No two investors are alike. That's why your portfolio doesn't necessarily need to look like your neighbor's, your children's, or anyone else's.
On the other hand, there are some types of rock-solid, all-weather stocks that should fit the needs of nearly every investor, regardless of their unique circumstances. Three such names are Mastercard (MA 1.33%), Merck & Co. (MRK -0.05%), and Nvidia (NVDA 3.65%), all of which bring smart balances of risk, reward, and reliability to the table.
Mastercard
It would be easy to assume the worst regarding credit card processing powerhouse Mastercard. Alternative payment services like those offered by fintechs such as PayPal and (increasingly) cryptocurrencies appear to pose a serious threat to the payment industry's stalwarts.
Look at the bigger picture, though, and you'll find that the advent of these alternative payment tools may have helped more than hurt Mastercard. PayPal accounts are frequently linked with debit or credit cards, which keeps the "old guard" of the business involved and profiting from payments processing.
And as for cryptocurrencies, although it's unclear exactly what role these decentralized digital assets will play in the future of commerce, Mastercard is preparing for whatever may come. In October, it announced a partnership with digital-asset platform operator Bakkt that will allow merchants as well as banks to offer a variety of crypto services, including payments processing. Then in November, Mastercard announced agreements with crypto service providers Amber, Bitkub, and CoinJar that will make it easier for consumers in the Asia-Pacific region to use their cards to make purchases with crypto.
The point is, this isn't the Mastercard of yesteryear. With projected revenue growth of nearly 20% for 2022 and corresponding earnings growth of 27%, it's clear this company is shaping the evolution of the payments industry rather than chasing it.
Merck
Drugmaker Merck was conspicuously missing from the initial race to develop a COVID-19 vaccine, and its subsequent efforts to address the coronavirus didn't turn out a whole lot better. The U.S. Food and Drug Administration did approve Merck's oral COVID-19 treatment in December, following most of Europe's emergency approval of the pill. The decision to approve molnupiravir in the U.S. came after a narrow vote by the FDA advisory committee, though, because the treatment hasn't proven to be quite as effective as earlier trial data had suggested.
Meanwhile, the company abandoned its COVID-19 vaccine efforts in January 2021 because of a clear lack of efficacy. In a market environment that has rewarded companies with effective COVID-19 solutions at the expense of other stocks in the pharmaceutical industry, Merck shares haven't exactly been heavily in demand of late.
However, that creates an opportunity for savvy investors who are thinking about the bigger, long-term picture.
Image source: Getty Images.
While the pandemic has been a major crisis that understandably dominated the conversation in the healthcare industry, that condition will not be permanent. Once COVID-19 transitions into an endemic disease, outbreaks of which should cause less disruption, investors will return their focus to the pharmaceutical industry's non-COVID pipelines and portfolios.
That's when Merck is going to shine again. It still owns cancer-fighting treatment Keytruda, HPV vaccine Gardasil, and Januvia, a treatment for type 2 diabetes. Those are all blockbuster franchises with plenty of marketability left in them. Further, the company has nearly 100 phase 2 and phase 3 trials underway, and three drugs being reviewed for approval by the FDA right now.
New investors can get exposure to the potential of that portfolio and pipeline at a valuation of less than 11 times this year's projected profits.
Nvidia
Finally, chipmaker Nvidia (NVDA 3.65%) belongs on the list of unstoppable stocks that every investor should want to have.
This is true even though the stock has been anything but unstoppable since November. It's now down by more than 30% from its peak of $346.47. And while it's up from Monday's low, that bounce hasn't exactly put the stock firmly on a course for recovery. Regardless, the recent weakness is only a short-term headwind. Its long-term future looks very, very bright thanks to the expected growth of a key market.
That market isn't video gaming, though. Although Nvidia may be best known for supplying the high-performance graphics processing units that allow gamers to play the latest (and most computationally hungry) titles, the big opportunity at hand for the company is artificial intelligence. As it turns out, the heavy processing requirements of AI applications are handled best by the same sorts of hardware and software that video-gaming enthusiasts need.
Market research outfit Omdia estimates that Nvidia's technology now accounts for 80% of the artificial intelligence accelerator market. That matters more than you might realize. Another market research company, IDC, estimates the AI hardware market will grow from $85 billion in 2021 to $200 billion by 2025.
For perspective, Nvidia's data-center business -- which consists primarily of its AI business -- was on pace to generate about $10 billion in revenue for its fiscal 2022, which ends Jan. 31. That just means there's a lot of room for top-line growth that should, sooner or later, lift this stock again.
