While changing investor sentiment can drive steep fluctuations in the market and individual stocks, great businesses don't vanish overnight. Looking beyond share prices alone at the underlying company you plan to buy can help you separate the wheat from the chaff in your portfolio.
Being selective about the types of stocks you buy while ensuring you only choose businesses that you plan to hold for a minimum of five years can help you build a resilient, profitable portfolio with time. If you're on the hunt for fantastic growth stocks to buy and have $1,000 to invest right now, here are two names to consider.
1. Airbnb
Airbnb(NASDAQ: ABNB) continues to evolve as its massive footprint within the travel industry widens. The company has a habit of capitalizing on the changing demands of consumers, and that adaptability, coupled with the continued post-pandemic travel resurgence, has driven substantial profitability and cash flow.
The company just reported its financial results for the first quarter of 2024 on May 8. It was another banner quarter for the company on multiple fronts. Revenue for the three-month period surpassed $2 billion, an 18% jump from one year ago.
It was also the most profitable first quarter in the history of Airbnb, with net income clocking in at $264 million. That was a significant 126% increase from the same quarter in 2023.
Trailing-12-month free cash flow totaled around $2 billion as of the end of the quarter, with a free cash flow margin of 41%. That free cash flow total was also up 21% from one year ago.
The continued growth of short-term bookings as well as steady influx of long-term stays (28 days or more) drove gross booking value of $23 billion in the quarter, a 12% year-over-year increase.
Hosts are continuing to flock to the platform. Despite the fact that Airbnb removed thousands of lower-quality listings in the first quarter of 2024, it ended the period with 15% more active listings than one year ago.
The healthy mix of stays that are driving Airbnb's growth story, along with its increasingly robust balance sheet, are bright green flags for this travel stock. Notwithstanding the impact of near-term economic shifts, this business looks primed to deliver growth to a long-term investor's portfolio.
2. Etsy
Etsy(NASDAQ: ETSY) has had a tough time since the earlier days of the pandemic when online spending boomed at unprecedented rates. A combination of growth deceleration along with changes in consumer spending, given ongoing macro challenges, has impacted Etsy's business.
The stock is trading down about 30% from its position one year ago. Many of the headwinds Etsy is encountering right now are not specifically tied to the business itself.
Etsy has the advantage of an asset-light business since it doesn't own or store inventory, its profits are improving, and the company has a hefty stash of cash on its balance sheet. The company also occupies a unique but rapidly expanding addressable market within the broader e-commerce space thanks to its focus on unique, handmade, and secondhand items.
Revenue only grew by a smidgen in the first quarter of 2024, while net income was actually down from the year-ago period. Still, those two figures were $646 million and $63 million, up 183% and 403%, respectively, from the same quarter in 2020. Gross merchandise sales for the recent three-month window totaled just shy of $3 billion, down 3.7% year over year but up 121% on a four-year basis.
Etsy closed out the first quarter of 2024 with 96.4 million active buyers and 9.1 million active sellers. Those figures represented respective bumps of 0.9% and 15% from just one year ago. On a more positive note, the Etsy marketplace reactivated 6.3 million buyers in the quarter and counted 37 million individuals as repeat buyers. Those buyer figures were year-over-year increases of 6% and 3%.
The company also closed out the quarter with more than $1 billion in cash and investments on its balance sheet. Changes in consumer spending that have driven a decided shift from discretionary to essential goods compared to a few years ago may persist for several more quarters at least.
Investors who scoop up this stock will need to be cognizant of this reality before taking a buy-and-hold position. Still, the overall potential of this business may outweigh the likelihood of near-term volatility and could be a compelling reason for some investors to buy on the dip.
Should you invest $1,000 in Airbnb right now?
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