Amid all the chaos caused by the pandemic, recession and civil unrest in 2020, the stock market performed surprisingly well, despite a sharp decline in the first quarter of the year. In the past 12 months, the S&P 500 is up 17%.
Could this year be just as dangerous as the last? That seems unlikely, but no matter what, some stocks should continue to do well. Two such stocks are Intuitive Surgical Procedure (NASDAQ: ISRG) and Shopify (NYSE: SHOP). This is why both companies are worth adding to your portfolio to weather any storms in 2021.
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1. Intuitive Surgical Procedure
Any technology that improves our ability to treat life-threatening diseases is likely to find some success in the marketplace. Intuitive Surgical’s robot-assisted surgical devices help physicians perform minimally invasive surgeries. Compared to open surgeries, these procedures result in smaller incisions, shorter hospital admissions and faster recovery times. In other words, both the patient and the hospital benefit greatly from these devices.
Intuitive Surgical markets the da Vinci robotic surgery system, one of the leading such devices on the market. As of December 31, the company had installed 5,989 da Vinci systems worldwide, an increase of 7% compared to the end of 2019. The number of elective surgeries actually performed with the Crown Jewel system decreased as a result of the pandemic, making the top line.
Total turnover also decreased by 3% in 2020 compared to the previous financial year. The company will continue to deal with these headwinds for the duration of the pandemic, but in the long run it should be fine for a number of important reasons.
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Intuitive Surgical builds a powerful competitive advantage. The company is benefiting from high switching costs: Once a hospital has spent between $ 500,000 and $ 2.5 million to purchase the da Vinci system, spent many hours training its staff on this device, and spent even more to Buying the corresponding tools, switching to a competing machine is an expensive proposition.
Even in the case of da Vinci technical problems, it is easier for hospitals to fix them than replace them. Intuitive Surgical also provides maintenance services to its customers. Thanks to these factors, the healthcare company should keep most of the customers it already has.
And it has already gone through a host of regulatory hoops to bring the da Vinci system to the market. The strict regulatory landscape of the healthcare industry is a bonus for companies that are already well established, such as Intuitive Surgical.
According to research firm Mordor Intelligence, the company should continue to benefit from increased adoption of robotic surgery, which, according to research firm Mordor Intelligence, will grow at a compound annual rate (CAGR) of 19.9% between 2021 and 2026. And with an aging population, the need for innovative devices like the da Vinci will only grow. This long-term tailwind should provide Intuitive Surgical with enough fuel to grow its sales, earnings and stock price quickly.
2. Shopify
The e-commerce space is overcrowded, with dozens of companies vying for power. Shopify has achieved tremendous success in this sea of competitors by marketing itself as a one-stop shop for small and medium businesses looking to build an online presence. Shopify makes it easy for them to sell and ship their products, process payments, and a lot more.
The company has also built a competitive advantage – like Intuitive Surgical, it benefits from high switching costs. It is expensive and time consuming for businesses to set up an online store and attract customers. After going through this process, few business owners would want to switch platforms and start from scratch, which means that Shopify will likely retain the bulk of its customers.
It continues to deliver excellent financial performance. During the third quarter, which ended September 30, revenue from subscription solutions grew 48% year over year to $ 245.3 million, in part due to an increasing number of merchants on the platform.
Revenues from the technology company’s merchants solutions increased 132% to $ 522.1 million, driven by the growth in gross trade volume (the total value of the items sold on the platform). Total sales increased 96% year over year to $ 767.4 million.
Image Source: Getty Images.
Unlike Intuitive, Shopify got a boost because of last year’s pandemic as consumers lean more heavily on online shopping. But investors have gotten used to tremendous sales growth over the years, and that trend is just about to end. Analysts see the company’s revenue increase by an average of 105.4% per year over the next five years.
The U.S. Department of Commerce says e-commerce made up just 14.3% of total revenue in the third quarter. As that number continues to grow, more merchants will try to reach customers online, and many of them will no doubt turn to Shopify. These factors make it an excellent stock for those trying to crush the market from now on.