History indicates a big decline is coming. Here are 3 stocks that will buck the trend
Since the markets reached their bear market low 14-months ago, stocks have been on a historic rise. Consider this – since 1980 the S&P 500 has averaged an annual return of 11%, including dividends. Comparatively, since its nadir on 23rd March 2020, the market has gained as much as 88%.
History suggests that this is unsustainable.
For instance, the last previous eight bear markets have featured at least one double-figures percentage drop in the S&P 500 within three years of finding a bottom. In total, there have been 13 corrections in the 3 years following the last eight bear markets. This shows that it’s common for the rebound from a bear-market bottom to be uneven.
While this is worrying, lessons are always learned from history, and by positioning your investments wisely there are always opportunities during a market crunch.
Here are my three go to stocks for when the next crash hits.
Amazon has got to be a core holding in any investor’s portfolio. Massive market dominance, outstanding long-term growth prospects, and exceptional cash flow growth have pushed it to the very top of investor’s wishlists.
There are no signs of its market grip diminishing either. According to a recent report from eMarketer, Amazon is expected to see its share of U.S. eCommerce grow to 40% by the end of this year. To put this into context, this means that for every dollar spent online in the U.S., 40 cents go to Amazon.
Let’s not forget their streaming service either. The pandemic boosted uptake in all the major streaming services including Amazon, and while this trend may slow, this is an income stream that isn’t going anywhere.
2 Vertex Pharmaceuticals
Vertex Pharmaceuticals are a biotech company with a neat trick – They make money. Many biotech companies are money-losing enterprises, shored up with a promise of big things lying just over the horizon.
This isn’t the case with Vertex. The treatments it has developed for the treatment of cystic fibrosis are at the center of the firm’s success. Its latest drug, Trikafta, targets the most common form of the disease and this means that 90% of sufferers can benefit from the drug. In its first full year of sales, it brought in nearly $4 billion.
It also has a large cash pile to help fund future developments and acquisitions.
Vertex is an absolute steal.
3 Innovative Industrial Properties
The cannabis market in the U.S. is exploding. Marijuana sales growth is expected to be 21% per annum from 2019 – 2025. In financial terms, this equates to potential sales of $41 billion annually by the middle of this decade.
Innovative Industrial Properties (IIP) is a company with its finger on the pulse of this market. Their modus operandi is to buy processing and cultivation properties and lease them out to producers.
As of the time of writing, IIP owns 71 properties with a total of 6.5 million square feet of rentable space across 18 states. Their entire portfolio is rented out with an average lease time of over 16 years.
Like it or loathe it, cannabis is here to stay, and the market forecasts are already attracting the smart money.