Over the past 15 months, investors have been taught an important lesson in patience. Despite the coronavirus crash lopping 34% off the benchmark S&P 500 in less than five weeks, it took under five months for the widely followed index to recover all of its losses and blast to new all-time highs.
Yet even with the S&P 500 a stone's throw away from hitting another record high, value can still be found.
If you have $3,000 that won't be needed to cover emergencies or pay bills, and a long-term mindset, the following are some of the best stocks to invest that money into right now.
You don't have to turn over every stone looking for a gem. Sometimes the best stocks to buy are brand-name companies, like Alphabet (GOOGL 0.32%) (GOOG 0.35%). Its subsidiaries include internet search engine Google and streaming platform YouTube.
Alphabet's foundational segment continues to be its search engine Google. According to data from GlobalStats, Google has pretty consistently maintained a worldwide search share of between 91% and 93% for the past couple of years. With this veritable monopoly, it's no wonder advertisers are willing to pay top dollar for placement. Over time, Alphabet's traffic acquisition costs should decline, paving the way for modest margin improvement.
However, the company's ancillary operations are equally exciting. YouTube is one of the three most-visited social sites on the planet, and it's now generating $24 billion in annual run-rate revenue. Meanwhile, cloud infrastructure segment Google Cloud grew by 46% in the first quarter from the prior-year period. Cloud margins have the potential to handily outpace advertising margins, and will likely be the key to Alphabet doubling its operating cash flow between 2020 and 2024.
Cannabis should be one of the top moneymaking trends of the decade for patient investors. Though there is no shortage of high-growth marijuana stocks to choose from, U.S. multistate operator (MSO) Jushi Holdings (JUSHF 9.69%) checks all the required boxes.
Even though Jushi is a relative small fry next to a number of other MSOs, it has approached its expansion wisely. The company is focusing most of its attention on three states: Pennsylvania, Illinois, and Virginia. All three states limit how they assign dispensary licenses. For example, Pennsylvania and Illinois both cap retail license issuance, whereas Virginia assigns licenses based on jurisdiction. The point is this: Jushi has entered markets where it'll have a good chance of building up its brand and gaining followers without being pushed around by bigger MSOs.
Jushi is also comfortable using its capital to make acquisitions. It's been bolstering its presence in Pennsylvania and Virginia, and has dipped its toes in the water in California, the largest marijuana market in the world by annual sales.
Realistically, Jushi has the potential to grow its annual sales from less than $81 million in 2020 to perhaps more than $600 million by 2024.
Most biotech stocks are hemorrhaging money and hoping they can develop the next blockbuster drug. Thankfully, Exelixis (EXEL 3.91%) isn't like most biotech stocks. It's profitable, and the company's lead cancer drug, Cabometyx, looks to be on its way to hitting $1 billion in annual sales by no later than 2022.
Cabometyx is approved to treat first- and second-line renal cell carcinoma (RCC) as well as advanced hepatocellular carcinoma. Combined, these indications alone give Cabometyx billion-dollar potential each year.
But Exelixis isn't done with its top-notch treatment. Cabometyx is being studied in close to six dozen additional cancer trials. One such study, which examined the combination of Cabometyx and Bristol Myers Squibb's cancer immunotherapy Opdivo, led to the Food and Drug Administration green-lighting this duo for first-line RCC earlier this year. Factors like label expansion, duration of use, and pricing power all give Cabometyx double-digit annual growth potential.
Investors should take note that Exelixis' key drug is also a cash cow. The company ended March with approximately $1.6 billion in cash and cash equivalents, which works out to about 20% of its current market cap. This cash is supporting the company's efforts to reignite its internal research engine, and it might allow Exelixis to go shopping at some point in the future.
If you didn't get enough small-cap growth action with Jushi, consider taking some of your $3,000 and putting it to work in online insurance marketplace EverQuote (EVER 0.35%).
I get it: Insurance is as exciting as watching paint dry. Personally, I want to stick sharp objects into my ears every time a GEICO commercial comes on the radio. But the way insurance products are peddled to consumers is changing, and EverQuote finds itself in the highest-growth portion of the space. Over the next four years, digital insurance-ad spend is expected to grow by an average of 16% annually.
EverQuote's online insurance marketplace serves two functions. It makes pricing policies easier and straightforward for consumers, and it allows insurers to spend their advertising dollars more effectively. Rather than putting that money toward a broad audience of people, insurers are getting more bang for their buck with EverQuote's targeted platform. According to EverQuote, 1 in 5 consumers ends up purchasing a policy through its marketplace.
Best of all, EverQuote isn't satisfied with just being a go-to destination for auto policies. It's been expanding into new verticals, including home, rental, life, and health insurance. These verticals have been growing considerably faster than auto policy revenue. Altogether, Wall Street believes EverQuote has the opportunity to double its sales over the next four years.
Berkshire Hathaway (B shares)
Lastly, history teaches us that riding Warren Buffett's coattails is a generally smart move. Buffett, who has led conglomerate Berkshire Hathaway (BRK.A 1.04%) (BRK.B 1.02%) as CEO since the mid-1960s, has generated aggregate returns of greater than 2,800,000% for its Class A shareholders. That's an annualized return of 20%, which practically doubles up the S&P 500's return, including dividends, over the same time frame.
Investing some or all of your $3,000 into Berkshire Hathaway's B-Class shares (the A-class shares go for more than $432,000) would be a smart move given Buffett's cyclical tie-ins. Most of the Oracle of Omaha's investment portfolio is tied up in information technology companies, bank stocks, and consumer goods businesses. These are companies that do well when the economy is expanding and struggle a bit when recessions arise. Buffett knows full well that recessions are an inevitable part of the economic cycle. But he's also aware that periods of expansion last much longer than recessions. It's a simple numbers game that allows Buffett to come out on top.
Additionally, Berkshire Hathaway owns around five dozen companies from an assortment of sectors and industries. There's an entire energy segment that can produce highly predictable cash flow in any economic environment, as well as cyclical components, such as railroad giant BNSF, that benefit during those aforementioned multiyear expansions.