Stock market dive: 5 unstoppable stocks on sale to buy now and hold forever

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What a difference a year makes.

Last year, the reference S&P500 fell by no more than 5%. Meanwhile, in 2022, the iconic S&P 500 Dow Jones Industrial Averageand technology driven Nasdaq Compound all entered correction territory with double-digit percentage declines. The latter is mired in a bear market with a recent peak down of around 30% since mid-November.

While bear market declines can be disconcerting and tug at investors’ emotions, the story is abundantly clear that buying during these big downturns is a smart move. This is because every notable decline in history has ultimately been put in the rearview mirror by a bull market rally. In other words, bargains abound for patient investors.

Image source: Getty Images.

The recent stock market slump has exposed a number of innovative and unstoppable stocks that are up for sale. What follows are five such unstoppable stocks to buy now and (ideally) hold forever.

Intuitive surgery

The leading developer of robotic-assisted surgical systems is the first unstoppable discount stock that can be bought now and never sold. Intuitive surgery (ISRG 0.43%). The company’s shares are 39% below their all-time high, reached six months ago.

What makes Intuitive Surgical so special is the company’s market dominance and operating model. Regarding the former, it has installed 6,920 of its da Vinci Surgical Systems in hospitals and surgical centers around the world over the past 20 years. Not only are none of Intuitive’s competitors even close to that install figure, but given the large initial investment associated with da Vinci systems ($0.5 million to $2.5 million), as well as the training provided to surgeons, clients tend to remain clients for a long time. weather.

As for Intuitive Surgical’s operating model, it is designed to grow operating margins at a faster rate than sales over time. During its early years, the company generated most of its revenue from the sale of da Vinci systems. Unfortunately, these are complex and expensive systems to build, which means the margins associated with selling them are only mediocre. But as more and more systems were installed, the instruments and accessories sold with each procedure, along with maintenance, became the lion’s share of Intuitive’s revenue stream. The margins associated with these categories are considerably higher.

Da Vinci only scratches the surface in thoracic, colorectal and other general soft tissue surgical indications. This gives Intuitive Surgical an incredibly long double-digit growth track.

A person using a banking app on their smartphone.

Image source: US bank.

American bank

Although banking stocks aren’t traditionally considered “unstoppable”, the regional banking giant American bank (USB -0.06%) could change your tune.

The biggest blow to bank stocks is that they are cyclical. This means that when recessions and economic downturns hit, banks typically see an increase in delinquencies and loan write-offs.

But it’s a two-way street. Although recessions are inevitable, they do not last very long. In comparison, economic expansions last disproportionately longer than recessions. Buying bank stocks like US Bancorp allows investors to take advantage of these long periods of economic expansion and win the long-term numbers game.

On a more company-specific basis, arguably no major bank has done a better job of promoting digital banking than US Bancorp, the parent company of the more familiar US bank. At the end of February, 81% of its customers were digitally active, with 65% of all loan sales being made online or through a mobile app. The latter is up 20 percentage points since the start of 2020. Digital transactions are significantly cheaper for banks than face-to-face or telephone interactions. Thus, US Bancorp’s digital push allows the company to reduce costs and improve operational efficiency by consolidating its branches.

At around nine times Wall Street’s earnings forecast for the year, US Bancorp is heavily discounted and ripe for the picking.

A smiling Starbucks barista wearing the company's signature green apron.

Image source: Starbucks.

Starbucks

A third discounted but unstoppable stock that investors can buy now and hold forever is the coffee chain. Starbucks (SBUX 2.03%).

While Starbucks has no shortage of headwinds (e.g., organizing efforts, soaring coffee prices, and COVID-19 lockdowns closing some stores in China), it is a company that has weathered with success of many stock market recessions and corrections over the years.

The incredible loyalty of its customers is perhaps the most important advantage of Starbucks. No inflation or price hikes scared off the company’s loyal base (myself included). This should allow Starbucks to outpace even historically high domestic inflation.

To add to that point, the company’s active Rewards members are an army unto themselves – 26.7 million people, as of April 3, 2022. Rewards members are more likely to order ahead and save their information payment stored on their smartphones. In other words, they help Starbucks stores become more efficient by moving lines faster.

The company’s innovation cannot be neglected either. Promoting healthier food options and redesigning drive-thru panels to suggest high-margin food and drink pairings should drive long-term disaggregated returns for shareholders.

Warren Buffett at his company's annual meeting of shareholders.

Image source: The Motley Fool.

Berkshire Hathaway

Look up the definition of “unstoppable” in the dictionary, and there’s a chance you’ll find a picture of Berkshire Hathaway (BRK.A 0.10%)(BRK.B -0.03%) CEO Warren Buffett. Since becoming CEO of Berkshire in 1965, Buffett has driven his company’s Class A shares (BRK.A) to an average annual return of 20.1%! In other words, investors have doubled their money, on average, every 3.6 years over the past 57 years.

One of the keys to Buffett’s continued success is his focus on investing in and acquiring cyclical companies. As noted, periods of economic expansion are much longer than periods of slowdown. Rather than trying to guess in vain when a recession might come, Buffett has loaded Berkshire Hathaway’s portfolio with companies that can thrive on the natural expansion of the US and global economy.

The Oracle of Omaha’s love of dividend-paying stocks has also been key to Berkshire’s success. Companies that pay a regular dividend are generally profitable, proven, and have transparent growth prospects. In short, these are exactly the type of companies that we expect to increase in value over time.

Based on a number of recent investments, such as the oil giant Chevronwhich has a base annual payment of $5, Berkshire Hathaway looks set to collect well over $5 billion in passive income over the next 12 months.

History has shown time and time again that riding in Buffett’s wake during takedowns is a lucrative move.

A person typing on a laptop inside a cafe.

Image source: Getty Images.

Metaplatforms

Last but not least, there is an unstoppable FAANG stock Metaplatforms (FB 1.18%)which is trading at its lowest valuation since becoming a public company in 2012.

Like Starbucks, Meta has a long list of short-term challenges, including AppleiOS privacy changes, increased metaverse spending (which is hurting earnings), and growing fears that the US is entering a recession. However, none of these headwinds are changing the company’s strategy or hampering its double-digit growth potential.

Meta’s competitive advantage is evident when looking at its social media assets and active users. Facebook, Instagram, WhatsApp and Facebook Messenger are consistently among the most downloaded social sites each year. Additionally, Meta ended March with 3.64 billion monthly active users across its app family. This means that more than half of the world’s adult population visits a Meta-owned asset every month, and this is precisely why advertisers will pay a premium to reach these users.

Something often overlooked with Meta is that the company hasn’t even significantly monetized all of its core assets. Almost all of its advertising revenue comes from Facebook and Instagram. If and when CEO Mark Zuckerberg pushes monetization of Facebook Messenger and WhatsApp, the company’s growth and operating cash flow can kick into high gear.

Given Meta’s incredible operating cash flow and aggressive investments in the Metaverse, a P/E ratio of 14 for the year ahead makes it too attractive for buy-and-hold investors.

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