Do you have $ 5,000? 5 brand actions that will make you richer in July (and beyond)
Last week, the three major U.S. stock indexes did what they’ve apparently been doing consistently throughout the year: hitting new highs. Yet despite the all-time records, history conclusively shows that now is still a good time to put your money to work in the market.
The big question, as always, is, “Where to invest? The best answer may well be branded companies. While branded stocks may not offer the growth potential of small-cap companies, you will often sleep better at night knowing that you own stakes in dominant, profitable, proven companies.
If you have $ 5,000 in cash ready to go to the stock market, which won’t be needed to cover bills or emergencies, the following five brand stocks have all the tools you need to make you richer in July, and probably fine. beyond.
While it’s unlikely to repeat the over 1,000% gain it has made for shareholders over the past decade, the payment processor Visa (NYSE: V) is a branded company that constantly enriches patient investors.
Visa is a cyclical business, which means it is not immune to the inevitable economic downturns. If individuals and businesses cut back on spending, it will weigh on Visa merchant fees. However, the US and global economy spends a considerably longer period of time growing than contracting. While recessions are measured in months or quarters, expansions often last for years or even a decade. It’s a virtual certainty that U.S. and global gross domestic product will grow over time, which helps Visa’s business model.
Also, consider that Visa is strictly a payment processor and does not lend. Not lending means not having to set aside money when credit defaults increase during a recession. This is one of the main reasons Visa is recovering from economic downturns so quickly.
Since the majority of global transactions are still done in cash, Visa has a very long track to expand its infrastructure into new markets. It’s a branded stock that long-term investors can comfortably buy without worrying.
Speaking of branded companies with potential to define and forget, the social media superstar Facebook (NASDAQ: FB) is a powerful growth and value stock that can offer its shareholders for a long time.
When the curtain closed in the first quarter, Facebook had 3.45 billion monthly active users – 2.85 billion on its eponymous site and 600 million additional unique visitors on Instagram and / or WhatsApp. In one context, this represents 44% of the world’s population.
Advertisers are well aware that there isn’t a social media platform on the planet that comes close to reaching so many eyeballs every month, and will therefore pay whatever it takes to get their message across. in front of users. Unsurprisingly, Facebook’s ad revenue grew by a double-digit percentage in 2020, even at the height of the coronavirus crash.
As I have already pointed out, this is a business model that has not even taken a step further. Despite being poised to generate over $ 101 billion in ad revenue this year, only its namesake site and Instagram are significantly monetized. Once Facebook Messenger and / or WhatsApp are monetized, Facebook will benefit from a further increase in sales and profitability.
Don’t forget virtual reality (VR) or augmented reality either. Facebook is the originator of the fast growing Oculus VR devices and may well become a leader in this high growth space.
Ford Motor Company
Automotive stock Ford Motor Company (NYSE: F) is another brand that can enrich investors. Ford has gone far beyond the problems that threatened the company more than a decade ago, and is seeking to capitalize on what may be the biggest growth catalyst the auto industry has seen in decades: the electrification of global automobiles.
In May, Ford confirmed its commitment to electric vehicles (EVs) by announcing its pledge to spend more than $ 30 billion by 2025. The intention will be to market 30 electric vehicles globally by the middle of the decade, as well as investing in the development and manufacture of its own batteries. Early indications of sales for the all-electric Mustang Mach-E and reservations for the all-electric F-150 Lightning are promising.
We might think of the United States when Ford is involved in the conversation, but China also represents a huge opportunity for Ford. It’s the world’s largest auto market, and by 2035, it’s estimated that half of all new vehicle sales will be powered by some form of alternative energy. Market share is absolutely to be gained in China.
If you need to be convinced that Ford is worth the investment, know that its F-Series pickup trucks have been the best-selling vehicle in the United States for 39 straight years. It is not a typo. Thirty nine consecutive years. It’s a performance you can count on.
Branded value stocks can also make investors richer in July and beyond. This is why the pharmacy chain CVS Health (NYSE: CVS) may be worth the investment.
One of the most intriguing things about CVS has been the company’s desire to grow vertically. In 2018, it acquired the insurance giant Aetna. While the deal may have been a bit of a headache at first, it is designed to generate significant cost synergies over time, as well as to increase CVS ‘organic growth rate. It also doesn’t hurt that Aetna’s over 20 million insured members now have a reason to stay in the CVS Health ecosystem.
Beyond acquisitions, CVS seeks to increase sales and retain the base by opening approximately 1,500 HealthHUB health clinics across the country. The aim of these clinics is to put chronically ill patients in contact with doctors or specialists who can help them treat their illness. Ultimately, the rapport CVS establishes with these people could lead to repeat visits to its higher margin pharmacy.
It should be emphasized that health stocks are also generally defensive. No matter how good or bad the US economy is, we don’t have control over when we get sick or what disease (s) we develop. This means fairly stable demand and cash flow for large healthcare companies like CVS.
The fifth and final branded stock that can make you much richer in July and beyond is (drum roll) Amazon (NASDAQ: AMZN). I know, no points for originality.
Amazon has what I would call a virtually insurmountable competitive advantage in the online retail space. According to an April report from eMarketer, it will be responsible for about 40.4% of all online sales in the United States in 2021. The next closest competitor is more than 33 percentage points behind Amazon. This total dominance has helped the company sign up more than 200 million people worldwide for a Prime membership. The fees for these memberships help the company offset its low retail margins.
Additionally, Amazon is a leader in cloud infrastructure services. Amazon Web Services (AWS) controlled about 32% of global cloud infrastructure spending in the first quarter, per Canalys. Margins associated with cloud infrastructure services revolve around retail margins several times. So, AWS is Amazon’s ticket to significantly higher cash flow and profitability in the years to come.
Amazon may be near an all-time high, but it’s safe to say it will be heading for $ 10,000 by the middle of the decade.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.