Even as the stock market touches all-time highs, extraordinary returns can still be found.
The coronavirus pandemic has proved to be a rollercoaster ride for financial markets around the world. During this time, the S&P 500 fell 30% faster than any other time in history. On the other hand, we also witnessed the greatest rebound after markets hit rock bottom. Since a low on March 23, 2020, the S&P 500 has risen by an incredible 88%.
On Monday, the first trading day of the month, the S&P 500 index increased by 0.3 percent, while the Dow Jones Industrial Average increased by 0.7 percent. The tech savvy NASDAQ NDAQ composite fell 0.5 percent.
Though public markets remain volatile due to the Covid-19 pandemic, investors can still benefit by making sound investment decisions. The three stocks mentioned below have the potential to outperform the market in May.
Zillow (NASDAQ: ZG), headquartered in Seattle, Wash., provides digital solutions for real estate. It facilitates the financing of mortgages, the sale and purchase of houses and listing of rentals. The company operates three main segments: homes, digital segment and mortgage. The homes segment, which caters to the direct sale and purchase of houses, constitutes 50% of the company’s revenue. The digital and mortgage segments partly generate earnings through advertising and marketing activities.
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Analysts believes that real estate constitutes a $93 billion market, and Zillow seems to have the potential to disrupt the industry by providing modern solutions to conventional problems faced by consumers. And Zillow’s personalized services set it apart from the competition: The company’s platform eliminates the need for haggling and streamlines processes that would otherwise take ages to complete.
Friendly policies implemented by the American government also make it a great time to invest in real estate. Stimulus packages, low mortgage rates and an active Federal Reserve are driving the demand for real estate in America.
Investors are drawn to Zillow because of its distinct value proposition. The company gives its customers flexibility to choose closing dates that work for them and assumes responsibility for home repairs that are normally handled and paid for by the sellers themselves. Furthermore, mortgage payments for sellers end on the closing date, as opposed to the norm, where consumers continue to pay until the property is actually sold. These factors have helped revenue more than double in the last three years.
Overall, technologically savvy Zillow is one-of-a kind within the real estate sector, making it a solid choice for investors looking forward to investing in financial markets right now.
SelectQuote (NASDAQ: SLQT), headquartered in Overland Park, Kan., is also a digital platform which helps consumers shortlist products related to life, health, home and auto insurance. The company earns revenue by marketing insurance products and charging commission.
Due to its simplicity, many consumers prefer the SelectQuote model. Its platform enables consumers to quickly compare prices from various vendors and thus make quick decisions regarding the products that are right for them. The company has grown rapidly in the last three years, with a compounded annual growth rate of 63%. As the company attracts genuine consumers, with roughly 20% of users ultimately purchasing a policy, insurance companies are compelled to use the platform.
The company’s growth drivers include the introduction of new products, an increase in lifetime value of existing customers, growth in agent productivity, driving cross-sell opportunities and an increase in potential partnerships with other insurance companies that SelectQuote does not currently cover. These efforts will result in increased earnings and value for investors.
The gap in digital advertising for insurance products creates an ideal environment for the company to consistently multiply revenue, and for investors to benefit from potential high returns that it can achieve in the future.
Canopy Growth Corporation
Canopy Growth Corporation (NASDAQ: CGC), headquartered in Smiths Falls, Canada, consists of multiple brands such as Tweed and Spectrum which deal in medicines, hemp and recreational cannabis. As the stock is currently trading at a low of $25.57, the time to invest in it is now.
The prospect of cannabis legalization in the United States has sparked interest in cannabis stocks. With Joe Biden’s election victory and the Democrats regaining power, the chances of legalization have never been better. On the other hand, even if legalization does not occur, businesses like Canopy will profit as long as the federal government does not interfere with state-level decisions.
The company intends to expand by leveraging its existing partnerships with cannabis companies Acreate and TerrAscend. Furthermore, the company is stepping up its marketing efforts in order to raise brand awareness among potential American customers. Canopy currently has production and distribution licenses in more than ten countries, allowing it to expand exponentially.
In 2022, the Canadian cannabis market is expected to grow by 40%, and by approximately 30% between 2022 and 2024 (according to Canopy’s report), so Canopy will be able to generate more revenue in the coming years as a result of this anticipated demand. Furthermore, advancement in distribution and innovation will also drive growth.
It is important to remember that stock markets offer ample opportunities to invest in companies that are undervalued and have room for improvement. Investing in these companies may help you reach your financial goals sooner than you think.