Historically, value stocks have outperformed growth stocks. But the tables have turned in a big way since the end of the Great Recession.
For the past 12 years, monetary policy has been almost exclusively dovish, leading to record-low lending rates. Furthermore, ongoing quantitative-easing measures by the Federal Reserve, such as its monthly bond-buying program, have held long-term yields in check. Top it off with Capitol Hill pumping trillions of dollars into the economy, and you have the perfect trio of catalysts for growth stocks.
With the nation's central bank pledging to remain accommodative for the foreseeable future, fast-growing companies could be your ticket to building wealth. Here are three growth stocks that should be able to make you richer in June, and well beyond.
If it seems like I'm pounding the table an awful lot on cloud-based customer relationship (CRM) software provider salesforce.com (NYSE:CRM), it's because I absolutely am. It's not often you'll find a dominant industry player that can grow by a double-digit percentage for as far as the eye can see.
In simple terms, CRM software is used by consumer-facing businesses to access and enter real-time customer/client information. It can be used to oversee service or product issues, can help with online marketing campaigns, and is even helpful with suggesting which clients might be likely to purchase a new product or service. It's a no-brainer software tool for retailers, but is finding utility in the financial, healthcare, and industrial sectors.
Just how dominant is Salesforce in the CRM space? During the first half of 2020, IDC estimated the company controlled 19.8% of global CRM revenue share. Meanwhile, the four closest competitors to Salesforce don't even add up to its 19.8% share. Even with increasing competition in the cloud-based CRM space, its innovation makes it the clear No. 1.
Salesforce is also making waves with acquisitions. It surprised folks last year when it announced a $27.7 billion cash-and-stock offer for cloud-based enterprise communications platform Slack Technologies. Salesforce will benefit by gaining access to the small and medium-size businesses that use Slack's platform. The ability to cross-sell to Slack's client base is another reason the company's sales growth will remain in the double digits.
According to CEO Marc Benioff, Salesforce is on track to grow sales from $21.3 billion to more than $50 billion in five years. That's growth long-term investors simply can't ignore from a megacap stock.
Last month, I featured U.S. marijuana stock Harvest Health & Recreation (OTC:HRVSF) as a growth stock that would make you richer in May (and beyond). Just weeks later, U.S. multistate operator (MSO) Trulieve Cannabis (OTC:TCNNF) announced it would buy Harvest Health in an all-stock deal valued at $2.1 billion. So, naturally, this month I'm suggesting folks buy Trulieve, which will combine two unique companies under one umbrella.
The interesting thing about Trulieve is the company's approach to expansion. Whereas most MSOs are planting their flag in as many large marijuana markets as possible, 82 of Trulieve's 88 operational dispensaries are in a single state: Florda, where medical marijuana is legal. The Sunshine State is projected to have the third-highest annual sales of weed by 2024, trailing only California and Colorado.
By saturating Florida, Trulieve has been able to effectively build up its brands while keeping its marketing costs down. As a result, the company has gobbled up 53% of the state's dried cannabis-flower market share and 49% of its higher-margin cannabinoid oils share. It's also been profitable for 13 consecutive quarters, which virtually no other pot stocks can match.
What Harvest Health brings to the table is a handful of new markets (Arizona, Maryland, California, and Pennsylvania), as well as more Florida dispensaries. The real prize, though, is Harvest Health's 15 dispensaries in Arizona. The Grand Canyon State voted to legalize recreational weed last year, and it could quickly become a billion-dollar market. Trulieve should have no trouble mirroring its successful Florida blueprint in Arizona.
As a combined company, Trulieve will have approximately 126 operating dispensaries, and it should be on track for north of $2 billion in annual sales by 2023. In other words, it'll have investors seeing green.
A third growth stock that can make you richer in June (and beyond) is telehealth giant Teladoc Health (NYSE:TDOC).
To get the obvious out of the way, Teladoc did indeed benefit immensely from the pandemic. With physicians wanting to keep high-risk patients at home and people potentially infected with the coronavirus out of their offices, if at all possible, they turned to virtual visits in big numbers. Teladoc's platform handled 10.59 million visits in 2020, up from 4.14 million in the previous year.
However (and this is a pretty big "however"), this isn't just a pandemic play. Teladoc averaged annual sales growth of approximately 75% in the six years leading up to the pandemic.
What's more, telehealth services offer advantages up and down the healthcare treatment chain. For instance, patients don't have to leave their homes, and physicians might be able to keep closer tabs on their highest-risk patients, which could result in more-favorable patient outcomes. Meanwhile insurance companies like the fact that virtual visits are billed at a cheaper rate than office visits -- and they're certainly going to support improved patient outcomes. This is a technology that's here to stay.
Teladoc further differentiated itself with the acquisition of applied health signals company Livongo Health in the fourth quarter. Livongo collects a lot of data on chronically ill patients, and with the help of artificial intelligence it sends its members tips and nudges that help them lead healthier lives. Livongo is focused on diabetes members at the moment, but will be expanding its platform to include hypertension and weight management. This means Livongo's potential patient pool is a large portion of the U.S. population.
Teladoc has a chance to be one of the fastest-growing healthcare stocks of the decade. That makes its more than 50% haircut since February a surefire buying opportunity.