Investing in equities is a proven way of beating inflation and creating wealth. Despite the volatility, the stock markets continue to surprise us to the upside time and again. A basket of stakes in quality American businesses has continued to gain value even through a history troubled with numerous shocks such as the Great Depression, World Wars, and disease outbreaks. From its first close of 62.76 on February 16, 1885, the Dow Jones Industrial Average (DJIA) today stands at ~33,000 (as of March 31, 2021) with a CAGR of 4.7%, not including the reinvested dividends (Data Source: Refinitiv). This includes the roller-coaster over the past calendar year amid the COVID-19 pandemic, political uncertainty, and lingering trade tensions. So though the stock market remains volatile due to changing business dynamics, uncertain economic, and regulatory environment, immense investment prospects exist and can be looked at. Of course, the nature of businesses keeps changing with times, but their propensity to create wealth does not. This is because as the economy grows, so do corporate sales and earnings, thus driving the vicious long-term cycle of rising incomes and consumer demand that flows back into the corporate and GDP growth. No wonder stock prices are regarded as the barometer of a nation’s economic health.
Data Source: International Monetary Fund (IMF) World Economic Outlook Database, October 2020; and Refinitiv Eikon; Chart Created by Kalkine.
The spurred-up momentum in Technology stocks since the onset of Covid-19 offers a recent example of how to ride the shift in markets. Tech now forms a much larger chunk of the market pie, with the FAANG (Facebook, Amazon, Apple, Netflix, and Google-parent Alphabet) adding billions to market values. Most of these were anyhow great businesses even before the move of consumer preference online due to the pandemic provided a strong tailwind. Sectors such as Health Care have also become active areas of interest, with biotech and pharmaceutical stocks in particular focus. Investors have evinced interest in not only the biotech firms with coronavirus vaccine candidates such as Novavax and Moderna but also in companies with certain novelties such as Vaxart that makes vaccine doses in the form of convenient tablets using a proprietary technique.
As Kalkine expands its research footprint in the US, we strive to identify the top value creators from the world’s largest market. This includes insights into unique business models such as the abovementioned ones which are poised to experience earnings growth. Stocks covered in the report are mostly blue-chip or mid-cap companies with steady cash flows, improving revenue and profit margins with low debt-equity profile, decent earnings potential, and sound management team, etc. We undertake an evaluation of the industry dynamics and the latest trends to identify companies with sustainable competitive advantages. We endeavor to uncover mispriced, high-quality businesses that can serve as a part of the core of one’s investments. Investing in these picks typically warrants a medium to long-term view. A well-diversified selection incorporating stocks from the leading sectors may also help lower systematic risks. In addition to the potential for capital appreciation, many of the stocks covered in the report offer scope for meaningful dividend yields, thus adding to the cash returns in a low interest rate environment.
To sum it up, Kalkine’s Diversified Opportunities Reports are easy to understand and offer deep insights into a wide range of opportunities with an enduring outlook. The reports intend to cover stocks with formidable business fundamentals after due consideration of associated risks.