Stock Market Crash 2.0: Where to Invest $1,000
Despite reopenings in many parts of the country, we are not yet off the hook with the coronavirus. With the delta variant of the SARS-CoV-2 virus causing COVID-19 to spread like wildfire, many fear that this dreaded pandemic will extend well beyond 2021. These worries have fueled a terrible, horrific day. , not good and very bad for the market on July 19, with the three main US stock indices having fallen by at least 1%. the Dow Jones fell more than 2% in what turned out to be its worst one-day sale since the start of the year.
While the market mostly rallied in the following days, the possibility of a much worse crash remains fresh in investors’ minds. There is, however, no need to fear this possibility, as it would undoubtedly create opportunities to grab shares of large companies in the discount bin. Two companies that would be excellent options in the event of another downturn in the market are AbbVie ( ABBV 0.39% ) and netflix ( NFLX 2.48% ).
Pharmaceutical giant AbbVie will likely start facing biosimilar competition in the United States for Humira, its top-selling drug, in 2023. Opponents believe that’s reason enough to stay away from its stock, especially given the decline in international sales of Humira after biosimilar competition entered the market overseas. But AbbVie’s management team anticipated this situation and planned accordingly.
As things stand, AbbVie has several areas for growth that offset Humira’s declining sales in Europe. Skyrizi and Rinvoq – both of which treat several autoimmune diseases – have rapidly increased their sales. In the first quarter ending March 31, Rinvoq’s sales were $303 million, more than double the first quarter of 2020. Meanwhile, Skyrizi’s revenue soared 91% to $574 million. of dollars.
Note that both of these products have only been on the market for about two years. Expect many more quarters of growth for these drugs. Venclexta, a cancer drug, is also contributing, with sales jumping 27.9% year-over-year to $405 million in the first quarter.
We also can’t overlook AbbVie’s acquisition of Allergan in May 2020 in a cash and stock deal valued at $63 billion. The purchase allowed the pharmaceutical giant to further reduce its dependence on Humira.
One of the key products AbbVie obtained through this deal was Vraylar, a treatment for schizophrenia. Its sales of $346 million were up more than 20% year over year in the first quarter. According to management, Vraylar is “one of the fastest growing drugs in psychiatry.”
Then there’s Botox, a product that AbbVie is confident we won’t see biosimilars for anytime soon. Botox Cosmetic sales jumped more than 40% year over year to $477 million, while Botox Therapeutic sales increased 7% to $532 million.
AbbVie’s current lineup will offset Humira’s eventual decline, and the company’s strong pipeline will also help strengthen its drug pipeline. Patients need medicines, especially lifesaving medicines, regardless of economic conditions, and that’s why AbbVie is well positioned to weather a potential downturn – and why it would be a good idea to claw back some of it. . pharmaceutical inventory in the event of a stock market crash.
Netflix’s critics have argued that the streaming industry’s increasingly competitive landscape, coupled with slowing user growth, is problematic for its financial results and stock market performance. I respectfully disagree with this view. First, although there are more streaming platforms than ever before – and Netflix has probably lost and will continue to lose some users as a result – these competing services are more than able to co-exist.
Many customers are more than happy to pay for several of these services as they largely offer different libraries of movies and TV shows (I personally have a subscription to three streaming services). Netflix has invested heavily in original content to bolster its library and entertain its users, and the strategy has worked well.
Moreover, the company’s user growth story is far from over. As management claims in its latest letter to shareholders, streaming accounts for just 27% of screen time in the United States. The rest is still controlled by linear TV, and the company’s long-term goal is to replace linear TV. Netflix offers thousands of on-demand, ad-free shows, and these benefits will likely continue to drive users away from traditional cable TV and into the streaming world.
The company hopes that many of these users will find their way onto its platform. Note that streaming industry penetration is even lower outside of the US, especially in developing countries where internet penetration is lower. In other words, the company can still be in the early innings of its growth storydespite what the bears say.
We may or may not be heading for further lockdown orders. If so, Netflix will likely benefit, just like last year. But even if that’s not the case, there’s more than enough fuel in Netflix’s growth story to justify buying its stock today, especially if it drops significantly due to a stock market crash.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging 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 wealthier.