Over the past four months, Wall Street and investors have been exposed to about a decade's worth of volatility. The CBOE Volatility Index, also known as the "fear index," hit an all-time high during March, with the benchmark S&P 500 losing 34% of its value in less than five weeks. But in the 11 weeks that followed, the S&P 500 bounced more than 40% off of its lows and got within sight of its all-time high.
If investors have learned anything from this recent volatility -- other than the fact that there are still plenty of unknowns surrounding the coronavirus disease 2019 (COVID-19) pandemic -- it's the benefits of long-term investing. While panic-selling can take an immense financial and psychological toll on short-term traders, it's not even a concern for investors with a long-term mindset and a focus on game-changing businesses.
Best of all, periods of heightened volatility and panic-selling have historically proved to be an excellent opportunity to put money to work. If you have, say, $5,000 in disposable cash that won't be needed to pay bills or to cover emergencies, then you have more than enough capital to get rich by investing in the following four stocks.
Although the social media space is dominated by Facebook and is increasingly difficult to get right from a business perspective, Pinterest (NYSE:PINS) looks to have the tools to offer its shareholders Facebook-like returns over the next decade.
While Pinterest is an ad-dominant business model, and COVID-19 is certain to adversely affect ad-spending in the near-term, the company's penchant for attracting overseas users is what has really stood out since the beginning of 2019. Though it's a fact that U.S. monthly active users (MAU) generate considerably higher average revenue per user (ARPU), the rapid growth in international members is what'll be largely responsible for longer-term ARPU growth. Last year, international ARPU more than doubled to $0.54, with overseas MAUs up by 93 million to 277 million over the trailing 15 months. Pinterest's future is dependent on acquiring these eyeballs, as higher MAUs will drive ad-pricing power.
Pinterest is also likely to benefit from its still early foray into e-commerce. Since users are primarily using Pinterest as a board to post their interests, it's only logical for the company to allow small and medium-sized businesses the opportunity to turn these interests into possible sales. If Pinterest can utilize video and other factors to improve user engagement, it should have little trouble drumming up its e-commerce revenue.
Green Thumb Industries
Despite being one of the hottest investments on Wall Street for much of the 2010s, marijuana stocks were a dumpster fire for the final nine months of 2019 -- Green Thumb Industries (OTC:GTBIF) included. However, as we "weed out" the have's from the have-not's, it's becoming clear that U.S.-based multistate operator (MSO) Green Thumb is on the right path and in much better shape than most U.S. pot stocks.
Currently, Green Thumb has 45 operational dispensaries, which is the third-most of publicly traded U.S. MSOs. It does, however, have licenses to open as many as 96 dispensaries in 12 states, giving it a presence in virtually all of the United States' potential billion-dollar cannabis markets.
More importantly, Green Thumb is generating around two-thirds of its sales from derivatives -- i.e., non-dried flower products, such as edibles, vapes, and concentrates. Derivatives are a pricier product than traditional dried flower, but they often speak to a younger generation of users and lead to much juicier margins than dried cannabis.
Green Thumb also happens to be one of a small handful of U.S. MSOs that's been able to access traditional financing, which means no near-term cash concerns. With the company growing like a weed (yes, another pot pun!) and on the cusp of recurring profitability, it has the tools needed to bring in the green for patient investors.
Kirkland Lake Gold
No, your eyes aren't deceiving you. Kirkland Lake Gold (NYSE:KL) is indeed a gold-mining stock that you should strongly consider buying due to its superior balance sheet and incredible production metrics.
At least part of the story behind why gold miners like Kirkland Lake are so attractive ties into the underlying metal they produce. Physical gold is within a stone's throw of a fresh seven-year high and is likely to benefit from ongoing fear and uncertainty tied to the COVID-19 pandemic. In particular, the Federal Reserve pledging to keep its federal funds rate at an all-time low of 0% to 0.25% paves the way for physical gold prices to head higher. With the Fed liberally increasing the money supply via quantitative easing and bond rates yielding virtually nothing after inflation is accounted for, physical gold becomes a go-to choice as a store of value for the foreseeable future.
More specific to Kirkland Lake Gold, it ended the most recent quarter with $530.9 million in cash and cash equivalents and no debt. Mind you, this nearly $531 million is after the company doubled its dividend to $0.125 per quarter, and repurchased a little more than 9.7 million shares for almost $330 million. There's not a more pristine balance sheet in the gold-mining industry.
Furthermore, Kirkland Lake Gold offers up some of the lowest all-in sustaining costs (AISC) from its three core producing assets. Even after factoring in the added costs associated with its recent buyout of Detour Gold, Kirkland's first-quarter AISC of $776 per gold ounce sold provides a well over $900 cash operating margin at current spot prices.
If I told you there was a stock that has returned an average of 20.3% annually to shareholders over the past 55 years, which is more than double the annual average return of the S&P 500, inclusive of dividends, you must think I'd be talking about some high-growth tech stock or perhaps an innovative healthcare company. But the company in question is none other than Warren Buffett's own Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B).
One thing investors get when buying into Berkshire Hathaway is Warren Buffett as their portfolio manager. Even though he's given up some control over the company's $137 billion war chest to his investing lieutenants, the Oracle of Omaha can still pick a bargain. For instance, he's made over $45 billion in unrealized gains plus dividends from his company's large holding in Apple.
A Warren Buffett investment portfolio is also very tied to the success of the U.S. economy. This is to say that Buffett is a big fan of purchasing cyclical businesses in the financial and consumer staples space. While recessions are inevitable, historical data shows that the U.S. economy expands for much lengthier periods of time than it contracts, which bodes well for Berkshire Hathaway and its investment portfolio.
Lastly, don't forget that Buffett's company has acquired around 60 businesses over many decades. Thus, in addition to Berkshire's $216 billion investing portfolio, there's revenue and profits rolling in from insurer GEICO, railroad operator BNSF, and a host of other well-known brands. Despite its size and maturity, Berkshire Hathaway can still make patient investors rich.