Investors may not realize it, but they've borne witness to history. Since bottoming out on March 23, 2020, the benchmark S&P 500 has doubled in value. It's the most robust bounce-back rally from a bear-market bottom Wall Street has ever seen.
Yet, even with the broader market consistently nipping at new all-time highs, value can still be found. The not-so-subtle secret to building wealth in the market is patience. If you're buying stakes in great businesses and planning to hang onto those positions for multiple years, what might look pricey today could turn out to be an amazing value in three, five, or 10 years.
You also don't need a boatload of money to begin or further your trek toward financial freedom. If you have $500 at the ready, which won't be needed to pay bills or cover an emergency, the following five no-brainer stocks would be perfect to invest in right now.
Vertex has lagged the broader market badly after two clinical treatments for alpha-1 antitrypsin deficiency were discontinued following mid-stage trials. But these two failures pale in comparison to the company's multiple successes in treating patients with cystic fibrosis (CF). CF has no cure, but Vertex's four generations of therapies have helped to improve lung function for those who have CF.
The company's latest approved combination therapy, Trikafta, which treats the most common CF mutation, was approved five months ahead of its scheduled review date by the U.S. Food and Drug Administration and brought in almost $3.9 billion in its first year on pharmacy shelves. In the June-ended quarter, Trikafta's sales topped $1.25 billion, implying a $5 billion annual run-rate. The key point being that Vertex's innovation in CF will protect its cash flow for a long time to come.
Vertex also has close to one dozen other compounds in clinical development to go along with $6.71 billion in cash and cash equivalents. In other words, investors get innovation, steadily growing cash flow, and a huge cash buffer, with Vertex.
One of the more surefire opportunities for investors right now can be found in the cybersecurity industry. No matter how well or poorly the U.S. economy and stock market are performing, robots and hackers don't take a day off. Cybersecurity has evolved into a basic-need service, which is great news for Ping Identity (PING).
As its name gives away, Ping specializes in identity verification. The company's cloud-based Ping Intelligent Identity Platform integrates with legacy security solutions to create a safer environment for enterprises. Reliant on artificial intelligence, Ping's platform is designed to become more efficient over time at recognizing and responding to threats, compared to on-premises security solutions. In short, it's designed to go beyond the basic parameters of on-premises security software to also constantly monitor and authorize user access to critical company data.
The big reason Ping Identity is such a value, compared to other high-flying cybersecurity stocks, is that some of its customers opted for short-term renewals during the pandemic in 2020. However, with the focused on promoting its higher-margin and nimbler software-as-a-service platform, which has grown sales at a compound annual rate of 44% since Q1 2020, it's only a matter of time before sales growth really picks up.
As a cybersecurity stock that's profitable on a recurring basis, Ping look like a bargain at less than 8 times this year's forecasted sales.
Square's foundational segment has long been its seller ecosystem. This is the operating division that provides point-of-sale devices, loans, and analytics to help merchants succeed. In the seven years leading up to the pandemic, gross payment volume (GPV) traversing its platform grew by an annual average of 49%. This past quarter, seller ecosystem GPV hit a new record at $38.8 billion. What's particularly noteworthy about the seller ecosystem is that larger businesses (defined by Square as those with $125,000 or more in annualized GPV) accounted for 65% of GPV in the June-ended quarter, compared to 55% in Q2 2019. Bigger merchants mean more gross profit for Square.
However, the company's future is unquestionably tied to the success of digital peer-to-peer payments platform Cash App. Cash App has consistently been the most-downloaded payments app in the U.S. for two years, and its monthly active user count more than quintupled to 36 million between the end of 2017 and the end of 2020. What's more, gross profit per Cash App user chimed in at $55 in Q2 2021, which is about 2.5 times what it was two years ago.
The icing on the cake is Square's recently announced $29 billion acquisition of Australia's buy now, pay later specialist Afterpay. Though this deal might sound pricey, it'll perfectly integrate the company's seller ecosystem and Cash App.
U.S. marijuana stocks could also be one of the smartest long-term investments. With 36 states having legalized cannabis in some capacity, the sky's the limit for multistate operator (MSO) Cresco Labs (CRLBF 0.30%).
Like virtually all multistate operators, Cresco has a budding retail presence. Closing its acquisition of Bluma Wellness during the second quarter, along with organic expansion, has pushed its operating dispensary count up to 33 (albeit the company holds close to four dozen retail licenses). Cresco has been targeting a number of high-dollar (Florida) and/or limited-license markets (Illinois and Ohio) with its retail expansion. The latter is important because states that limit their retail and cultivation license issuance are creating an environment where every licensed player has an opportunity to gobble up significant share.
Yet, what's far more impressive about Cresco Labs is its industry-leading wholesale operations. Net wholesale revenue accounted for 52% of the company's $210 million in sales in the June-ended quarter. Wholesale often gets a bad rap for having lower margins than the retail side of the equation. Thankfully, Cresco can more than make up for this on the volume front. As a holder of a cannabis distribution license in California, Cresco Labs can place proprietary and third-party pot products into more than 575 dispensaries throughout the Golden State.
Cresco Labs will likely be one of the fastest-growing pot stocks of the decade.
Ford Motor Company
A final no-brainer stock you can invest $500 in right now is Ford Motor Company (F -2.49%). Chip shortage issues in the near-term, which have constrained the manufacturing capacity of auto stocks, presents the perfect opportunity to buy into Ford at a discount.
The clearest catalyst for the company is the electrification of automobiles. In May, Ford announced that it was upping its spending on electric vehicles (EVs) to more than $30 billion through 2025. The plan is to launch 30 new EVs worldwide by mid-decade, and generate 40% of its unit sales from EVs by 2030. Considering the push by developed countries to combat climate change, EVs represent a multi-decade vehicle replacement opportunity at the consumer and commercial level that could significantly lift Ford's now-modest growth rate.
While Ford's performance in the U.S. will remain in focus, it's the company's opportunity in China that could be even bigger. China is the world's leading auto market, and it's been estimated by the Society of Automotive Engineers of China that half of all vehicles sales could be powered by alternative energy by 2035. Given that China's EV market is nascent and Ford has the infrastructure in place to meet the country's production needs, it could quickly gobble up EV share.
The icing on the cake is that Ford's F-Series pickups have been the best-selling vehicle in the U.S. for 39 consecutive years. With its growth rate about to pick up, Ford is worth investing in.