Where to invest $ 1,000 right now
There is more than one way to be successful in investing, but one of the best proven strategies is a simple buy and hold strategy. Be patient, even in the face of brutal market liquidations, wins more often than he loses because stocks tend to rise over the long term.
It is important to find good companies that can withstand the rigors of market corrections. Even when stock indexes regularly set new records, savvy investors can still find some great deals to buy now. If you have $ 1,000 to invest that you won’t need for at least three to five years – and preferably decades – the following three actions can reward investors who wait.
1. Annaly Capital Management
Mortgage Real Estate Investment Trust (REIT) Annaly Capital management (NYSE: NLY) is the leading mortgage REIT (mREIT) and most important by market capitalization. It invests in mortgages and mortgage-backed securities, primarily those guaranteed by the full confidence and credit of the federal government in the event of default.
The so-called agency-backed mortgages, as they originate from Fannie Mae, Freddie Mac and Ginnie Mae, represent 99% of Annaly’s mortgage portfolio at the end of June. While this protects her business to some extent, one of the biggest risks Annaly faces is that the Federal Reserve is pumping billions of dollars into the economy.
Easy money policies could have a negative impact on the long-term health of the economy and could help fuel the soaring inflation we are experiencing. This is also why Annaly is is experiencing an increase in its constant prepayment rate (CPR), or the percentage of its portfolio that it expects to pay back within one year.
The TPC jumped to 26.4% this quarter from 23.9% in the first quarter. While mREIT expects its long-term CPR to be 12.9%, better than the 18% it predicted a year ago, it is still up from the rate of 11, 8% than he expected two months ago.
Like all REITs, however, Annaly is required to pay out most of its profits in the form of dividends. The company’s dividend currently pays around 10% per year, which is well within its average over the past two decades, as it has returned some $ 20 billion to shareholders in the form of dividends. Look for this mREIT to continue to grow and reward its investors for years to come.
It is clear that one of the main selling points right now for Novavax (NASDAQ: NVAX) is the potential of its vaccine candidate against the NVX-CoV2373 coronavirus, which shows great promise. It provides the biotechnology at clinical stage with a real opportunity to be one of the big three in vaccine production as the company looks forward to completing its regulatory application in the fourth quarter.
While this is a good catalyst for short-term growth, it wouldn’t be a very convincing argument for Novavax to be a long-term part of its portfolio if it were just a one-ride pony. Yet it is a drug development company and it has several therapies in progress. These include the Nanaflu for regular flu, which met all of its primary endpoints in phase 3 testing, and a COVID / flu vaccine mashup, for which it recently began clinical trials.
It’s still just a start with this one, but since each individual vaccine candidate has had positive results so far, there is a good possibility that a combined vaccine could be similarly successful. It is a great advantage to provide a reason for patients to be blocked fewer times. While Moderna also pursues a dual-use vaccine, Novavax could be the first on the market, which could give it a competitive advantage.
Biotech in the development stage is inherently risky, so I wouldn’t go all out on Novavax, but an investment of $ 1,000 as part of a larger portfolio could be a risk worth taking.
3. Successful holdings
FinTech Holdings reached (NASDAQ: UPST) has been public for less than a year (it went public last December), but it’s already making waves. The shares rose 700% in 2021 and rose more than 16 times their offer price of $ 20 per share. The market obviously likes what the company sells.
Uses achieved artificial intelligence (AI) to determine loan eligibility, which is a big difference from traditional lending institutions that use FICO scores or a handful of rule-based criteria to determine loans. The fintech AI channels its decision-making process across more than 1,000 data points, creating a network effect that he says allows him to accurately quantify the real risk. This ends up providing more loan opportunities at lower rates for the borrowers.
The vast majority of its lending business is unsecured personal loans, but it has recently expanded to include auto loans. He sees further growth opportunities with credit cards, mortgages, student loans and home equity lines of credit. Obviously, there is always a risk of default in the Upstart lending process.
Economic downturns like last year’s pandemic-induced recession could cause borrowers to default on their loans. Upstart says that because it is a digitally native transaction, consumers might not see a loan received through its operations as significantly as they see one obtained through a bank or other traditional channel.
Upstart appears capable of mitigating these risks. Revenues jumped 1,018% in the last quarter with commission income 1,300% higher, as loan issuance through its banking partners jumped more than 1,600% from the previous year. This allowed it to achieve operating income of $ 36 million this year, compared to a loss of $ 11 million last year, while adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) closely $ 60 million was a big leap from the $ 3 million loss a year ago.
Upstart isn’t the cheap stock it was when it went public or even a month ago (it’s up 60% since then), so an investor may want to wait for any signs of pulling back. But as part of a larger portfolio, a $ 1,000 stake in this fintech stocks might not be a bad place to start right now.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.