If there’s one lesson the stock market is always willing to teach, it’s that patience pays off. Despite navigating its way through the Black Monday crash in 1987, the dot-com bubble, the Great Recession, and the coronavirus crash, the benchmark S&P 500 has delivered an average annual total return of more than 11% since the beginning of 1980.
Patience can pay off for you, as well, if you put your money to work in game-changing businesses and allow your investment thesis to play out over time. As we move into the second-half of 2021, the following trio of top stocks has the potential to make you a lot richer.
If growth stocks tickle your fancy, one of the best investments you can make right now for the second half of 2021, and well beyond, is cloud-based customer relationship management (CRM) software provider salesforce.com (NYSE:CRM).
CRM software is used by consumer-facing businesses to optimize interactions and sales. It helps with real-time information logging, overseeing service and product issues, managing online marketing campaigns, and can offer predictive analysis of what existing clients might buy a new product or service. It’s a sustainable double-digit growth opportunity that’s been a no-brainer tool used by service-oriented industries, but is becoming more widely used by healthcare, financial, and industrial companies.
Salesforce is the king of the mountain when it comes to cloud-based CRM. According to estimates from IDC, salesforce nearly controlled 20% of global CRM revenue share in the first-half of 2020. That nearly quadruples its next-closest competitor, and it is more than the four closest competitors, combined.
In addition to growing its business organically, salesforce has a rich history of making smart acquisitions. Some of its most successful include purchasing Tableau Software in 2019, and MuleSoft in 2018. The latter is responsible for powering the Salesforce Integration Cloud, while the former is a data treasure trove that helps businesses gain a deeper understanding of their customers.
The newest deal, tallying $27.7 billion, is for cloud-based enterprise communications platform Slack Technologies. This deal will allow the company to cross-sell its suite of CRM support solutions to Slack’s bevy of small-and-medium-sized businesses.
This combination of market share dominance, organic growth, and acquisitions has salesforce growing at 20% or more annually. Per CEO Marc Benioff, salesforce is on track to hit a goal of $50 billion in annual sales by fiscal 2026 (up from $21.3 billion in fiscal 2021). This is growth and dominance investors can trust.
Don’t worry, value investors, I haven’t forgotten about you. A second top stock that can make you a lot richer in the latter half of 2021 (and beyond) is precious-metal miner SSR Mining (NASDAQ:SSRM).
Roughly 10 years ago, gold and silver were soaring and precious-metal miners were liberally spending on new projects, existing mine expansions, and acquisitions. After the price of gold peaked, many were left with less-than-stellar balance sheets. That’s not been the case with SSR Mining.
Last year, SSR completed a merger of equals with Turkey’s Alacer Gold. This effectively combined SSR’s Marigold and Seabee gold mines, and its silver-producing Puna operations in Argentina, with Alacer’s Copler gold mine. Altogether, these four producing assets should yield between 700,000 gold equivalent ounces (GEO) and 800,000 GEO annually for the next five years, if not longer. Prior to the deal, SSR was producing a little north of 400,000 GEO annually.
Here’s the thing: Whereas most gold stocks have scrambled to pay down debt, SSR is sitting on a net cash balance of around $400 million, as of the end of March 2021. The roughly $450 million the company is expecting to generate in annual free cash flow has allowed it to begin paying a $0.05 quarterly dividend, as well as institute a $150 million share buyback program.
In addition to improved output, a dividend, and a share buyback program, SSR Mining should benefit from stronger precious-metal prices. The Federal Reserve continues to hold off on raising historically low lending rates, while the prospect for longer-term inflation is climbing. Both scenarios point to investors continuing to flock to gold as a potential store of value.
Just how cheap is SSR Mining? Shares can currently be purchased for less than 9 times Wall Street’s forward-year earnings estimate. Even more telling, SSR is valued at a multiple of 5 times this year’s estimated cash flow, which implies a significant discount to a fair valuation, which I’d peg as closer to 10 times cash flow.
There’s no question that cannabis is a sustainable double-digit growth opportunity. But considering the regulatory issues and atrocious balance sheets that accompany most Canadian pot stocks, the U.S. is the smart way to play the cannabis craze. By mid-decade, the U.S. could be bringing in more than $41 billion in annual weed sales, per New Frontier Data.
What makes multistate operator (MSO) Trulieve so special is how the company has chosen to expand. Many large MSOs have opened retail, cultivation, and processing facilities in as many legalized states as reasonable. As for Trulieve, it has 91 operational retail locations in the U.S., 85 of which are located in medical marijuana-legal Florida. That’s right — it’s opened 85 dispensaries in a single state.
How’s that worked out? By blanketing the Sunshine State, Trulieve Cannabis has been able to gobble up 53% of Florida’s dried cannabis market share and 49% of its higher-margin cannabinoid oils share. In other words, the company has effectively built up its brand and a loyal customer following without having to break the bank with its marketing budget. As a result, it recently reported its 13th consecutive profitable quarter.
In May, we learned that the next chapter for Trulieve will entail taking its blueprint to new markets. On May 10, it announced a $2.1 billion deal to acquire MSO Harvest Health & Recreation (OTC:HRVSF). Harvest Health has a five-state focus, one of which includes Florida. Thus, Trulieve will soon have an even larger presence in the Sunshine State. But the big driver of this deal is Harvest’s 15 operational dispensaries in Arizona, which legalized adult-use cannabis in November and began sales in January. Nothing would stop Trulieve from becoming a dominant force in Arizona’s potential billion-dollar weed market.
With its rich history of profitability and stunning growth potential, Trulieve Cannabis checks all the right boxes to be a moneymaker for investors.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.