The stock market is as unpredictable as it comes, and volatility is just as much a part of it as stocks themselves. However, amid the chaos, there are certain stocks you can feel comfortable holding throughout the inevitable ups and downs. Here are three explosive stocks to look into right now.
Explosive doesn't mean you should expect your investment to double in the near future, but each of these companies is positioned to be a long-term staple in your portfolio. From growth to blue chip to dividend, each one plays a distinctive role.
1. Snowflake
Snowflake (SNOW +0.80%) is a data warehousing platform that's become one of the gold standards of the big data industry. Its platform allows companies to easily combine and analyze cloud data from major cloud services, and its customer growth and retention seem to speak for themselves.
NYSE: SNOW
Key Data Points
At the end of its fiscal year (FY) 2023 (ended Jan. 31), Snowflake had 330 customers who spend over $1 million annually with the company -- more than four times the 80 it had at the end of its FY 2021. Its customers who spend over $20 million annually jumped to 10, up from three and one in FY 2022 and FY 2021, respectively.
The company isn't just adding customers at an impressive rate -- it's adding high-quality customers with large wallets.
Source: Snowflake 2023 Investor Day presentation. TTM = trailing 12 months.
Snowflake predicts its total addressable market (TAM) will grow to around $290 billion by 2027. If that happens, that'll be more than double its TAM in 2022. There's no reason to believe Snowflake can't capitalize on this growth opportunity.
A growth spark in the near term should come from Snowflake's recently announced partnership with Nvidia that's aiming to help companies create and customize generative artificial intelligence (AI) apps (think ChatGPT and Midjourney) using their own data. Combining Snowflake's data expertise with Nvidia's graphics processing units (GPUs) should make for a powerful pair going forward.
2. Visa
If you want to learn about competitive advantage, look no further than payment processing giant Visa (V +0.21%). When it comes to merchant reach and payment networks, no competitor comes close to Visa.
NYSE: V
Key Data Points
Think about the times you've been somewhere that accepted Visa but not Discover or American Express. Now think about the times you've been somewhere that accepted Discover or American Express but not Visa. Chances are the latter has rarely happened. That's because of Visa's 100 million-plus merchant locations.
Visa's revenue growth has been impressive, but its gross profit margins are the real story.
Data by YCharts.
Many of the investments it took to expand Visa's reach were made years ago, so the company is reaping the profits without spending much in the present. It's not like they're selling a physical product that requires spending to make it before selling it. Visa's roughly 80% margins are top-of-the-line.
In an industry that depends a lot on volume and reach, Visa's moat is a recipe for sustained success for a long time. And considering how much of the world still operates largely with cash, there are plenty of growth opportunities for Visa as the world's economies become more adapted digitally.
3. Enbridge
Enbridge (ENB +0.87%) is a Canadian energy company that transports and distributes natural gases and crude oils through its large pipeline network across North America. While its stock price doesn't have the growth prospects of Snowflake or Visa, its impressive dividend yield and track record make it an appealing choice for investors seeking solid investment income.
NYSE: ENB
Key Data Points
Enbridge's current dividend yield is around 7.2%, more than four times the S&P 500's 1.5% yield. The company increased its annual dividend for 28 consecutive years, and this is unlikely to change anytime soon, considering its balance sheet and consistent cash flow.
The company only pays out between 60% to 70% of its distributable cash flow in dividends, which leaves room for plenty of investments. That should intrigue investors because a lot of Enbridge's future growth will depend on how well it can expand via acquisitions. The company made two in the first quarter of 2023 alone.
Enbridge has met financial projects for 17 straight years and has a CA$17 billion ($12.8 billion) project backlog that should keep revenue growth headed in the right direction. This backlog includes 15 projects across all four of Enbridge's businesses: liquid pipelines, gas transmission, gas distribution & storage, and renewables. It's not a pretty business, but it's a lucrative one.
