With the stock market back near all-time highs, it may feel like it's too late to invest during the coronavirus pandemic.
But there's still plenty of uncertainty in the market, as new cases are surging in a number of states and the economic recovery is only in its infancy. Volatility means opportunity for investors, and there's still a lot of movement in the market -- the bifurcation continues between tech stocks, which are well-suited to the current era, and cyclical stocks like consumer discretionary companies that have gotten crushed in the pandemic.
In markets like these, a little bit of cash can go a long way. If you've got $1,000 to invest, here are three options that could give you huge returns: Domino's Pizza (NYSE:DPZ), Vroom (NASDAQ:VRM), and Bill.com Holdings (NYSE:BILL)
Domino's: A bulletproof restaurant stock
Domino's Pizza has been one of the best stocks in the stock market over the last decade, delivering a whopping 3,000% return, thanks to the reformulation of its pizza recipe and investments in technology to make ordering easier.
During the pandemic, Domino's advantage has become even clearer: It's a seller of low-priced comfort food employing a delivery/takeout model. While most restaurant chains, especially sit-down ones, have struggled, Domino's has seen sales surge. From March 23 to May 17, comparable sales in the U.S. jumped 14% as local economies began to reopen and Americans grew tired of cooking at home. Sales at international locations have fallen due to mandated closures, but that should recover as they reopen.
Meanwhile, there are signs in the U.S. that dine-in restaurant service may not fully reopen during the pandemic. Some restaurants in states seeing cases climb have closed down again, and other states are delaying restaurant reopenings, especially for indoor service. That should help eliminate Domino's competition and fuel its growth both during the pandemic and over the long term.
Domino's, on the other hand, has a clear path to double-digit earnings growth over the coming years as it opens new locations and grows comparable sales, which should make it a winner no matter what happens with the pandemic.
Vroom: Disrupting the used-car market
Investors may be familiar with Carvana, the online used-car seller that's put up gains of more than 1,000% since its 2017 initial public offering. Now, Vroom, a used-car e-commerce platform that had its IPO earlier this month, has an opportunity to deliver similar growth.
Since launching its e-commerce platform last April, Vroom has seen triple-digit growth, with sales in that division up 159% to $233.2 million in the first quarter this year. The company is also chasing a huge opportunity in the used-car market, which is valued at $841 billion in the U.S., and is bigger than any other consumer product category. Fewer than 1% of used-car sales currently take place online, even though consumers generally dislike the experience of shopping at a dealership and the peer-to-peer marketplace comes with its own risks; these factors give Vroom a secular tailwind.
Though car sales typically fall during a recession, Vroom could actually see a boom: Social distancing protocols may lead more people to get their own set of wheels so they can avoid public transit; e-commerce presents a safer option for buying a new car than doing so in-person; and used cars are likely to be more popular than new models with many consumers who are still on tight budgets.
Carvana recently saw its streak of 23 straight quarters of triple-digit revenue growth, which had propelled the stock, come to an end. Vroom, the smaller of the two, may just be starting a high-growth streak of its own.
Bill.com: A work-from-home winner
Working from home has been one of the biggest trends during the pandemic, and that's unlikely to change, at least until (or unless) an effective vaccine becomes available. Even then, some of the shift to work-from-home is likely to remain, as some companies have told their employees that they can work from home permanently, and many workers are happier doing so.
Bill.com provides cloud-based software to help small and medium-sized businesses (SMBs) manage back-office operations like payments and accounting. As of 2016, more than 90% of SMBs relied on paper checks to make and receive payments, illustrating the market opportunity in front of Bill.com; it estimates the global market for its service to be worth $30 billion.
However, the market for remote payments has likely increased during the pandemic, which has made traditional paper transactions difficult with so many people working from home. CEO Rene Lacerte said on the recent earnings call: "What we started to see was in mid- to late March, that businesses that now had shelter-in-place or work-from-home guidelines, they now needed to find a way to manage their back office, their financial operations." He also said he expected the transition to digital financial operations to accelerate because of the pandemic.
The company also sees core revenue growing 46% in the second quarter, indicating it should be able to keep up its growth momentum during the crisis. As the crisis drags on, Bill.com could see more SMBs flock to its service, pushing the stock higher.