The American Rescue Plan, a rescue package that will put some much-needed cash in the hands of average Americans, was adopted by the US Congress on March 10. The following day, President Biden signed the bill into law. Eligible Americans will receive a $1,400 check, with a matching amount for each dependant, thanks to this new piece of legislation. These initiatives will go a long way toward assisting individuals who are still suffering from the economic consequences of the pandemic. With that in mind, putting that money to work by investing in stocks would not be a bad idea, but only if you’ve taken care of your immediate financial commitments and have enough money set aside for a rainy day. If this sounds like you, here are two firms to consider investing in with your stimulus funds: Teladoc Health (NYSE:TDOC) and PayPal Holdings (NYSE:PYPL) (NASDAQ:PYPL).
YCharts SPX data 1. Teladoc
The term “revolutionary” is frequently used in the investment community, and for good reason. Investing in a company whose business is truly revolutionary can result in market-shattering gains over time. That is why investors should carefully consider buying Teladoc stock, a firm that is revolutionizing the delivery of healthcare services.
Teladoc is a platform that allows consumers to have virtual consultations with nurses and general practitioners, which saves time and money for healthcare professionals. Teladoc is also expanding in sectors such as behavioral health, dermatology, nutrition, and others. According to management, the company’s specialized care visits will have increased by more than 500 percent by 2020. During fiscal year 2020, the company’s total visitors increased by 156 percent.
In a cash transaction valued at $18.5 billion, Teladoc increased its service offerings by acquiring Livongo Health, a digital chronic disease management specialist. Teladoc’s long-term goal is to become a one-stop shop for as many virtual care services as possible, and the deal, which closed in October, fit perfectly in.
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Because of the rising amount of services available on Teladoc’s platform, patients will continue to be drawn to it. When the value of a service rises as more people use it, this is known as the network effect. Teladoc will be able to maintain a significant portion of the burgeoning telemedicine market because to this competitive edge.
Between 2021 and 2028, this sector will increase at a compound annual growth rate (CAGR) of 22.4 percent, according to Grand View Research. For those hoping to profit from this long-term trend, Teladoc is one of the greatest firms to invest in. Given that the company’s price has dropped 35% in the last month, now may be as good a time as any to start investing in this healthcare stock.
2. Use PayPal
PayPal, a fintech company, had a strong financial year last year. Consumers relied more on digital payments as a result of the lockdown orders, which is squarely in the wheelhouse of the tech giant. PayPal’s net new active accounts increased by 95 percent year over year in fiscal year 2020, to 72.7 million.
PayPal’s overall payment volume, or the total value of transactions made on its platform, increased by 31% to $936 billion. Meanwhile, PayPal’s net sales grew by 22% to $21.5 billion, with adjusted profits per share (EPS) increasing by 31% to $3.88.
Despite the fact that last year’s economic dynamics had a beneficial impact on PayPal’s operations, the company will be OK after the pandemic has passed. After all, as the graph below indicates, PayPal’s revenue and profitability expanded at a rapid pace before 2020.
YCharts’ PYPL Revenue (Quarterly) data
Our decreased reliance on cash transactions will continue to benefit PayPal. The digital payment sector will grow at a CAGR of 19.4 percent between 2021 and 2028, according to Grand View Research. More digital transactions will mean more opportunity for PayPal to expand. The business presently estimates its entire addressable market to be at $110 trillion (including internet transactions, in-store retail transactions, bill pay, and so on).
PayPal wants to hit $50 billion in sales by 2025, more than doubling its previous year’s total. PayPal will be able to meet this target thanks to its rising client base and service offerings. Last year, for example, the computer giant began allowing its clients to buy and sell cryptocurrencies.
With renewed and increased interest in this asset class among individuals and organizations, the move could attract additional users to PayPal’s platform and increase engagement. PayPal has also begun to offer services such as “buy now, pay later” and QR codes, which allow app users to buy and trade without having to make contact, which is a perfect alternative in the age of COVID-19.
PayPal’s stock has also taken a beating recently, with shares down 18% in the previous month. Long-term investors should disregard PayPal’s recent troubles, as the company is well-positioned to continue outperforming the market for many years to come.
This post is the author’s own view, which may differ from a Motley Fool premium advice service’s “official” recommendation position. We’re a mishmash! Questioning an investing theory, even our own, encourages us to think critically about investing and make decisions that will make us smarter, happier, and wealthier.
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