Economy
3 great stocks to buy when the stock market crashes
When the curtain finally closes, 2020 will almost certainly be one of the most volatile years in history for Wall Street and investors. Uncertainty Caused by the 2019 Coronavirus Disease (COVID-19) Pandemic Initially Set the Benchmark S&P 500 declined 34% in the first quarter. This was followed by the strongest sharp rally ever, with the S&P 500 rising to new highs in less than five months.
But just because the stock market has completed a full turn in six months does not mean that volatility is gone.
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The market crash last Thursday, which saw the S&P 500 shed about 126 points, was the eighth largest one-day one-point drop in history. Of course, keep in mind that a 3.5% drop is not one of the worst days for the stock market. The move, however, sends a clear signal that significant economic uncertainty remains and that the stock market could crash without warning.
While a stock market crash can be unnerving in the very short term, this is really fantastic news for long-term investors with dry powder at the ready. This is because every stock market correction in history has ultimately been erased by a bull market rally. If investors choose to buy high quality companies when the stock market goes up, they usually win in the long run.
While it’s too early to tell whether last week’s turbulence will turn into something akin to a full-blown correction, here are three great stocks to consider buying when the stock market does crash.
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Teladoc Health
Prepare your sticks because this time to beat the drum on the telemedicine giant Teladoc Health (NYSE: TDOC), again.
beauty health care stock is that even if they are caught in an emotional vortex that is a stock market crash, the demand for their products and services remains largely unchanged. Since we don’t have the ability to choose when we get sick or what diseases we develop, the cash flows for healthcare companies are fairly stable no matter what happens in the stock market.
More specifically for Teladoc, he saw incredible growth in demand for virtual doctor visits… Yes, COVID-19 played a key role in Teladoc’s growth in 2020, with visits during the quarter ending June increasing by an astounding 203% to 2.8 million. But that doesn’t mean Teladoc didn’t grow like a weed long before the coronavirus pandemic changed our way of life. The pursuit of convenience and precision medicine boosted Teladoc’s revenue from $ 20 million a year in 2013 to $ 553 million in 2019, well before COVID-19 was declared a pandemic.
Telemedicine is an essential component of the precision medicine of the future. This frees up more time for consultation between the patient and the doctor, provides consultation flexibility for both parties, and is actually cheaper for insurance companies than visiting an office. While we’re not going to see personal trips to the doctor stop, the runway for virtual visits is huge, and Teladoc is still just scratching the tip of the iceberg when it comes to its potential.
One final note: Teladoc is in the process of merging with application health signal provider Livongo Health (NASDAQ: LVGO) in the deal with cash and stock. Livongo uses mountains of patient data and artificial intelligence to send advice and nudge patients with chronic conditions to help them achieve sustainable behavioral changes. This works wonders for the company’s diabetes participants, and Livongo has already gone beyond profitability despite only owning 1.2% of the US diabetes market. After a complete merger, this company will become a precision medicine center.
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AT&T
For the more conservative investors who are not overly interested in the short-term volatility that Teladoc can bring, let me suggest buying the telecom giant. AT&T (NYSE: T)…
When you think of essential goods or services, the idea to buy food, water, or pay for electricity or natural gas probably comes to mind. But what about our addiction to mobile phones? As technology has improved, access to smartphones and wireless technology has lowered costs, making mobile phones something of a basic service for many adults in this country. Since AT&T’s business model is primarily subscription-based, the stock market crash is unlikely to have much, if any, impact on wireless subscribers.
It should also be noted that AT&T has been rolling out its first wireless infrastructure upgrades in about ten years. This transition to 5G networks won’t happen overnight, and consumers won’t update their wireless devices right away. However, this investment in faster download speeds will inevitably lead to a multi-year technical update cycle that powers AT&T’s highly profitable wireless segment…
Investors shouldn’t overlook the company’s streaming capability either. As the DirecTV subsidiary continues to drain subscribers through cutting the cord, AT&T is counting on its streaming offerings, HBO Max, and its own networks (TNT, TBS and CNN) to attract paying customers. The purpose of the guide is to double the number of subscribers to streaming channels worldwide on HBO Max and HBO (cumulatively) to about 80 million by 2025.
Best of all, patient investors will receive a dividend yield of 7% with AT&T, this is one of the highest and safest returns you will find. If volatility is making your stomach spin, AT&T is a great place to keep your money.
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Visa
Another wise idea when the stock market crashes is to buy a payment intermediary. Visa (NYSE: V)…
As you can imagine, the COVID-19 pandemic has damaged consumer spending and pushed the U.S. economy into its first recession in 11 years. This is bound to reduce the amount of money consumers spend, ultimately hurting merchant fees that intermediaries such as Visa charge.
But here’s another way to look at this data. During the Great Recession, Visa saw only one year-over-year (2009) decline in terms of the gross dollar value passing through its payment network. Between 2009 and 2018 Visa’s US credit card market share by purchase volume increased more than 9 percentage points to 53%, and the volume of purchases on his network more than doubled from $ 764 billion to $ 1.96 trillion. Visa is the preferred payment operator in the world’s # 1 economy, which is dependent on consumption.
Visa also acts exclusively as an intermediary for cashless payments… While some of its data processing partners also act as lenders, Visa does not lend money. This may seem like a bad choice, given the potential to double income streams during periods of economic growth. However, this means Visa is not directly affected by loan delinquencies during inevitable periods of economic downturn or recession. When there is no need to set aside loan loss provisions, Visa’s margin is stable at 50% or higher.
In addition, Visa has a ridiculously long runway for growth… Most of the world’s transactions are still in cash, giving Visa a great opportunity to attract new merchants and wage a war on cash in underbanked regions such as the Middle East and Africa.
If the stock market crashes, Visa is a great stock to consider.
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