Putting your money to work in the stock market is an effective way to build wealth over time. Forget about get-rich-quick schemes and high-risk penny stocks. The best way to create a successful investment portfolio is to buy shares of fantastic companies at reasonable prices. Then, hold on to those stocks for at least five years and watch the returns add up.
You don't have to be rich to get started. For example, if you can only set aside $2,170 that won't be needed to pay the bills over the next few years, you could pick up 10 shares each of Universal Display (OLED +0.37%) and Coinbase Global (COIN 6.97%). And if you can only spare one-tenth of that sum, you could still get started with one share of each stock.
These two stocks have recently fallen from much higher share prices, opening a buying window for savvy investors. And they are both excellent companies with stellar long-term growth prospects.
Let me show you why Universal Display and Coinbase are superior stocks to buy right now.
NASDAQ: OLED
Key Data Points
Growth, value, or dividends? Choose all three
Universal Display is the research company behind the organic light-emitting diode (OLED) screens found in most mid-range and high-end smartphones nowadays. The company collects patent-license royalties and resells the materials needed for building OLED screens, and the payments are typically based on the total area of OLED panels its clients create and sell to phone makers and other gadget builders.
The same technology is finding its way into much larger TV screens these days, and one big-screen TV set with a large OLED panel contributes as much to Universal Display's revenue streams as hundreds of smaller smartphone screens. Automakers are also finding places to use flexible, good-looking, and power-frugal OLED screens in their latest vehicles. Oh, and Universal Display is working with several consumer lighting specialists to develop and commercialize OLED-based lighting panels. Furthermore, the company is preparing to roll out a more complete set of phosphorescent OLED solutions to replace small-molecule and polymer OLED components.
To support this groundswell of market applications, many of Universal Display's direct customers are investing billions of dollars in larger and better OLED manufacturing facilities. When these panel-building plants get going over the next couple of years, economies of scale should bring down OLED prices for the consumer and drive this technology even deeper into the mainstream market.
So Universal Display offers tremendous shareholder value in the long run. Sales are skyrocketing and the company is generating richer cash profits than ever, even in today's unstable market environment. Yet the stock price fell 40% over the last year and now stands closer to it 52-week lows than annual highs. And don't forget about Universal Display's respectable and rapidly rising dividend payouts, which amount to a 1% yield today.
This outstanding stock is a bargain right now, and it's wise to pick up a few shares at these deeply discounted prices.
NASDAQ: COIN
Key Data Points
Priced for absolute disaster, poised for years of high-octane growth
Cryptocurrency trading platform Coinbase Global may look like a risky investment at first glance. The company's fortunes are tightly bound to the volatile crypto market, where fortunes can be made in a hurry and lost even faster.
Coinbase's trailing earnings are currently negative due to falling crypto prices in the last two quarters. In addition, transaction-based revenue fell 66% year over year in the recently reported second quarter and the dollar-based value of all assets held by the platform decreased by 47%. As a result, Coinbase recorded a non-cash impairment charge of $377 million related to lower crypto asset values in the second quarter.
That's enough to send traditional value investors running for the hills. They don't want any part of this high-risk operation and its unpredictable bottom-line results.
However, the company's cryptocurrency risks are often misunderstood. Even though Bitcoin (BTC 1.03%) prices fell from $47,700 to $20,000 in the first half of 2022 and Ethereum (ETH 0.10%) took a 71% price cut over the same period, Coinbase's operating expenses only increased by a much softer 37%. In addition, the company saw 9 million active users per month in this report, up from 8.8 million a year ago. And Coinbase stands on a robust financial platform, with $6.7 billion of cash and cash equivalents balanced against just $3.4 billion of long-term debt.
This company can hardly wait for regulators to set up a firm framework for taxation and transaction rules in the crypto market. Some investors worry that the governmental rulebook may be too draconian, but the truth is that even the toughest of all possible systems would improve today's unstructured uncertainty. Moreover, deep-pocketed institutional investors such as banks and hedge funds are likely to pour untold billions of dollars into the crypto market when the regulatory questions have been settled, and that's when Coinbase's golden age should start.
You don't have to rush into this stock, since those regulatory actions could take years to set in motion. However, the stock is on fire sale due to the recent crypto downturn, which some investors incorrectly saw as a deal-breaking disaster for Coinbase. Share prices sit 75% below last November's 52-week highs, including a 63% price cut in 2022 alone. If you see any long-term value in cryptocurrencies at all, Coinbase should look like a no-brainer buy today.
If you have $2,170 you won't need to meet basic needs in the foreseeable future, it's an excellent idea to buy a few shares of Coinbase and Universal Display right now. You can enjoy their fantastic long-term business prospects at bargain-bin prices.
