The first half of 2022 had the dubious distinction of ending with the biggest market loss in over 50 years. For investors accustomed to the recent bull market, this may seem like a blow. But time and time again, the stock market has always returned to gains after a bear market and surpassed previous highs.
It’s a good reminder to focus on high-quality companies that should rebound easily when the market does, providing many years of gains for your portfolio. Shopify (STORE 0.68%), Airbnb (ABNB -0.15%)and Floor and decoration backgrounds (NDF -1.23%) are three low-trading stocks that can help prepare you for life.
E-commerce giant Shopify has been under a lot of pressure lately, and its stock is now down 76% this year. This is not a good time for tech or retail stocks. The market has little appetite for popular growth stocks and sees near-term pressure for anything retail-related. Investors shun upstarts and unprofitable companies in favor of solid value stocks that can survive any downturn.
Internally, the company is facing a drop in demand after the first pandemic rush. This impacts its business in two important ways. First, revenue growth slowed sharply in the first quarter of 2022 to 22% year-over-year. The other is that management is increasing its marketing spend, which affects the bottom line. Shopify posted a massive $1.5 billion loss in the first quarter after many quarters of profitability, especially as sales surged last year.
There may be more in the future based on Shopify’s recent announcement that it is acquiring delivery company Deliveroo for over $2 billion. This will take some of its revenue, but it’s an effort to build its e-commerce capabilities, which should result in increased merchant signups and an overall increase in sales and revenue down the line.
E-commerce is expected to continue to grow at a rapid pace and reach $5.55 trillion this year. The percentage of global sales made online this year is expected to reach 21% of all sales, up from 17.9% two years ago, and is expected to reach 24.5% by 2025. Shopify is investing in its future and capturing much of this growth. market. Buying Shopify stock now can help build your portfolio for life.
Airbnb did not benefit from any early-stage pandemic orders; rather the opposite. It suffered a double-digit sales decline and yet was still the biggest initial public offering of 2020 at the same time. It was a very different market.
Despite the astronomical valuation at the time, Airbnb is a company that is more than hype. It rebounded with strong sales even though travel has yet to fully resume. It surpassed its pre-pandemic sales levels and posted several profitable quarters.
It is well positioned to continue to show sales growth in this atmosphere as well as in the future, and it is constantly improving to get there. It has just launched a highly anticipated “summer release” with 100 upgrades to various aspects of its service, and which follows a release last year with 150 improvements.
It is the agility of the company that is a major element of its success. It was able to recruit more hosts and offer more non-urban locations when travel got tough, but it won’t be stuck with them afterward, unlike many retailers who are stuck with excess inventory. He can respond to demand wherever it is, literally or figuratively.
Airbnb stock is down 44% this year, but it offers huge growth opportunities.
3. Flooring and decoration
There’s so much to love about Floor & Decor, both as a store and as a stock. Warren Buffett noticed it too, buying stocks for Berkshire Hathaway.
It’s fairly new, in operation since 2020, and fairly small, with 166 stores and five design centers in 33 states. While it’s fairly focused on flooring and complementary products, when you consider that there are over 2,300 Home Depot stores and counting, it seems like there’s a huge opportunity for growth.
So far it has done a great job in its existing slots. It offers everything a shopper for their products could need, with “visually inspiring” layouts, free design services, and a solid omnichannel model. Customers appreciate its low prices. It opened 27 stores in 2021 to reach 160, nearly double the number five years ago, and it sees the potential for at least 500 stores.
First-quarter 2022 sales rose 31% year-over-year to $1 billion for the first time, although net profit fell as the company faced the same rising costs as the rest of the retail industry.
It’s a simple, winning pattern, but the stock is down 47% this year. The shares are now trading at 25 times earnings over the past 12 months, which seems like a good value for a stock with its potential. At this price, many years of growth should open up to shareholders.
Jennifer Saibil holds positions at Airbnb, Inc. The Motley Fool holds positions and endorses Airbnb, Inc., Berkshire Hathaway (B-shares), and Shopify. The Motley Fool recommends the following options: Shopify January 2023 $1,140 Long Calls, Berkshire Hathaway (B-Shares) January 2023 Long Calls $200, Shopify January 2023 Short Calls $1,160, short calls of $200 in January 2023 on Berkshire Hathaway (B shares), and short calls of $265 in January 2023 on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.