During market sell-offs, sometimes it can be difficult to decide what to invest in. Do you buy growth stocks on sale? Maybe you want a dividend stock you can count on for passive income. Or maybe you can even test the waters in crypto.
Thankfully, today's age of low-cost or even free trades makes it easier than ever to invest in whatever you want whenever you want, and with as little or as much money as you want.
The growth play
The auto industry is under a lot of pressure amid rising inflation and persisting bottlenecks in global supply chains. The long-term growth of the electric vehicle (EV) industry is compelling. But even companies like Tesla (TSLA -1.05%) are facing their fair share of short-term headwinds.
Tesla reported first-quarter 2022 production of 305,407 units and deliveries of 310,048 units, which represented virtually no growth over the 305,840 units produced in the fourth-quarter of 2021 and the 308,600 units delivered in that period. Tesla pointed to supply chain issues and factory shutdowns as two of the biggest challenges affecting production.
Tesla is one of the most efficient automakers in the industry, routinely sporting industry-leading operating margins and growth. It also has the most experience with EVs. It's not a stretch to say that if Tesla is challenged, that probably means the rest of the industry is having an even tougher time.
In many ways, the struggles of EV automakers enhance the investment thesis for ChargePoint -- one of the largest EV charging infrastructure companies in North America (and a major player in Europe). ChargePoint doesn't make money by selling EVs or even by selling electricity to charge them. Rather, it makes money from businesses, residents, and fleets that want to install its charging ports. In this sense, ChargePoint is a bet on the long-term adoption of EVs.
ChargePoint grew revenue by 65% in fiscal 2022. It expects revenue to rise by 96% in fiscal 2023. Given its growth rate and rapidly expanding suite of customers, ChargePoint might just be the simplest and best way to invest in the EV industry right now.
The dividend play
Starbucks shares are down about 35% from their high and hovering around a 52-week low. The sell-off has been brutal but is somewhat understandable.
Starbucks is only beginning to find its footing after its COVID-19-induced growth slowdown. Like many companies, Starbucks is facing inflationary pressures that could affect its margins. Starbucks has implemented several price hikes, but it remains to be seen whether customers accept those increases if inflation stays hot.
Former Chief Executive Officer Howard Schultz stepped in as Starbucks' interim CEO on April 4 and immediately suspended the company's share buyback program. Starbucks had planned to spend $20 billion on dividends and buybacks over the next three years, roughly $13 billion of which would have likely been used on repurchases. It's worth mentioning that Starbucks gave no indication that it was cutting the dividend or ceasing dividend increases. Starbucks began paying a quarterly dividend in 2010 and has raised it every year since 2011.
Schultz's reason for suspending the buyback is that he wants Starbucks to grow its core business and improve its culture. Given the Starbucks stock sell-off, some investors may have preferred for Starbucks to repurchase its stock at reduced prices. But if it can boost margins and get back to growth, then it should be a net positive for the company. In the meantime, Starbucks has a dividend yield of 2.4%, making it an attractive source of passive income.
The crypto play
Just as ChargePoint is one of the simpler ways to invest in the growth of EVs, so too is Ethereum one of the simplest ways to invest in cryptocurrency.
Ethereum is down by more than a third from its high for several reasons. For starters, the value of Ethereum exploded in 2020 and 2021. Even now, Ethereum is up 55% over the past year and -- wait for it -- 2,140% over the last two years.
Therefore, it's understandable that the Ethereum rally would cool off. What's more, federal regulations, inflation, competition, and geopolitical risks are all valid headwinds affecting Ethereum. Competition in the crypto space is fiercer than ever, with many altcoins gunning for a slice of Bitcoin's (BTC -0.52%) and Ethereum's pie. The overall value of the crypto industry could continue to grow. For now, it's worth about $2 trillion, around 60% of which is in Bitcoin and Ethereum.
The Ethereum 2.0 upgrade should make Ethereum faster, safer, and more scalable. If the network pulls it off, it would give Ethereum a better chance at fending off competition from the likes of Cardano or Solana. However, there's a lot of uncertainty going into the upgrade -- seeing as how nothing like it has ever been attempted before. Most investors would probably be best served by simply waiting to make sure the upgrade goes smoothly before considering Ethereum. But others who believe in Ethereum's long-term thesis, even if the upgrade has some hiccups, could consider opening a starter position in Ethereum now.
Focus on solid fundamentals and long-term trends
Investing in companies or projects with strong fundamentals is always important. But during times of heightened volatility, asset values can move a lot in a short period. By buying stocks or crypto with a compelling long-term thesis, an investor can limit the influence of noise -- caring less about a given quarter and more about where something will be in five or 10 years.
In this vein, ChargePoint is well-positioned to benefit from the transition from the internal combustion engine to the electric motor. Starbucks is an incredibly strong brand and an inexpensive stock. And Ethereum is the single most important pillar of decentralized finance. There are no guarantees in the stock market. But given these profiles, ChargePoint, Starbucks, and Ethereum all look like good buys now.