Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
In a time when the government is mulling over shutting down small businesses, the income of millions of Americans is still under threat. One would think that a skyrocketing rise in COVID-19 cases, while deaths are simultaneously decreasing, would be outstanding news.
Which Stocks Should I Buy with a Second Stimulus Check?
After all, this means that COVID-19 is as lethal as seasonal flus of the past decades when no nation-wide lockdowns were implemented, just like the CDC projected. Nonetheless, the damage done to the economy is already severe enough for a likely second stimulus check in the future.
Can you imagine the societal breakdown with dozens of millions of people out of work, without savings and no income in the foreseeable future? Politicians are well-aware of the calamities that would ensue without emergency assistance in the form of stimulus checks.
With that said, if you were prudent enough to have some savings, your next stimulus check could be better served as an investment in stocks that are most likely to rise. And now that stocks are easier to buy than ever before with a number of reliable, trustworthy stock trading apps, we’ve outlined three top-picks when it comes to stocks to buy with a second stimulus check.
If anything became clear during the coronavirus, it’s that people rely on online digital payments more than ever before. In this new-normal, purveyors of global payments stand to gain the most. One of them is MasterCard (MA), a worldwide provider of payments via credit, debit, and pre-paid cards. In the initial stages of the coronavirus, MasterCard took a 9% profit hit for this year’s first quarter.
However, with so few players entrenched in the payment arena as MasterCard, the prospects for the company look bright. In particular, it should follow the acceleration of e-commerce as many businesses turn to virtual space as a contact point for their products and services.
MasterCard’s immense payment processing network is all set to handle more customers who almost exclusively rely on credit/debit cards and those digital payment platforms that are attached to MasterCard’s infrastructure. To further smooth out this process of mediation, MasterCard recently launched their own B2B platform dubbed Track. It is not difficult to realize that, in the future, there will be more digital payments and fewer cash payments, and MasterCard is all set-up to take advantage of this. So should you.
2. Brookfield Renewable Partners
As the world’s biggest banking institutions set more sustainability conditions for other businesses to operate under, it would be wise to take into account that renewable energy sources will only increase. Practically every government in the world is in some way subsidizing the deployment of solar, wind, and hydropower solutions.
The global project of drawing most energy needs out of renewables will last for decades, and only those companies with a long-term view and technical expertise will experience sustainable growth. Brookfield Renewable Partners (BEP) is one of such sustainability pioneers, with an outstanding dividend of 4.5 to 4.7%, supported by their solid track record.
There are many reasons why one would pick BEP in the environmental arena: large, long-term hydroelectric assets, margin expansion, continued self-drive on top of new acquisitions, and experience in operating on a global level. For the 2020 year alone, BEP plans to invest $800 million into energy production and efficiency projects. With such certain growth, BEP’s last quarter profit of $304 million warrants a close look as one of your top stock picks.
3. Vertex Pharmaceuticals
Biotech stocks are often a tricky investment. The inherent experimental nature of biotech may seem promising at a glance, but rarely are commercially viable products deployed on the market. No doubt, the experimental nature of biotech is exceedingly valuable for future insights and products, but that is not something that would spur a stock investor into immediate action. This is on top of the burdensome regulation all biotech companies have to constantly struggle against.
With that in mind, Vertex Pharmaceuticals (VRTX) is quite an exception in the biotech field. VRTX made itself impervious to standard biotech investment concerns by specializing and holding a virtual monopoly in the treatment of cystic fibrosis, a common genetic disorder affecting 1 in 3000 newborns within the White population, 1 in 17,000 newborns within the African population, and 1 in 31,000 newborns within the Asian population.
VRTX’s drug, called Trifakta, demonstrated admirable results in the US and it is on its way to being approved in the EU. Moreover, VRTX partnered up with CRISPR Therapeutics to deliver solutions for other genetic disorders such as sickle cell anemia and beta-thalassemia. These treatments will be delivered via the holy grail of medicine – gene therapy – which means that permanent cures are in the cards as well.
Regardless of the success of their future ventures in curing genetic diseases, Trifakta alone as made VRTX highly profitable with $4.2 billion of cash as reported this March 31. This large cash infusion is likely to continue with EU’s drug approval, and with their acquisition of Semma Therapeutics for almost $1 billion last year, for the purpose of pursuing gene therapy research and development. Semma Therapeutics specializes in treating diabetes, one of the most common diseases affecting Americans and many other nations suffering from the obesity epidemic.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.