Growth stocks might not have been the hottest investments a few months ago, but that doesn’t mean investing in this space is dead. Not even close.
While shares of many of these companies have fallen well below pandemic highs — and some have been right — there are still plenty of compelling growth stocks with strong companies to invest in now.
If you have $1,000 to invest, here are two such stocks to consider adding to your portfolio.
I’m not usually one to rave about travel stocks, not because there aren’t any really great companies in this space, but simply because I’m drawn to other areas. airbnb (ABNB -1.52%) remains an exception to this personal rule.
Unfortunately, the company, which reported 58% year-over-year revenue growth in its most recent quarter (one of its most profitable quarters ever), not to mention nearly $800 million in free cash flow, took a long time. The journey is done. Epidemic. Airbnb’s second-quarter revenue wasn’t a huge jump year over year; It grew its revenue by more than 73% from the same quarter in 2019.
I’ve been following this stock fairly closely since its IPO in late 2020, and decided early on that I wanted to see a series of earnings reports that weren’t just growth numbers on pandemic recovery before investing any money. I am currently planning to invest in the company later this year.
The reason I find Airbnb so compelling is that it’s so much more than just a travel exchange. It’s a way to play the space of travel, but it’s also an investment in trends like work, the rapidly evolving future of technology, and new ways of living and working. Now, given the current inflation and interest rate environment, it is quite realistic to expect that Airbnb will face further volatility as consumer spending inevitably slows down in the near future.
It may even take a few years for these trends to dissipate. In the longer term, however, Airbnb is well positioned to capitalize on the changing needs of its customer base and find the ideal accommodation and experience for everyone from travelers to long-term renters. They choose to go anywhere in the world.
Chevy (CHWY -1.16%) was a very popular stock at the start of the pandemic. Recently, however, growth stock prices have fallen in several regions, and Chevy has followed suit.
Chevy is much more than a destination for pet owners to get food and accessories, although it certainly accounts for a significant portion of its sales and profits. The company continues to diversify its business model beyond just selling pet products, from its online pet pharmacy, where you can find everything from prescription drugs to dietary supplements, to its AutoShip membership program, to CarePlus pet insurance and wellness plans, where you can buy anything.
In the second quarter of this year, Chevy’s net sales rose 13% year over year as net income came in at $22.3 million, compared to a loss of $16.7 million in the year-ago quarter. Chewy reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $83.1 million, up 257% from the prior-year period.
Grand View Research estimates that the entire pet care market will be worth $236 billion by 2030. Chevy will control almost half of the pet products market as of 2021, according to a report by Cardify.AI.
While Chewy’s stock is currently trading fairly low, its pet spending isn’t going anywhere. Given the company’s strong path to market dominance and continued growth, Chevy has significant room to grow its business and improve shareholder returns for years to come.
Rachel Warren has no position in any of the stocks mentioned. Near The Motley Fool Airbnb, Inc. and Chewy, Inc. Has Reviews and Recommended. The Motley Fool has a disclosure policy.