In the past two months, Wall Street has seen a new phenomenon: the Reddit frenzy.
Retail investors in Reddit’s WallStreetBets (WSB) chatroom have essentially banded together to buy and stock shares Out-of-the-money call options on stocks with high short interest. The goal of the WSB community is to create a short squeeze that will skyrocket sharply shortened stocks. With the vast majority of short sellers being institutional investors and hedge funds, these retail investors see their actions as a way to get back to what they call “big bucks”.
AMC is an extremely popular (and incredibly dangerous) investment
Even though GameStop is the undisputed king of all Reddit stocks, cinema chain AMC Entertainment Holdings ((NYSE: AMC) easily ranked second most popular. AMC was one of the least-selling stocks in the market in late January, and the penny stock price was voracious bait for young investors.
Beyond the Reddit frenzy, optimists are also encouraged by the reopening of the U.S. economy. New York City and Los Angeles cinemas are reopening, and 21% of the US population have received at least one dose of a coronavirus vaccine. A return to normal seems on the horizon and investors are banking heavily on AMC to capitalize on this pent-up demand.
Unfortunately, the “buy AMC” thesis is is flawed. The reopening catalyst assumes there will be no setbacks in the major markets, which is unlikely. It’s not yet clear whether enough Americans will receive the vaccine, suggesting that herd immunity could be pushed further. Coronavirus variants also threaten to reduce the effectiveness of vaccines approved for emergency use.
AMC is even more worrying just avoided filing for bankruptcy earlier this year. It was forced to sell nearly 165 million shares and spent more than $ 400 million in debt to step down from the bankruptcy bar. Unless capacity limits in key markets relax anytime soon, I’m not sure if AMC has enough capital to survive the year – especially if there are pandemic setbacks.
Worst of all, however, AMC’s core operating model is now threatened. With consumers stuck in their homes for about a year, select streaming services have become competitors. AT & T. Subsidiary is WarnerMedia All of his films will be released on HBO Max in 2021 They’ll be in theaters the same day. Walt Disney plans to do something similar with a few movies on its Disney + streaming platform.
Forget AMC, these innovative stocks can make you rich
The point is, AMC is a dangerous investment that can make people lose a lot of money. Rather than buying a company that is hanging by a thread, I encourage you to buy the following three game-changing stocks, each of which has the tools to make you rich.
Although there are a number of trends in this decade that offer double-digit growth potential, Cybersecurity could be the safest. As more and more companies push online and move their data (and that of their customers) to the cloud, the responsibility for protecting this data will increasingly lie with third parties. That’s where Ping Identity Holding ((NYSE: PING) come in.
While most security companies excelled during the pandemic, identity verification specialist is Ping Identity struggled a bit. Full year sales were largely unchanged, with a number of customers opting for one-year subscriptions instead of multi-year plans. However, there are many reasons to believe that this weakness is pandemic-related and temporary.
Although total revenue was flat, the company’s focus on subscription services helped increase annual recurring revenue (ARR) by 15% to $ 259.1 million. Ping ended the year with 51 customers generating ARR greater than $ 1 million, up from 38 customers at the end of 2019. The company clearly has the ability to expand its services with larger customers and touts its services protecting 60% of Fortune 100 companies.
Additionally, 92% of fourth quarter revenue came from subscriptions, and the gross subscription margin was 86% for that quarter of 2020. For example, even if ARR growth came in at 15% next half-decade, it would be pretty hard to overlook the cash flow potential with the company’s subscriptions generating 86% gross margin.
Ping identity is also very inexpensive. While most cybersecurity stocks are valued at 20 times sales or higher, Ping can be topped up for 7 times projected sales in 2021. This is possibly the best value among cybersecurity stocks.
Marijuana stocks should be big winners throughout the decade, regardless of what happens to the classification of cannabis in Washington. The US multistate operator (MSO) operates in the world’s most lucrative market. Cresco Labs ((OTC: CRLBF) has the potential to make investors rich.
As with most MSOs, Cresco’s success will depend to some extent on its presence in retail. The company started the year with just 20 pharmacies open but relied on acquisitions to expand. The signing of the green creations contract maximized its presence in Ohio during the upcoming deal Bluma Wellness The buyout gives the company a healthy presence in medical-marijuana-legal Florida.
The interesting thing about Cresco Labs, however, is that there is a game plan for retailers mainly revolves around limited license states. In particular, over 60% of open locations are in states where regulatory authorities limit the number of retail licenses. Penetrating states with caps on pharmacy licenses is a smart way for Cresco to build its brand while facing minimal competition.
The major growth driver for the company is likely to be wholesale. Although wholesale cannabis offers lower margins than retail, Cresco has more than enough volume to overlook margin differences. This is because the company holds one of the most coveted cannabis distribution licenses in California, allowing the company to place proprietary and third-party products in more than 575 pharmacies across the Golden State.
With Cresco’s forecast growth outperforming many of its peers, it has a good chance of putting some serious green in its shareholders’ pockets.
Intuitive Surgical is best known for its da Vinci robotic surgical system that enables surgeons to make precise cuts that can reduce scarring and shorten hospital stays. For insurers, this can result in higher up-front costs but reduce longer hospital stays, which can prove to be even more costly.
The da Vinci system is the undisputed leader in robot-assisted surgery. Intuitive has installed almost 6,000 of its machines worldwide since 2000, more than all of the company’s competitors put together. The company has been able to build priceless relationships with surgeons in hospitals and surgical centers very unlikely that we’ll see his customers switch to a competing system.
But it’s not just the company’s overwhelming competitive advantage that makes it such an attractive stock. Its operating model is Designed to be more efficient over time. As more da Vinci systems are installed, a higher percentage of sales will come from segments with juicier margins, such as: B. Instruments and accessories sold with each procedure, as well as from system maintenance.
Intuitive Surgical is just beginning to capitalize on its opportunity with its innovative soft tissue surgical solutions. Expect the da Vinci to gain significant market share in thoracic, colorectal, and general soft tissue procedures over the decade.
This article represents the opinion of the author who may disagree with the “official” referral position of a Motley Fool Premium Consulting Service. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.