There are plenty of stocks with compelling risk-to-reward relationships. But only a handful of names can truly be considered "unstoppable." These rare companies sell goods and services that are in demand regardless of the economic environment, even if they don't necessarily boast high-octane growth.
Here's a closer look at three such stocks that would be at home in almost anyone's diversified portfolio.
It's not a name that needs much in the way of an introduction. In fact, not only are you likely to be familiar with Alphabet (GOOG -1.31%) (GOOGL -1.42%), you're also likely to be a user of at least one of its services. The company is parent to search engine giant Google, which still fields over 91% of the world's web searches, according to Global Stats. It also owns YouTube, where more than two billion people come every month to watch billions of hours' worth of digital video every day. Alphabet is also the name behind the popular mobile operating system Android, which Global Stats reports is powering more than 71% of the world's mobile devices.
Connect the dots. Alphabet isn't a mere web company. It's one of the internet industry's permanent centerpieces, connecting consumers with content creators. Each one of these searches, views, and app downloads may only translate into a few pennies of revenue, but when you're talking about billions of people, clicks, or views, the pennies add up.
They add up rather reliably too. While the spread of COVID-19 all over the world during the second quarter of 2020 prompted most businesses to curtail their advertising -- taking a bite out of Alphabet's sales growth -- only one other time since 2010 has the company suffered a year-over-year dip in quarterly revenue. Not many other organizations can say they're operating nearly as consistently.
Whereas Alphabet's three flagship businesses are well-established and proven, Upstart (UPST 9.01%) is at the other end of that scale. Not only is the relatively unknown company young at only 10 years of age, last year's $849 million worth of revenue means it's just too small to get most investors' attention.
Don't let its small size or lack of notoriety fool you, though. This is the direction the lending business is moving -- last year's top-line growth of 264% says so.
Simply put, Upstart provides alternative credit scores for prospective borrowers to lenders. Rather than the credit bureaus' traditional consideration of payment history, income, and current debt burden, Upstart uses artificial intelligence to sift through a variety of personal data to determine how likely it is that a person is willing and able to make payments on a loan.
It sounds odd, but it works. Indeed, it works much better than the credit scores the big credit bureaus are still selling to lenders. The company's own research has determined that its approach results in 75% fewer loan defaults compared to the average bank. Or from a different perspective, Upstart's approach allows for 173% more loan approvals than the average bank with the exact same number of defaults. That's why another four lenders have already tapped Upstart to power their loan-approval process this year.
Do know that Upstart's smaller size and relatively new approach to doing a very old business all set the stage for continued volatility. If you can stomach the swings, though, patience should pay off in spades.
Finally, add Walmart (WMT -1.05%) to your list of unstoppable stocks everyone needs in their portfolio.
It's not going to win any growth awards. This year's expected sales growth of 3.1% is fairly typical for the world's biggest brick-and-mortar retailer, and there's little it could feasibly do now to ratchet that figure up. Operating earnings are growing at about the same clip.
What the company lacks in growth firepower, however, it makes up for in sheer reach. It operates more than 5,300 stores in the U.S. alone, at one point suggesting that 95% of the United States' population lives within 10 miles of a Walmart store. If you need something and you need it right now, for years Walmart has been your best bet. The company's got more than 5,100 stores up and running outside the United States as well, making it the biggest brick-and-mortar retailer of the overseas/non-U.S. market, with a similar outcome. That is, wherever a Walmart is found, it's usually one of the area's go-to, all-purpose retailers.
That's not to say it's unflappable. Several years ago the company's rapid growth left it unwieldy and in need of a major overhaul, translating into too many empty store shelves and too many disinterested workers. It would also be amiss to not point out that Walmart let Amazon go unchecked for too long before getting serious about its own e-commerce engine.
CEO Doug McMillon seems to have a firm grip on where the company needs to go and how it needs to get there, though. In fact, he was leading relatively strong -- and very reliable -- sales growth before the COVID-19 pandemic rattled global consumerism, and the retailer hasn't suffered any year-over-year quarterly revenue dip since 2016, which was just a couple of years after he took the helm.