Given the extreme volatility the market has seen this year, you might be wondering whether it's still the right time to invest in the stock market. The short answer is, it depends. If you're struggling to put money toward your nest egg and/or your emergency fund, it might be wise to work on shoring up those areas before you invest more cash in stocks.
On the other hand, if you have cash to invest that you don't expect you'll need soon, it's always an opportune time to invest in great stocks, and the current market environment is no exception. When you have a minimum investment horizon of three to five years for any stock you buy, recent market events shouldn't deter you from continuing to build your portfolio.
On that note, if you have $5,000 to invest in the stock market right now, here are two fantastic stocks to consider.
1. Abbott Labs
Healthcare stocks are a wise place to park your cash in any market, bull or bear. Abbott Laboratories (ABT 0.55%) is one of my favorites for a few reasons. The company boasts an incredibly diversified portfolio featuring a broad selection of therapies, products, and devices that people need at any given point in time, regardless of what's happening with the market or economy at large.
These include a robust lineup of branded generic medicines targeting everything from bowel to respiratory to nervous system disorders, as well as household name nutrition products like Ensure and Pedialyte, and cardiovascular devices like surgical valves and pacemakers. Abbott is also a leader in diabetes care with its continuous glucose monitoring system FreeStyle Libre, the third version of which was recently cleared by the FDA. Sales of the company's FreeStyle Libre systems surged 25% in the most recent quarter alone.
The fact that Abbott has a foothold in so many sectors of the healthcare industry gives it a distinct competitive edge and has helped it continue to generate impressive financials. In the most recent quarter, Abbott reported overall organic sales growth of 14% year over year, along with net earnings up 70% from the year-ago period.
Another reason to consider Abbott if you're looking for ways to generate passive income is its long-standing tradition of paying and raising its dividend. The company has boosted its dividend every year for 50 years and counting, which makes it a Dividend King, with a current yield of 1.7%.
According to a study by the Information Insurance Institute, roughly 70% of families in the U.S. own a pet, which comes to about 91 million households. Meanwhile, the same study showed that just 3.9 million pets were insured as of 2021. Bear in mind, these numbers only encompass the U.S. alone. The pet insurance market is a multi-billion dollar industry, set to witness growth of nearly 17% CAGR between 2022 and 2030. What does this all boil down to? A fast-growing market that is considerably underpenetrated.
That's great news for Trupanion (TRUP 12.95%), one of the leading pet insurance providers in the world. Trupanion offers coverage for pets across North America, Australia, and Puerto Rico. The company has become a mainstay for pet owners, reimbursing 90% of covered veterinary costs with no payout limits for insured cats and dogs, including everything from sudden injuries or illnesses to breed-specific conditions.
Trupanion's proprietary software reimburses vets directly to make the process more seamless for pet owners, and all coverage is provided under the single plan that Trupanion offers, with premiums billed as a monthly subscription.
Trupanion's highly sticky business model has allowed it to post 20% or more revenue growth for 59 quarters straight. As of the last quarter, the company reported 1.3 million enrolled pets and a 98.7% monthly customer retention rate. In the most recent quarter, revenue actually jumped 30% year over year, while total enrolled pets climbed 32%.
In my opinion, Trupanion's robust foothold in the pet insurance space, its strong customer loyalty, and the still highly untapped market in which it operates are all excellent reasons to consider this stock as a long-term investment.