The simplest strategy for amassing wealth and building a rock-solid retirement portfolio is to buy stock in excellent companies and hold them for the long haul.
Whether you’re looking to add to your portfolio or are just getting started, our list of the best stocks to buy now will help you get on the path to investing success.
You see, investors are too often concerned over when to buy and when to sell. Owning the right stocks will beat timing the market every time.
The COVID-19 crash last year is a perfect example…
Nobody knew how long the decline would last. In fact, most analysts thought the drawdown in stocks would last a lot longer than it did.
But we knew investors who continued to buy the best stocks on the market would be handsomely rewarded.
And that’s turned out to be correct.
That’s why we weren’t worried about trying to time the bottom. Since it’s near impossible to get that right, we simply recommended buying the best stocks on the market and holding them over the long term.
The returns we’ve helped our readers generate speak for themselves:
Now that the worst of the coronavirus is over and markets are nearing record highs, investors are concerned with the risk of buying at the top. After all, the economy is far from being fully recovered, and many risks remain, even as stocks near record highs.
But the strategy is the same. Owning high-quality stocks over the long term beats trying to time the market.
The best part is, we’re still finding opportunity in a select group of stocks with similar return potential today.
To get you started, here's our list of the best stocks to invest in right now.
They've each been picked by Money Morning's team of market experts, each with decades of trading and investing experience.
Our experts don't work for big banks or brokerage houses. They aren't money managers hoping to skim off a percentage of your portfolio. They are offering their experience and expertise directly to our readers because they are sick of Wall Street parting everyday folks with their money.
They've pinpointed these seven stocks as having outstanding short-term and long-term profit potential.
This could be the only chance you have in your life to get into great companies at such low prices. Let's get started.
Who They Are: Shopify Inc. (NYSE: SHOP) solves one of the biggest problems facing businesses in the digital age by supplying the technology for selling goods and services. Its mission statement boldly claims it is “making commerce better for everyone.”
Shopify is most known for offering payment processing tech for online sellers. For startups and entrepreneurs who are just getting started, the process of actually selling and getting paid online can be tricky. Not only do you need a digital shopping cart that lets customers stack up items they want to buy, but you have to calculate sales tax, shipping costs, and securely accept their credit card payment. This can be daunting for many companies dipping their toes into e-commerce.
Shopify solves all that with a streamlined approach. Now anyone can set up a digital store in a matter of minutes. From shopping carts to secure checkout to creating the online store itself, Shopify has everything solved. Plus, it even offers payment solutions for physical stores, so companies don’t have to deal with two different systems.
But Shopify doesn’t stop there. It offers solutions for branding and marketing to help businesses not just get paid for their products, but to grow their sales too. No longer do entrepreneurs and businesses need to become experts in everything from e-commerce programming to marketing just to get a store online, or hire a team of experts to do it - they can use Shopify as a turnkey solution.
Why Now Is the Time to Buy: You can see why Shopify is an exciting business, but it’s more than a good idea. It’s an incredibly profitable idea.
Last year, Shopify raked in a staggering $2.9 billion in revenue. With a net margin of 11%, it took in $320 million in profits. That was the first year of profitability for the firm, and it certainly won’t be the last. That’s why it makes sense to board this train now, before it really takes off. Shopify has only been public since 2015, so this is still a young company. With it already achieving profitability, its future is very bright.
Why SHOP Is a Buy: The E-Commerce Boom Is Only Getting Started
The e-commerce sector grew by 50% between 2017 and 2020, making it one of the hottest tech sectors on the market. But the COVID-19 pandemic made it an even more explosive force. While you might think it will slow down as the economy gets closer to returning to normal, e-commerce growth won’t be slowing down.
The COVID-19 pandemic forced people around the world to stay in their homes and away from crowded public spaces, like malls and big box retailers. That ignited a boom in the already fast-growing e-commerce sector.
E-commerce sales spiked by 28% in 2020. Growth between 2018 and 2019 was 12%, for comparison.
That sent e-commerce stocks skyward over the course of the pandemic. The Amplify Online Retail ETF (IBUY) jumped 140% higher since the start of 2020. Even a massive company like Amazon saw its share price nearly double.
But now that vaccines are widely available in the United States and businesses are reopened, investors are turning their attention elsewhere.
That could be a big mistake.
While the catalyst poured gasoline on the fire, e-commerce growth isn’t slowing down. The sector is expected to grow another 30% higher over the next four years according to Statista.
And that’s nothing compared to the global digital payments market. Grandview Research predicts it will boast a compound annual growth rate of an absurd 19.4% from this year to 2028. That means it could grow from $58.3 billion in 2020 to $202 billion by 2028.
Why SHOP Is a BUY: Real Growth Potential
With the digital payments sector potentially growing 250% by 2028, you could capture a chunk of those gains by owning an ETF or a basket of e-commerce and digital payments stocks.
But by owning the right stock in this space, you won’t just get the average market return; you could get much, much more.
And Shopify is our top stock to lead the charge here.
It’s grown sales by an average of 62% over the last three years. That roughly translates to doubling its sales every 14 months. And with the e-commerce sector growing so fast, there’s little reason to see Shopify slowing down.
That’s why 96% of analysts currently rate the stock as a buy or hold right now. One Wall Street analyst projects Shopify shares will soar 112% higher by this time next year.
But our experts think Wall Street is being much too conservative.
Money Morning Defense + Tech Specialist Michael Robinson’s price prediction for Shopify is an astronomical $5,980 a share. That would be quadruple its roughly $1,500 price in July.
That might sound too good to be true, but his calculation is actually on the conservative side.
SHOP is averaging 178% annual earnings growth. To be safe, Michael cuts this rate by two-thirds, assuming an average growth rate of just 60%. At that growth rate, Shopify’s EPS will double twice in the next three years. That would push the stock to nearly $6,000 a share.
Why SHOP Is a Buy: It’s Amazon’s Supercharger
You might be wondering how a newcomer could compete with a behemoth like Amazon. The answer is simple: You join forces.
You see, Amazon isn’t content selling and managing its own products. It is aggressively expanding its third-party offerings by bringing in more businesses to sell products through Amazon’s site.
That means more products are available for Amazon customers and there’s less for Amazon to manage. It’s a win-win.
Over the last 12 years, the percentage of third-party sellers on Amazon has more than doubled. Today, 55% of merchandise on Amazon comes from third-party sellers, amounting to $178 billion dollars in third-party sales last year.
Take a look at some of the numbers coming out of Amazon. Last year, third-party sellers made over $3.5 billion in sales during Prime Day. This year, Amazon boasted that the 2021 Prime Day amounted to “the two biggest days ever” for third-party shops. Over 250 million products were sold by third-party sellers.
And as more businesses take their wares to Amazon, they’ll need Shopify’s suite of tools to manage payments, track packages, and run their shops.
Shopify isn’t competing with Amazon, it is supercharging Amazon.
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Who They Are: Adobe Inc. (NASDAQ: ADBE) is highly regarded for products like Illustrator for creating, editing, and managing graphics as well as Photoshop for managing and editing pictures.
They're products that Money Morning Defense and Tech Specialist Michael A. Robinson has been using for decades.
Like most technology companies, Adobe continuously updates its offerings. The company keeps them current with contemporary needs, like the work-from-home trend that’s now expected to be permanent for about 50% of companies even after the pandemic.
Why Now Is the Time to Buy: In a wild-and-wooly market like the one we're navigating now, focusing on a company whose products, services, and technologies you know, like, and use (even more when working from home) can give you one heck of a competitive advantage. Even as the economy changes and the vaccines lead to businesses reopening, companies with must-have products have only entrenched their footholds.
That's why Robinson loves the stock so much.
Why ADBE Is a Buy: It Knows How to Sell
Back in 2009, the firm quietly began moving from a "sales" model to a de facto "rental" model. This means users pay monthly fees on an ongoing basis to gain and maintain access to a range of products delivered via the Web, or "the Cloud." This business model is now commonly known as software as a service (SaaS), and it’s becoming the gold standard for a reason: Tech firms can make more revenue over the lifetime of their products, updating it incrementally, than trying to create and sell new products every few years.
The timing of this shift was perfect.
It's not just because the global cloud market is growing at 21.4% a year and will be worth $185.8 billion by 2024, according to KBV Research.
It's something far more fundamental. A well-run firm that uses the cloud to run its SaaS has two factors operating in its favor that hardware companies can only dream about.
The first is high profit margins. The second – which is even better – is recurring revenue: The money literally rolls in month after month after month.
The firm says that – as of the end of this year, when you add up of all its various services – its total addressable market will be $80 billion.
Over the past three years, Adobe has grown its sales an average of 24% annually, meaning the firm is doubling sales roughly every three years.
At that rate, sales could hit $21.3 billion by the end of 2023. By 2026, they could come in at a stunning $40.6 billion.
Why ADBE Is a Buy: Excellent Partnerships
Robinson is always on the hunt for well-run firms captained by top-notch leaders.
One way you can judge that is by looking at key partners. And Adobe is working closely with Microsoft Corp. (NASDAQ: MSFT), one of the world's very best cloud-services players – and a firm that itself made the jump from software publisher to the SaaS model.
Microsoft ranks No. 2 in cloud hosting behind Amazon Web Services. Back in December, Adobe and Microsoft unveiled a sweeping alliance. Adobe Experience Cloud and Adobe Document Cloud integrated with Microsoft's Dynamics 365, Office 365, LinkedIn, and Azure cloud infrastructure services.
The move gives Adobe access to 180 million of Microsoft's commercial customers. Adobe has said it's getting a "phenomenal response" for the Microsoft integration.
Why ADBE Is a Buy: This Stock Could Double Your Money
To find stocks that can jump 100% higher from when you buy them, you need to look at the firm's earnings, its earnings growth rate – and then calculate how long it will take to double profits.
By doing that, we can figure out how long – on average – it should take for the stock price to double, as well.
With Adobe, after a detailed review of its financials, Robinson projects earnings per share (EPS) will grow by an average 30% over the next three years.
This is a conservative forecast.
The fact is that – over the past three years – Adobe has grown its EPS at an average annual rate of over 30%.
It finished 2020 with EPS up 80%, from $6 to $10.83.
By inputting that number into his "doubling calculator" (an equation mathematicians refer to as the "Rule of 72"), we find that the stock should double in 2.4 years.
Who They Are: SolarEdge Technologies Inc. (NASDAQ: SEDG) is one of the world’s leading solar companies and our favorite way to play the explosive growth happening in the renewable energy space. Solar costs are now on par with fossil fuels, and the Biden administration is making renewable energy funding a priority. It’s a double catalyst for this exciting sector.
SolarEdge designs, manufactures, and sells direct current optimized inverter systems for solar installations. Solar simply won't work without them, and SEDG makes the best inverters on the planet.
In addition to inverters, the company has also developed a cloud-based monitoring platform to help manage energy consumption. This is a great development since it extends the company’s reach beyond manufacturing and into a service essential to solar power.
SEDG is one of the best pure solar plays because it sells its hardware and software to residential solar installations as well as commercial solar installations.
By keeping its addressable market as large as possible, SolarEdge is growing sales at a rapid pace… It's up 62% since 2019 and has averaged 86.3% over the last three years.
If it's able to keep that pace over the next three years, investors could really see some explosive gains from SEDG stock.
Why Now Is the Time to Buy: Renewable Energy Is the Future
When it comes to making money in stocks, it pays to spot trends early. Look no further than work-from-home stocks this year.
That's why we’re looking at the solar sector, which is downright unstoppable.
Renewable energy has major advantages over traditional energy sources. It’s not controlled by Middle East dictators. It doesn’t need to be shipped across the world or mined from under the ground. It can’t dry up, and it doesn’t pollute the environment.
The only thing that’s been missing has been the technology to make it efficient and affordable. That’s finally here. And it’s creating opportunities left and right. Just look at the money flowing into electric vehicle stocks right now.
In the case of solar power, there's still massive growth potential ahead.
Right now, over 60% of electricity generation in the United States is from fossil fuels, which means there's plenty of growth left for solar.
Even with the current 30% tariff on Chinese solar panels set in place in 2018, which was originally seen as a major setback given much of the manufacturing is outside of the United States, solar has continued to grow…
Take a look at how much solar usage has gone up in the last decade.
While this looks like we have added a lot of capacity, we still have a long way to go (with a lot of money to be made along the way).
In 2019, solar energy provided only 2% of total U.S. electricity. But we expect that will at least triple to 6%, and possibly quintuple to 10% by 2024.
On top of that, the economics have also gotten better. Solar costs have fallen 82% since 2010, making it a much more affordable form of energy.
As solar costs continue to fall, they'll continue to replace more expensive fossil fuels.
Why SEDG Is a Buy: The Biden Administration Is Prioritizing Solar
Solar power has been popular in Washington lately, and the Biden administration is no exception.
In May 2020, the Trump administration greenlit the largest solar project in the United States. The Gemini solar project in Nevada will be a $1 billion, 690-megawatt power plant with 380 megawatts of battery storage when complete.
During his campaign, President Joe Biden also promised to rejoin the Paris Climate Accord and get America's electric grid to be carbon-neutral by 2035.
The economic benefits of this changeover, in terms of job creation and GDP growth, could be substantial. But it will nevertheless require massive investments in wind, solar, hydro, biomass, and nuclear power.
While we have seen several solar plants built in the last few years, the Biden-Harris campaign promised to spend $2 trillion on renewable energy. Now that the COVID-19 relief package is passed, the White House and Congress are turning their sights on infrastructure spending. And solar could feature heavily.
Within this plan, they want to create a task force to push the install of 500 million solar panels to help reach a goal of 100% carbon-free electricity by 2035, a much quicker goal than the prior target of 2050.
Biden's program also calls for putting in 500,000 electric vehicle charging stations by the end of 2030 and shoring up tax credits for buying electric vehicles. The USPS already launched a $6 billion program to replace mail trucks with electric vehicles.
More to the point, the Biden administration may well create a national solar incentive or mandate similar to California's requirement that new homes be built with solar panels.
Even without that, analysts expect to see U.S. solar installations to grow by 42% from now through 2025.
And the most lucrative way to play this is SolarEdge. The inverters the company manufactures are absolutely critical for providing consumable solar power. And this company sells the best ones in the business.
Over the past three years, the firm has grown earnings by an average of 30%. At that rate, it's on pace to double in 18 months, not counting the impact of any new solar legislation out of Washington.
Who They Are: Constellation Brands Inc. (NYSE: STZ) is the beverage giant behind Corona beer, Ravenswood wine, and Svedka vodka. Since 2017, the company has been expanding into the legal cannabis market. And it's the best cannabis stock to buy before legalization becomes even more widespread.
Congress is already working on bills that would end the Schedule I designation for cannabis and laws that would end the federal prohibition of cannabis. This could lead to an explosion of opportunities for marijuana companies. Plus, even more states could be encouraged to legalize cannabis.
That’s part of the reason Constellation is such a great play here.
In 2017, Constellation Brands became the first Fortune 500 company to invest in legal cannabis, buying a $191 million stake in Canopy Growth Corp. (NYSE: CGC). Since then, it has upped its investment to more than $4 billion.
Its favorable position to capture much of the recreational cannabis market has analysts at the National Institute of Cannabis Investors (NICI) calling it a "stock to retire on."
Why Now Is the Time to Buy: Constellation Is a Powerhouse
Constellation is a powerhouse company you'll want to keep in your portfolio on a very long-term basis – it's only going to grow every year. Its beverage lineup alone makes it a great buy.
And as the market for cannabis-infused beverages opens up in Canada and elsewhere, its partnership with Canopy gives it a leg up now that cannabis-infused beverages are legal in Canada.
It's more than legalization fueling Constellation Brands' rise. There are three reasons this stock will be making shareholders a fortune…
Why STZ Is a Buy: Constellation Is Already an Outstanding Blue-Chip Company
While many cannabis companies are young startups without a proven track record, Constellation has already built a massively profitable empire with its beverage brands, averaging over $2 billion in profits each of the last four years.
The road to success wasn't always an easy one. Going back to the late 1980s, Constellation lost 70% of its value over three and a half years. But it bounced back in a big way in the 1990s, and it has since acquired some of the most recognized brands in beer, wine, and spirits.
Analysts at NICI have called CEO Bill Newlands and the controlling shareholders "the best management team of any company in any industry in the world."
Constellation also pays a dividend, which you won't get from any pure play cannabis stocks. The 1.4% dividend yield can help you ride out any turbulence to greater and greater wealth.
Why STZ Is a Buy: Canopy Is One of the Largest Growers in Canada
Constellation now holds a 38.6% percent stake in Canopy. So, an investment in Constellation is also an investment in Canopy, which is definitely to investors' advantage.
Canopy was already one of the dominant players in the Canadian medical cannabis market when Constellation made its investment. Canopy has the highest revenue of all Canadian marijuana companies. Now armed with a multibillion-dollar war chest, Canopy has made a slew of acquisitions all around the world.
That includes a deal with U.S.-based Acreage Holdings Inc. (OTCMKTS: ACRGF), which sets up a potential acquisition that will be triggered if the U.S. federal government legalizes cannabis. That could be closer than ever as Senate Majority Leader Chuck Schumer is proposing a bill that would do just that.
The move ensures that Canopy – and Constellation Brands – will be ready to pounce if the U.S. market opens up on a broad scale.
Canopy isn't limiting its scope to North America either. It has acquired cannabis enterprises in European countries as well, including Spain and Denmark. In May 2019, Canopy acquired the German company Cannabinoid Compound Co., or C3, the largest CBD-based pharmaceuticals company in Europe.
At this point, you might be tempted to buy shares of Canopy too. There's certainly nothing wrong with that. But buying Constellation gives you an extra level of profit potential. Here's why…
Why STZ Is a Buy: Cannabis Beverages Are Ready to Explode
Cannabis-infused beverages became recreationally legal in Canada just last December. And they are a prime candidate to take over as the cannabis consumption method of choice for a number of reasons…
First, they are simply a more familiar option to many people. A Canadian government survey showed 77% of adult residents drink alcohol, but only 17% smoke.
And unlike alcohol, cannabis is calorie-free, giving drinkers an alternative that won't contribute to weight gain.
Plus, cannabis doesn't cause hangovers.
So, Constellation and Canopy have a chance to attract not just cannabis users looking for new consumption methods, but also drinkers who want the kick without the side effects.
Constellation already has a dominant beverage empire. Add cannabis to the mix, and the sky's the limit.
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Who They Are: Microsoft Corp. (NASDAQ: MSFT) needs no introduction. It's one of the biggest tech companies in the world, with more than 156,000 employees.
The company is a household name due to the success of its software products, as well as its productivity products like Microsoft Office and Office 365 Security. But it's become much more than the software company Bill Gates founded in 1975...
Why Now Is the Time to Buy: Microsoft Is Resilient
We’ve already seen stocks bounce back in a big way from the pandemic, but that’s just paving the way for even bigger growth once the economy fully rebounds.
And Microsoft will continue to lead the way.
To this point, MSFT's peak-to-trough drop during the pandemic and resulting economic crisis was only around 27%. It’s now up over 30% on the year, nearly double the rate of the S&P 500’s growth. MSFT is now among the elite $2 trillion companies.
Don’t expect that to let up either, especially as the economy recovers. Microsoft just boasted earnings growth of 47% over the last quarter and it is projecting that to continue.
Why MSFT Is a Buy: Its Strong Core
Microsoft was one of the best stocks on the planet going into the pandemic and still will be coming out of it.
A big reason for that is the company’s ability to generate cash.
Take a look at net cash flow from operations, one of the most important metrics for businesses.
Here's how those numbers have looked for the past four years: 2016 = $33.3 billion; 2017 = $39.5 billion; 2018 = $43.9 billion; 2019 = $52.2 billion; 2020 = $60.6 billion. That's some impressive growth in cash generation.
The pandemic didn’t slow that down, and the economic recovery can only boost these higher.
Why MSFT Is a Buy: A Leader in Cloud Computing
Its cloud computing arm continues to thrive, growing revenue and market share faster even than the juggernaut that is Amazon.
Back in 2018, 80% of all enterprises were running their applications through Amazon Web Services (AWS). But by the end of that year, the adoption rate for Microsoft Azure jumped to 58%.
That’s how Azure grew its revenue 51% in the last quarter.
Cloud-computing platforms and services are an essential part of enterprises in today's market – increasing the number of new digital businesses and operating an IT infrastructure for existing conglomerates.
In 2020, 87% of all major enterprises had a multi-cloud system to help manage their operations. And large public companies with over 1,000 employees were spending, on average, over $6 million on cloud-computing technology.
According to Statista, the global cloud computing industry will hit $305 billion by the end of 2021. That's up a whopping 25.7% from 2019.
And cloud computing isn't the only industry Microsoft is a major player in…
Why MSFT Is a Buy: The Growing E-Sports Market
Let's not forget the substantial video game segment of MSFT's business, which is getting a major boost from the coronavirus due to the massive amount of people being forced to stay at home.
During this time of social distancing, numerous video game platforms have reported significant spikes in interest, particularly in e-sports.
The new Xbox Series X game console is getting rave reviews in the gaming community and should provide MSFT with a massive amount of revenue. Not only is the new console still in huge demand nearly a year after its release, but it brings more and more users into the Microsoft ecosystem.
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nearly a year after its release, but it brings more and more users into the Microsoft ecosystem.
Who They Are: BlackRock Inc. (NYSE: BLK) is a company doing what you’re doing right now: investing. Except BlackRock does it on an astonishing scale with some of the best results in the world.
Its portfolio is so massive it’s actually larger than every economy in the world except for the United States and China. With a portfolio this size, you might think this means it grows slowly. But that couldn’t be further from reality.
In fact, Money Morning Chief Investment Strategist Shah Gilani calls BlackRock a “money-printing machine.” Even after a nearly 80% run-up over the last year, BlackRock pays a handsome 2.3% dividend yield. The average yield for the S&P 500 is a full percentage point less.
Why Now Is the Time to Buy: It’s a big-time dividend-payer in an uncertain world.
Even though the stock market has rallied back from the pandemic crash, there’s plenty of uncertainty around. Investors are nervous about inflation, rising interest rates, and the economy not fully recovering.
But a stock that can generate cash for your portfolio can add stability.
And you’ll have a hard time finding a better deal than BlackRock.
Consider this: While many companies, from Wells Fargo to General Motors, cut their dividends, BlackRock kept paying its throughout the pandemic economy. Go back a little further to the 2008 financial crisis, an even bigger disaster for Wall Street, and BlackRock didn’t budge its dividend.
This is a rock-solid company for uncertain times.
Why BLK Is a Buy: BlackRock Is the World’s Largest Investor
Investing is what you’re doing after all, so why not own the biggest and best investor of them all?
BlackRock owns some of the best companies in the world, including Apple, JPMorgan & Chase, and Exxon Mobil. Sure, you can go out on the market and buy these same stocks, but BlackRock owns enough it has seats on boards. That means it has a say in how the companies are run in ways individual investors can’t.
Even better, it invests in startups and helps take young companies public, something individual investors have a hard time doing on their own. BlackRock was one of the leaders behind the biggest foreign IPO since AliBaba when it helped Coupang, a Korean e-commerce firm, go public in March. That matters if you own BlackRock, because it is going to make decisions to improve its bottom line. That gives you exposure to some of the most exciting companies in the world while your friends have to wait and see.
It also owns iShares, some of the biggest ETFs on the market. Think about how popular investing has gotten during the pandemic – more than 10 million new brokerage accounts were opened last year. BlackRock is collecting fees on a big chunk of newcomers who are buying into their very first funds.
Lastly, BlackRock invests in everything else under the sun, from commodities to currencies to derivatives. If there’s a way to make money on something, Blackrock is doing it.
Why BLK Is a Buy: Artificial Intelligence Is Changing the Game
As Shah points out, “CEO Larry Fink changed the entire asset management model a few years ago.” That included using artificial intelligence and machine learning to hone its investing strategies.
It created the BlackRock Lab for Artificial Intelligence back in 2018 as a way to put serious resources behind this push. These tools are allowing it to use even more data in its investing decision-making, like using text analysis to measure market sentiment or to use web traffic to find future growth prospects.
Its asset management model costs it nearly nothing to run but brings in over $10 billion a year in fees. AI is only going to help streamline its management tools further.
In January 2021, BlackRock took a minority stake in Clarity AI, a data science company. The investment is a clear signal BlackRock is committed to using Big Data and machine learning to improve and create new investment management tools. BlackRock says its plans are to use Clarity AI’s technology to beef up Aladdin, its proprietary AI tool for investment pros.
Why BLK Is a Buy: BlackRock Is Taking On China
Far from being complacent, BlackRock is focusing on some of the fastest growing countries in the world, including China. Even if BlackRock had exhausted its potential in the United States, which it hasn’t, the opportunities available in China could still ignite its share price higher.
BlackRock is making investing in China possible for investors around the globe, where it offers advice and insight on investing in everything from Chinese bonds to the Hong Kong stock exchange. It's also offering a China-focused mutual fund.
Chinese stocks have been treading water lately thanks to a dispute between the United States and China that could see these stocks delisted in a worse-case scenario. That makes them risky for retail investors. But firms like BlackRock don’t have that problem. They simply don’t have to rely on U.S. listings to invest in these companies.
But the real opportunity here is that BlackRock is starting to manage money for Chinese investors. In fact, it’s one of the very first foreign companies to get approval from the Chinese government to offer these services. While it first set up asset-management operations in China in 2017, it now has approval to manage money for any Chinese investor.
That opens up China’s 700 million person middle class to BlackRock’s investment management business. Remember, the entire population of the United States is half of that. That’s why BlackRock’s China venture is so enticing for investors like us.
Who They Are: Apple Inc. (NASDAQ: AAPL) is certainly a household name. It's also one of the favorite stocks of Money Morning Executive Editor Bill Patalon. Don’t let the size of the company fool you. Apple grew to become the first $2 trillion company in the world amid a global pandemic and economic recession. This isn’t a legacy stock coasting on its name.
Apple is best known for its tech devices, including the iPhone, Mac computer, iPad tablet, Apple Watch, AirPods, Apple TV, and AirPods. But the company is more than its devices. Apple is renowned for its Apple Care support services, digital content streaming services, cloud storage, and even the cashless payment service Apple Pay.
Founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, the company is now run by one of the world's most recognizable execs, Tim Cook.
Why Now Is the Time to Buy: Because of Apple's long-term performance and reliability, Bill considers it one of his "Accumulate" stocks. That means it's a stock you can keep buying more of year after year to increase your wealth.
"The pioneer and perfector of the 'ecosystem' strategy, Apple sells more than just tech – it sells an end-to-end way of running your life – from work, to health, to communication, to entertainment," Bill said. "Apple's innovative array of devices, software, and services work together seamlessly, which has cemented its reputation for ease of use."
That ecosystem is also what powers its growth. Once a user adopts an Apple device, they are naturally encouraged to use Apple’s subscription services and add more Apple devices.
Why AAPL Is a Buy: It's More Than Its Devices
Apple is not just a device company anymore.
That is, it's not unit sales of Apple devices that are driving the company's growth. It's the services Apple delivers to the devices people already own.
Sales of those services, including Apple Music, iCloud, and the App Store, hit $17.5 billion in Q3 2021, a record high.
Overall, the company is expected to bring in an astronomical $315 billion in revenue this year. That's an increase of 11% from full-year 2020 numbers, which will include sales of the latest 5G iPhone 12 in Q4 2020. In 2022, revenue is expected to jump a conservative 8.5% to $342 billion.
Why AAPL Is a Buy: Apple's Sights Are Set on Healthcare
Growth estimates for Apple are healthy – but we see it as underestimating the profit potential here.
In 2019, Morgan Stanley (NYSE: MS) did a deep dive on Apple's healthcare opportunity. The investment bank concluded that healthcare could add anywhere from $15 billion to $313 billion annually to Apple's top line. The report pegged the midpoint at $90 billion of additional revenue by 2027.
Apple’s TTM revenue is $294 trillion. So, if the Morgan Stanley report is right, that represents a revenue increase of nearly 20% from healthcare alone.
And even though we've focused on "services" so far, Apple's devices are still an absolute cash cow…
Why AAPL Is a Buy: Device Sales Are Rock Solid
"The company's roster of devices has grown from the venerable Mac to the iPhone, the iPad, and the Apple Watch, while it has added lucrative services like the App Store, Apple Music, and the new Apple TV Plus streaming service," Bill said.
With 5G here, we are seeing a whole new "upgrade cycle" heading our way – especially as a coronavirus vaccine gets distributed.
Plus, Apple's hardware sales continue to expand the installed base of Apple users. In Q4 2019, the company said half the customers who bought a Mac were new to the platform.
Investors should expect this new customer conversion rate to remain similar in 2021 as the company began releasing new Macs with its own Apple M1 computer chips in November 2020. This will also increase profitability because the company will no longer need to purchase and install computer chips from Intel Corp. (NASDAQ: INTC).
The installed base matters because all those users – approximately 1 billion people own at least one Apple device – are also signing up for Apple's services. And that's where most of its revenue growth is coming from now.
That revenue growth has made Apple one of the richest companies in the world.
Not to mention, the company has a $191.8 billion war chest of cash on hand that it can use to dominate whatever market it wants next and pays investors a reliable 0.66% dividend.
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