No stock is perfect, but quality businesses can stand the test of time in your portfolio.
While a full-fledged, prolonged stock market correction could impact shares across a range of industries, investors with capital on hand can find that these periods present fortuitous opportunities to put cash to work. If you have the risk appetite to invest right now, there are plenty of tried-and-true businesses that have stood the test of time and can do so in a long-term investor's portfolio.
Large-cap stocks, which generally include companies with a market value at or above $10 billion, are often household names or other established businesses that can provide more stable investment opportunities. If you have $500 to invest right now, here are two great businesses to consider for your basket of stocks.
Bristol Myers Squibb (BMY 0.46%) is one of the top pharmaceutical entities in the country, with a balance sheet and diversified lineup of products to prove it. The company has dealt with the inevitable cyclicality that many big pharma companies face in recent years, which is the loss of patent exclusivity on top-selling drugs.
The most recent of these events was the loss of patent exclusivity on Revlimid in 2022, which is one of the company's multiple myeloma drugs. Bristol Myers has plenty of other blockbuster drugs in its portfolio, though, with wide-ranging patent protections. Currently, top-selling drugs include the non-small-cell lung cancer drug Opdivo, a medication for numerous ailments, including moderate to severe adult rheumatoid arthritis called Orencia, anticoagulant drug Eliquis, and multiple myeloma drug Pomalyst/Imnovid.
Sales of these four drugs rose 15%, 7%, 10%, and 27%, respectively, in the second quarter of 2024 compared to the same period in 2023. Looking at the second-quarter period on the whole, revenue rose 9% year over year to $12.2 billion. Taking out the impact of foreign currency fluctuations, the top line grew 11% from one year ago.
The company's growth portfolio, which features precision oncology as well as immunology products, comprised nearly half of its revenue total for the quarter. The growth portfolio generated total revenue of $5.6 billion in the three-month period, an 18% surge on a year-over-year basis.
Bristol Myers is profitable, and net income in the quarter came in at $1.7 billion. It finished the quarter with $7 billion in cash and investments on hand and has generated a free cash flow of approximately $16 billion over the trailing 12 months. The healthcare stock has been paying a consistent dividend for over three decades and maintains an enviable payout ratio of approximately 60% of earnings.
Its current yield is in the ballpark of 5%, with a forward annual dividend rate of $2.40 per share. As icing on the cake, Bristol Myers has hiked its dividend by close to 50% in the trailing-five-year period alone. For long-term shareholders, while share price performance hasn't been a lot to write home about lately, Bristol Myers' dividend, market leadership, and underlying financial strength could make for a solid multi-year investment.
HubSpot (HUBS -0.20%) is a cloud-based software-as-a-service platform that offers an array of solutions designed to help businesses operate more seamlessly. The company specifically targets small and mid-sized businesses for its client base, with cloud offerings that range from marketing and sales solutions to customer service support and content creation services.
Companies can use the platform's customer relationship management (CRM) software, powered by artificial intelligence, to improve client interaction and retention in business-to-business (B2B) interactions. From lead generation to deal management to billing and invoicing customers, HubSpot's users can leverage these diverse cloud products to make data-driven decisions that optimize efficiency and the customer experience.
Over the trailing 12 months, HubSpot brought in $2.4 billion in revenue, up 23% from the same period in the prior year. It's also achieved a free cash flow of $344 million with a free cash flow margin of 14% in that same window of time.
Looking at the company's financial performance in the recent quarter, second-quarter revenue rose 20% year over year to $637 million. Of that total, about $624 million was attributable to subscription revenue, with the remaining $13.5 million coming from professional services (e.g., consulting services) and other revenue. Subscription revenue was up 20% year over year, while professional services and other revenue were up 18%.
HubSpot isn't profitable under generally accepted accounting principles (GAAP). However, it did report adjusted earnings of $104 million in Q2. It also shrunk its GAAP net loss to $14.4 million from $112 million in the same quarter last year. HubSpot ended the quarter with about $2 billion in cash and investments on its balance sheet. Shares have been beaten down recently, with one notable factor being that a rumored acquisition by Alphabet fell through.
However, HubSpot estimates that it faces a broad and growing total addressable market (TAM) opportunity. That TAM is expected to expand from $51 billion in 2023 to $77 billion by 2028, and management estimates that HubSpot has only penetrated about 10% of its market opportunity. This is a company that looks well poised to thrive on its own merits, and investors might find that its overall financial strength merits even a modest investment at its downtrodden valuation.