Got $ 500? 3 obvious actions to buy now
Arguably the most important lesson investors learn when investing their money in the stock market is that patience pays off.
Last year, the coronavirus pandemic sent the widely followed S&P 500 shouting 34% less in just 33 calendar days. Despite unprecedented volatility and uncertainty, those who believed in their long-term investment theses were generously rewarded. The S&P 500 has rebounded 90% since it hit its bear market low in March 2020.
The point is this: anytime is a good time to invest money in the stock market, as long as you have a long-term mindset.
Best of all, you don’t need a load of cash to get started or to continue on your path to financial independence. If you have $ 500 ready to invest that won’t be needed to pay bills or cover emergencies, the next trio of obvious actions are asking to be bought now.
For much of the past decade, Wall Street has shunned gold stocks. This is because the miners were a little too zealous to go into debt in the early 2010s after a more than ten-year rise in the price of physical gold. But after years of cutting costs and favorable macroeconomic conditions, the gold mining industry is teeming with value stocks. that’s why Barrel gold (NYSE: OR) is an obvious stock that you can buy right now.
From a macro perspective, things are almost perfect for gold. The Federal Reserve is committed to keeping lending rates at or near historic lows, and its bond buying program is designed to weigh on long-term yields. Between a rising money supply, low yields and the prospect of higher inflation in the future, gold ticks all the boxes it needs to head well above $ 2,000 an ounce.
But there’s more to love about Barrick Gold, beyond just charging a higher price for what it produces and sells. In particular, we’ve seen the company’s balance sheet flourish since the start of 2019. What was once a net debt position of $ 3.6 billion is now a net cash position of $ 500 million. While higher realized selling prices helped, Barrick’s size and the high-yielding ore grade of its mines helped lower its All-Inclusive Sustaining Costs (AISC) to around $ 1,000 per ounce. ‘gold ($ 1,018 / oz in the first quarter of 2021 and $ 967). / oz in full year 2020). This provides well over $ 800 per ounce in operating margin.
Additionally, Barrick Gold aims to improve its AISC. Investments in underground automation at Kibali, Luolo-Guonkoto and Bulyanhulu, as well as the $ 300 million Third Shaft project at Turquoise Ridge in Nevada, are expected to improve production and reduce production costs.
After more than a decade of tracking gold stocks, I have come to the conclusion that a multiple of 10 times operating cash flow is a fair estimate. With Barrick Gold currently valued at less than eight times Wall Street’s cash flow projections for 2021, a big hike is still likely.
During the coronavirus pandemic, traditional workplaces have been disrupted like never before. Although businesses launched online and in the cloud long before the coronavirus hit the spotlight, the pandemic has given this trend a boost. In other words, as more and more data enters the cloud, the responsibility for protecting that information from hackers and bots increasingly falls on third-party vendors. That’s why put your $ 500 to work Ping Identity (NYSE: PING) is such a no-brainer.
As the name probably suggests, Ping Identity is focused on providing identity verification solutions to its corporate clients. Ping’s platform uses artificial intelligence to become smarter at identifying and responding to threats over time, and its more advanced services offer a hybrid approach to cloud native security as well as protection over time. site. Cloud native applications are generally more agile than on-premises solutions at identifying and resolving issues.
While there is no embedding that Ping’s 2020 has been less than stellar – a number of its clients have opted for shorter-term deals due to the uncertainty of the pandemic – a deeper dive into its recurring income is very promising. Annual recurring revenue (ARR) jumped 16% in the first quarter compared to the period a year earlier. Since Ping is primarily focused on growing the software portion as a higher margin service of its business, as opposed to its term license subscriptions, we are likely to see ARR growth. maintain in mid to high teens. , income growth is catching up.
While the growth of ARR in the mid-teens doesn’t seem as impressive as what other cloud-based companies are offering, I remind people not to overlook the 85% subscription gross margin as Ping Identity brings. With such robust margins, even a modest double-digit growth rate can generate significant cash flow.
Considering that most cybersecurity stocks are valued at 10 to 20 times the sales for the coming year, Ping is a bargain at a multiple of six times the expected earnings for next year.
A third obvious stock to buy now with $ 500 is a growing edge cloud business Quickly (NYSE: FSLY).
Fastly provides a number of services to clients, but is perhaps best known for its content delivery network. More specifically, it is responsible for accelerating the delivery of content to end users in a secure manner. With businesses moving online at an extraordinary rate during the pandemic, traffic demand has increased for Fastly. This is great news given that Fastly’s operating model is usage-based.
While Fastly is probably remembered for his meteoric rise and fall over the past 15 months, I think the defining moment for the company came in the third quarter of 2020. That’s when where the company announced that its main customer, ByteDance, the parent company of TikTok, derives most of its traffic from the network. For context, ByteDance was engaged in a dispute in the United States with the Trump administration at the time. Instead of curling up in a fetal position, Fastly still managed to increase sales by 42% in the third quarter and an additional 35% in the recently completed first quarter. In other words, Fastly has demonstrated the importance of its services to a wide range of fast growing companies.
While Fastly remains unprofitable as it increases its workforce and incurs higher costs following the acquisition of Signal Sciences, other measures remain promising. The total number of customers increased by 123 in the first quarter to 2,027, adjusted gross margin remained robust at 60.1% and the dollar net expansion rate (DBNER) reached 139%. This latest figure, DBNER, tells us that existing customers spent 39% more in the first quarter of 2021 than in the period the previous year.
With more and more content being delivered online over time, Fastly is at the helm of a sustainable, high-growth operating model.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.