There is no better vehicle for creating wealth than investing in stocks and no better market for it than U.S. exchanges. The relative transparency, regulatory oversight, high liquidity, and the U.S. dollar being the world's currency all make American markets the most sought-after in the world.
This extends to U.S. businesses as well. Despite the many impediments that have been thrown in their path over the past few years, American companies have remained one of the best assets to own. And not just during this crisis, but over the long haul as well.
While gold, bonds, real estate, and (more recently) cryptocurrency might outstrip stocks over short periods of time, the long-term results prove that if you want to accumulate large amounts of wealth, investing in stocks is the way to go.
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Last year, Deutsche Bank published a study showing that over the past century, equities beat out gold by 5.6% per year, housing prices by 6.6%, Treasuries by 6.8%, and oil by 8.4% per year.
There have been only two decades when stocks have had negative returns: the Great Depression of the 1930s (with a negative return of 0.5%) and the start of the 21st century -- when the dot-com implosion, 9/11, and the bursting of the housing bubble conspired to tank the market by 0.9%.
It's clear that for investors wanting the best chance of having a comfortable retirement, investing in stocks and staying in the market for the long haul is the correct strategy.
While government spending policies and Federal Reserve monetary policy are scheming to undermine the strength of the stock market, investors should consider these three top U.S. companies for their portfolios today.
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1. PubMatic
Madison Avenue advertising is an American institution, but the way ads are sold today is far different from its Mad Men-era heyday. Like virtually every other industry, advertising has gone digital, and that makes PubMatic (PUBM +1.68%) potentially one of the biggest beneficiaries of this trend.
This next-generation ad tech platform is a sell-side provider, meaning the company's clients are publishers looking to sell their display space. And it uses machine learning and artificial intelligence to complete the task by optimizing the ad placement for clients. That doesn't always mean the highest-priced ad is the one chosen, but it's often the most relevant for the space.
Not only does PubMatic software help publishers to sell their ad space to advertisers, but it also assists on the demand side. This softwate integrates its tools into other leading platforms like The Trade Desk and the marketing platform of Alphabet's Google. Balancing the needs of its clients with those of advertisers has been a tightrope walk, but it's been a lucrative dance so far.
Revenue from mobile and omnichannel video grew 64% while connected-TV revenue surged sevenfold over the year-ago period. At the same time, it hit a net dollar-based retention rate of 157%, meaning existing publishers from the year-ago quarter spent 57% more in the current quarter.
Plus, growth in this space is accelerating. eMarketer predicts up-front spending on connected-TV advertising will hit almost $6 billion in 2022, a 32% increase over 2021.
PubMatic is the straw that's stirring the drink of this trend, and because it is already profitable, it looks to be a solid U.S. stock to buy now.
A Planet 13 superstore. Image source: Planet 13 Holdings.
2. Planet 13 Holdings
Planet 13 Holdings (PLNH.F 4.03%) is providing cannabis consumers with a different experience than other pot stocks. Although the multi-state operator (MSO) has a handful of marijuana retail dispensaries in a few states, just as other MSOs do, what it's best known for is its flagship Las Vegas dispensary.
That location is the largest dispensary in the world, and beyond its large selection of dried cannabis, paraphernalia, and derivatives, the retail store also features a cafe, a processing center, and an events stage.
Because of its presence near the Las Vegas Strip, the dispensary attracted over 1 million visitors in 2019, before the pandemic shut everything down. The current number of visits are still below those levels, but volume is growing and should eventually reach parity.
Management is doubling the dispensary floor space at the Las Vegas store and just opened a California superstore as well near Disneyland, Knott's Berry Farm, and some of the state's best-known beaches. It also intends to have home delivery for local residents and the resorts.
Beyond the sprawling megaplexes, Planet 13 also operates a chain of smaller neighborhood retail stores called Medizin, which offer the same experience, but in a more compact footprint (just 4,750 square feet). Within five years, Planet 13 intends to have at least eight superstores and nearly two dozen smaller locations.
With the U.S. the largest pot market and California the biggest market within the country, Planet 13 has tremendous potential by delivering a unique experience to consumers. At just $3.32 per share, Wall Street sees the MSO more than doubling in value over the next year, setting a consensus price target of $7. Revenue is forecast to grow from $70 million last year to $193 million by the end of next year when it goes from running losses to breakeven.
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3. AT&T
AT&T (T +0.04%) has come a long way from when it was Ma Bell, but it remains an iconic fixture in U.S. telecommunications. For too long, though, it has tried to do too much and be all things to all people, but now it's sharpening its focus to telecom again, and that should excite its investors.
There have been two big catalysts for AT&T: the spinoff of its WarnerMedia properties before merging them with Discovery to create a new publicly traded media company, and the continued rollout of 5G networks.
Although the acquisition of TimeWarner was one of the events that turned AT&T into a sclerotic, debt-burned behemoth (along with a couple of other ill-advised deals), Ma Bell's decision to exit from the entertainment business is a smart move. As a result, this move will free up capital for investing in its remaining operations and also pay down a portion of its debt.
Having spent billions acquiring 5G midband spectrum earlier this year, it expects its 5G-C network to cover 200 million people in the U.S. by the end of 2023 and its fiber footprint to grow to cover 30 million customers by the end of 2025.
The trade-off for this realignment is AT&T will cut its dividend by about half, ending its status as a Dividend Aristocrat, a stock that has raised its payout for 25 years or more. While that's a blow to income investors, the yield will still be around 5%, which is more than the average yield of the S&P 500. Analysts are forecasting the dividend will grow again, finally exceeding its current payment by the middle of the decade.
That makes AT&T a U.S. stock investors should consider buying now while its stock trades at a discount.
