On January 20, President Joe Biden took over an economy that was absolutely ravaged by the unprecedented coronavirus pandemic. Despite inheriting less than ideal economic conditions, policy proposals being put forward by the Federal Reserve and federal government could lead to a ferocious bull market taking shape under the Biden administration.
Think about this for a moment: Congress has already passed a $1.9 trillion stimulus relief package, and President Biden recently introduced an infrastructure spending bill that tops $2 trillion in cost. This comes atop the Federal Reserve's monthly bond-buying activity and its pledge to keep interest rates at or near historic lows through at least 2023.
Things just about couldn't be more perfect for stocks. For patient investors with a long-term mindset, the following four spectacular stocks could make you bank if a Biden bull market takes shape.
A great way to make money in runaway bull markets is to buy businesses on the leading edge of innovation that benefit from an expanding economy. Payments company Square (SQ 3.97%) perfectly fits this mold.
Most people are probably familiar with Square's point-of-sale payment solutions, which are most commonly employed by small merchants. A merchant fee-driven segment, Square has seen gross payment volume (GPV) for its seller ecosystem skyrocket from $6.2 billion in 2012 to $112.3 billion in 2020. In the seven years prior to the pandemic, seller ecosystem GPV was growing by an annual average of 49%.
What's intriguing about the seller ecosystem is that it's begun resonating with larger merchants. For instance, 60% of total GPV in the fourth quarter was derived from businesses with at least $125,000 in annualized GPV. That's up from 52% in Q4 2018. If bigger companies shift to Square's seller ecosystem, it can continue to drive healthy double-digit growth.
But let's make no mistake about it, Cash App is the real star here. Square's peer-to-peer digital platform ended last year with 36 million monthly active users (MAUs), up from just 7 million MAUs three years ago. The company notes that it costs less than $5 to bring in each new user, yet generates $41 in gross profit. The ability to generate revenue from multiple sources with Cash App, including Bitcoin exchange, has Square firing on all cylinders.
Pretty much anything that focuses on precision medicine and streamlining the treatment process for patients in the healthcare space has a good chance to outperform under the Biden administration. That's why investors looking to ride a potential bull wave should consider buying Teladoc Health (TDOC 4.88%).
As you can imagine, Teladoc was a key winner of the pandemic. Wanting to keep potentially infected and at-risk patients out of their offices, physicians turned to virtual visits and consultations like never before. Teladoc supported almost 10.6 million virtual visits in 2020, up from a little north of 4.1 million in 2019. Keep in mind, though, that sales growth for the company averaged 75% annually between 2013 and 2019. In other words, telemedicine was resonating with the medical community long before the pandemic struck.
Even when the pandemic ends, there's a strong case for telemedicine's continued use. It's considerably more convenient for patients and allows physicians to better keep tabs on potentially high-risk patients. Virtual visits are also billed at a lower rate than office visits, which makes telehealth an instant hit with health insurance companies.
What'll separate Teladoc from its peers is the November 2020 acquisition of applied health signals company Livongo Health. Livongo collects large amounts of patient data and uses artificial intelligence (AI) to send tips and nudges to its members. These tips help people with chronic conditions lead healthier lives. The company already has more than 500,000 diabetes members, and it's planning to expand its services to include those with hypertension and weight-management issues. That's a huge pool of prospective patients that this newly combined company can cross-sell to.
Green Thumb Industries
Perhaps the greatest thing about U.S. marijuana stocks is the no-lose situation for the group with Biden in the White House. Regardless of whether the current administration legalizes cannabis at the federal level or maintains the status quo of a hands-off approach, a select number of pot stocks can thrive. U.S. multistate operator Green Thumb Industries (GTBIF -0.38%) is one such company.
Green Thumb currently has 56 operating dispensaries in legalized states and holds an additional 41 licenses for retail stores in its back pocket. The ability to open up to 97 retail locations across a dozen states makes it one of the largest cannabis retailers in the country.
What's notable about Green Thumb is the markets the company has chosen. The vast majority of states where Green Thumb operates have already hit $1 billion in annual sales or are well on their way to achieving that mark within the next couple of years.
Furthermore, Green Thumb has shown it favors limited license markets. By operating in states that cap the number of dispensary licenses they'll issue, Green Thumb is reducing its competition and giving itself the best possible chance to build up its brands and create a loyal following.
But my favorite aspect of this cannabis stock is that a majority of its revenue is generated from derivatives, such as edibles, infused beverages, and vapes. Derivatives yield much higher margins than dried cannabis flower, and they're less prone to oversupply and pricing pressures. In short, they're Green Thumb's ticket to recurring profitability in 2021 and perhaps $1.1 billion in annual sales by next year.
If there was ever a case for the importance of cybersecurity, look no further than the news we heard a week ago about 533 million Facebook users having some of their personal data leaked online. Cybersecurity may have been optional at one point, but with businesses pushing online and into the cloud at a rapid clip, it's evolved into a basic-need service for companies of any size, in any economic environment.
What makes CrowdStrike so special is the company's cloud-native Falcon platform. Being built in the cloud and leaning on AI allows Falcon to be especially nimble and responsive to potential threats. According to the company, Falcon oversees over 5 trillion signals each week, which means it's growing smarter with every single customer the company signs up.
The company's operating results back up the idea that Falcon is a generally superior option to on-premises security solutions. CrowdStrike's customer retention rate has been at 98% for two years, with its total customer count catapulting from 450 to 9,896 in just four years.
Even more impressive is CrowdStrike's ability to scale with its clients. Back in the first quarter of fiscal 2018, only 9% of its customers had four or more cloud module subscriptions. Less than four years later, 63% of its clients have four or more cloud module subscriptions. Since we're talking about a business model that generated a 79% subscription gross margin in fiscal 2021 -- but is still in the early innings of its growth -- it's a good bet to handily outperform under the current administration.