ready, which won't be needed to pay bills or cover emergencies, you have more than enough to invest in the following three undisruptable stocks right now.
Arguably one of the most exciting companies in the healthcare arena over the next decade is Teladoc Health (TDOC -2.75%). As the name implies, Teladoc is a leading provider of telemedicine services in the United States.
In recent weeks, investors have fled Teladoc for two reasons. First, it was one of the dozens of high-growth companies punished with the general Nasdaq Composite sell-off tied to rising Treasury bond yields. Second, it came under fire after Amazon (AMZN -0.16%) announced plans to take its telehealth platform, Amazon Care, nationwide. Amazon has deep pockets and a well-known brand, so this this announcement clearly worried some folks.
However, there are reasons to believe that Teladoc's ascension as the nation's leading virtual healthcare services provider isn't a fluke. Although its virtual visit count skyrocketed in 2020 to 10.59 million from 4.14 million as a result of the pandemic, it's worth noting that its telehealth revenue averaged growth of 75% annually between 2013 and 2019.
The momentum behind telehealth is real and here to stay. It's more convenient for patients, allows physicians to keep better tabs on chronically ill people, and is generally billed lower than office visits. Lower initial cost and the ability to avoid potentially costlier long-term care for chronically ill people makes telehealth a platform that health insurers will gladly promote.
Teladoc also has its secret weapon: Livongo Health. Teladoc acquired this leading applied health signals provider in early November in a cash-and-stock deal. Livongo collects copious amounts of data on patients and, with the help of artificial intelligence, sends its members tips and nudges to help them lead healthier lives. Livongo's current focus is on diabetes, where it has more than 500,000 enrolled members, but plans to pivot to include hypertension and weight management.
The ability of Teladoc and Livongo to cross-sell and create a personalized healthcare platform is what'll set this company apart from the field.
Finding differentiation in the retail space is difficult, but that's exactly what e-commerce platform Etsy (ETSY -0.70%) provides for investors.
Not to sound like a broken record, but Amazon is often pointed to as the greatest threat to anything having to do with retail. According to an eMarketer report from March 2020, Amazon was expected to expand its already robust U.S. online market share by 100 basis points to 39.7% in 2021. That's an estimated 33 percentage points higher than any other online retailer.
With Amazon being so dominant, you're probably asking yourself how Etsy has any chance of being undisruptable in the retail space. The answer lies in its operating model.
The Etsy online marketplace is predominantly focused on small merchants that can provide personalization and customization that simply won't be found on other retail platforms. Etsy may never come close to rivaling Amazon in terms of gross merchandise volume, but Amazon is no threat to Etsy's small merchant focus.
Putting aside mask sales, which made up a small but notable portion of total sales in 2020, Etsy saw gross merchandise sales of $10.28 billion on its platform, which more than doubled from the prior-year period. More importantly, the number of active buyers and active sellers jumped 77% and 62%, respectively, from the previous year. The Etsy marketplace has legs.
Another way Etsy will continue to grow its seller and buyer base is with innovation. It's begun testing video listings as a way to keep users engaged and has launched a "buy now, pay later" installment service in the United States.
When it comes to small merchant e-commerce, Etsy looks unstoppable.
The perceived-to-be concern for Visa is the rise of a handful of digital payment companies, like PayPal and Square, or even the ascension of digital currency Bitcoin. But none of these truly poses any serious threat to Visa.
What makes Visa such a dominant company is its brand-name and breadth. It's been leading the War on Cash for decades, well before Square, PayPal, Bitcoin were even a thought in the minds of consumers. In the U.S., Visa controls more than half of all credit card network purchase volume and was more than 31 percentage points higher than its next-closest competitor, as of 2018. Put in another context, Visa is the undisputed leader in processing in the world's largest economy, which happens to be dependent on consumption for its gross domestic product.
Visa's branding and deep pockets will also allow it to infiltrate underbanked regions of the world. With a majority of global transactions still conducted in cash, Visa has a multi-decade runway to expand its infrastructure into Africa, the Middle East, and Southeastern Asia to take advantage of emerging market opportunities.
Furthermore, Visa's avoidance of the lending market represents yet another reason it's unstoppable. Though lending money would allow Visa to take advantage of the interest income and fees associated with an expanding economy, it would also expose the company to credit and loan delinquencies during recessions. Since Visa doesn't lend, it doesn't have to set aside cash for unpaid loans. This is why it's able to bounce back from recessions and economic contractions much faster than its financial service peers.
Visa might be old-school fintech, but it's a rock-solid investment and the perfect company to invest $500 right now.