Pushed lower by 30% in 22 trading days, which is about 10 times faster than it typically takes bear markets to lose 30%.
Recorded its largest single-session percentage loss since 1987, and its biggest single-day percentage gain since 2008.
In other words, volatility has been the name of the game, with the spread of the coronavirus disease 2019 (COVID-19) squarely to blame.
Image source: Getty Images.
Investing during bear markets is always a smart move
As of Saturday, March 28, there were almost 658,000 cases confirmed worldwide, with over 30,400 deaths attributed to COVID-19, per Johns Hopkins University. The number of worldwide cases has doubled in a week. With stringent mitigation measures firmly in place in many developed countries, economic activity has ground to a crawl, with equity markets around the world paying the price.
However, there’s always light at the end of the tunnel in even the most dismal situations when it comes to investing. That’s because each and every stock market correction and bear market, no matter how steep or prolonged, has eventually been completely erased by a bull-market rally. This means that if you invest in high-quality businesses and hang on for the long run, thereby allowing your investment thesis to play out, you should come out a winner.
While we can’t predict when the coronavirus crash will end or if we’ve already hit the bottom, we can say with a fairly highly degree of confidence that the stock market will be higher in the future. This means now is the time to take advantage of depressed stock valuations.
The question, of course, is which top stocks to buy?
Image source: Getty Images.
My single best investment idea for April
Although I’ve personally bought 12 new stocks during the coronavirus crash, as well as added to a handful of existing positions, one stock stands out head and shoulders above the rest. If you have $1,000 in disposable income to invest right now (i.e., not money you need to pay bills or for emergencies), then you should consider buying into what I view as my single best investment idea for April: Intuitive Surgical(NASDAQ:ISRG).
Intuitive Surgical is a manufacturer of surgical-assisted robotic systems. These systems help trained surgeons perform various types of soft tissue surgeries with finite precision, leading to potentially faster recovery times for patients.
As recently as last Monday, March 23, Intuitive Surgical’s share price had lost over 40% of its value from its very recent all-time high. Like many companies wading through the uncertainty of the coronavirus pandemic, Intuitive Surgical warned Wall Street that this outbreak would have an adverse impact on its financial results. With many elective procedures being cancelled and pushed further down the road, this will, undoubtedly, hurt the company’s very near-term growth potential.
However, COVID-19 is not going to be a long-term concrete weight on the global economy. Eventually, treatment options will be found and/or an antiviral discovered, and the corporate world will return to normal. When this happens, Intuitive Surgical’s numerous competitive advantages will shine through.
Image source: Getty Images.
Three no-brainer reasons you need to own Intuitive Surgical’s stock
The first clear-cut advantage can be seen in the company’s sheer number of installed systems. Intuitive Surgical ended 2019 with 5,582 systems installed worldwide, up nearly 600 from the end of 2018. None of its competitors are anywhere close to having this many precision surgical systems installed around the world. When coupled with a lofty price tag of $0.5 million to $2.5 million for the da Vinci surgical system, and the training provided to surgeons, there’s virtually no chance of client churn or lost business to a competitor.
Secondly, this is the perfect example of a razor-and-blades business model. In this instance, the razor is the pricey da Vinci surgical system. Even though these systems generated $1.35 billion in sales for the company last year, they don’t generate beefy margins given how complicated they are to manufacture.
The bulk of the company’s margins and growth are derived from its blades, which include the instruments and accessories sold with each procedure, as well as the servicing needed to keep these systems in perfect working order. Last year, $3.13 billion was derived from the combination of high-margin instrument, accessories, and service sales. As the number of da Vinci systems installed grows worldwide, the percentage of total sales being generated from these higher-margin revenue sources will climb. Or, put in another context, Intuitive Surgical’s profit growth should continually outpace its double-digit sales growth.
Third and finally, Intuitive Surgical is still only scratching the surface on what its da Vinci system is capable of. The company is already a leader in gynecology and urology surgeries, but still offers a long runway to acquire market share in thoracic, colorectal, and general soft tissue surgeries. Since we’ve established that no surgical system developer has the geographic reach or rapport with the medical community as Intuitive Surgical, it’s only a matter of time before its systems are more widely used in place of traditional laparoscopic procedures.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
