Amid all the chaos caused by the pandemic, recession and civil unrest in 2020, the stock market performed surprisingly well, despite falling sharply in the first quarter of the year. Over the past 12 months, the S&P 500 is 17% higher.
Could this year be just as dangerous as the previous one? This seems unlikely, but no matter what happens, some stocks should continue to perform well through it all. Two such shares are Intuitive surgical (NASDAQ: ISRG) and Shopify (NYSE: STORE). This is why both companies are worth adding to your portfolio to withstand storms in 2021.
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1. Intuitive Surgical
Any technology that improves our ability to treat life-threatening diseases is likely to find some success in the market. Intuitive robotic surgical devices with robotic support help physicians perform minimally invasive surgeries. Compared to public surgeries, these procedures result in smaller incisions, shorter hospital stays, and faster recovery. In other words, both the patient and the hospital benefit greatly from these devices.
Intuitive Surgical markets the da Vinci robotic surgical system, one of the leading such devices on the market. On December 31, the company installed 5989 da Vinci Systems worldwide, representing a 7% increase compared to the end of 2019. The number of elective surgeries performed with the crown jewel system has dropped due to the pandemic and the top line.
Total revenue also fell by 3% in 2020 compared to the previous financial year. The company will continue to deal with this headwind for the duration of the pandemic, but in the long run it should only be good for a few important reasons.
Image Source: Getty Images.
Intuitive Surgical builds a powerful competitive advantage. The company benefits from high switching costs: once a hospital spent between $ 500,000 and $ 2.5 million on acquiring the da Vinci system, it spent long hours on its device and spent even more on the device. to purchase associated instruments, to go to a competitive machine is an expensive offer.
Even in case of technical problems with the da Vinci, it is easier for hospitals to fix it than to replace it. Intuitive Surgical also provides maintenance services to its clients. Thanks to these factors, the healthcare business needs to retain the most customers it already has.
And it has already jumped through a number of regulatory hoops to launch the da Vinci system on the market. The strict regulatory landscape of the healthcare industry is a bonus for companies that are already established, such as Intuitive Surgical.
According to research firm Mordor Intelligence, the company must continue to benefit from the increasing acceptance of robotic assisted surgery, which will grow between 2021 and 2026 at a compound annual rate (CAGR) of 19.9%. And with an aging population, the need for innovative devices like the da Vinci will only increase. This long-term backlash should provide Intuitive Surgical with enough fuel to grow its revenue, profits and share price rapidly.
2. Shopify
The e-commerce space is crowded, with dozens of companies struggling for supremacy. Shopify has achieved tremendous success in this sea of competitors by marketing itself as a one-stop-shop for small and medium-sized businesses looking to build an online presence. Shopify makes it easy for them to sell and ship their products, process payments, and more.
The company has also built up a competitive advantage: just like Intuitive Surgical, it benefits from high switching costs. Creating an online store and attracting customers is expensive and time consuming. After going through this process, few business owners want to switch platforms and start over, which means that Shopify is likely to retain the majority of its customers.
It still achieves excellent financial performance. During the third quarter, which ended on September 30, revenue for subscription solutions rose 48% annually to $ 245.3 million, in part due to an increasing number of traders on its platform.
The technology company’s trader solutions rose 132% to $ 522.1 million, thanks to growth in its gross trading volume (the total value of items sold on its platform). Total revenue increased 96% year-on-year to $ 767.4 million.
Image Source: Getty Images.
Unlike intuitive, Shopify got a boost last year due to the pandemic, as consumers relied more heavily on online shopping. But investors have become accustomed to tremendous income growth over the years, and the trend is not about to end. Analysts see the leading company rise by 105.4% a year over the next five years.
According to the U.S. Department of Commerce, e-commerce accounted for only 14.3% of total sales in the third quarter. As the number continues to grow, more merchants will want 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.