Want to get richer? 2 unstoppable stocks to buy now and hold for the next decade
Between 1928 and 2021, the S&P500 generated positive returns for 62 calendar years. In other words, the overall market gained ground about two out of three years. These are not bad odds for investors. But over the same period, the S&P 500 has also generated a total return of around 10% per year.
So while your holdings may go up or down in any given year, your chances of generating a profit with a diversified portfolio improve as your investment period lengthens. This illustrates the importance of a buy-and-hold mindset. Rather than trying to time the market, focus on investing in high-quality stocks for the long term. For example, Airbnb (NASDAQ: ABNB) and MercadoLibre (NASDAQ: MELI) are growing rapidly, and both could make you rich over the next decade.
The case of Airbnb
The pandemic has dramatically altered the course of many industries – few more than travel and tourism. Many more people are working remotely, which means they have more flexibility in where and when they travel, as well as how long they stay. Airbnb’s business model fits perfectly into this trend.
Its platform connects 4 million hosts with potential customers, helping travelers find accommodation in 100,000 cities around the world. And last year, the company introduced flexible search parameters for dates and destinations, making it easier for customers to find the Airbnb that’s right for them. By the end of the third quarter of 2021, this feature had been used over 500 million times.
Additionally, compared to traditional hotels, Airbnb provides a more immersive experience for travelers. For example, the platform lists private coastal cottages, rustic farmhouses, and trendy urban apartments among its more than 170,000 unique accommodations — think yurts, treehouses, and even castles. No hotel chain can match this range. And Airbnb’s advantage on this front is reflected in its financial performance.
Over the past year, the revenues of the two Marriott and hilton fell about 16%, while Airbnb’s revenue jumped 47% to $5.3 billion. The company also generated free cash flow of $1.6 billion in the past 12 months and posted GAAP earnings of $1.22 per diluted share in the third quarter. Investors should expect this momentum to continue.
Before the pandemic, travel and tourism accounted for more than 10% of the global economy, or $9.2 trillion in economic output. That figure was nearly halved in 2020, but as the industry continues to recover, Airbnb stands to benefit. Its platform offers greater flexibility – both in terms of location and hosting – than traditional options. And among young people, his brand has become synonymous with travel.
Management values Airbnb’s addressable market at $3.4 trillion, a figure that factors in short stays, long stays and experiences. But its gross bookings totaled $41.5 billion over the past year, representing just over 1% of its market opportunities. This leaves plenty of room for growth, which is why this stock looks like a smart long-term investment.
The case of MercadoLibre
MercadoLibre is the most popular online marketplace in Latin America, which itself is one of the fastest growing e-commerce marketplaces in the world. In fact, the company’s three main geographies – Argentina, Brazil and Mexico – all ranked in the top five countries for online sales growth in 2021, according to eMarketer. And MercadoLibre’s vertically integrated business model reinforces its strong competitive position.
For example, merchants can use its fintech platform, Mercado Pago, to accept digital payments on and off the market, both online and in-store. This is especially important in a region like Latin America, where bank account and debit card penetration rates remain well below those of the United States. Additionally, MercadoLibre provides shipping and fulfillment, digital advertising and financing solutions, all of which simplify commerce for third parties. sellers.
Like any marketplace type business, MercadoLibre benefits from network effects: each new buyer creates value for all the merchants on the platform, and vice versa. More importantly, the breadth of MercadoLibre’s ecosystem makes its market very sticky, meaning merchants are unlikely to cut ties with the company. In fact, MercadoLibre’s acceptance rate rose to 17% of gross merchandise volume in the last quarter, from 12% the year before, proof of the company’s pricing power.
Unsurprisingly, MercadoLibre’s financial performance has been solid. In the past 12 months, revenue has skyrocketed 89% to $6.3 billion, and the company posted a positive GAAP profit of $78.8 million, compared to a loss of $4.1 million. dollars in the previous 12-month period. Shareholders should expect more of the same from MercadoLibre as the company will benefit from significant tailwinds.
Specifically, internet penetration in Latin America stands at 62% and only 38% of the population shop online. By comparison, Internet penetration in the United States stands at 90% and nearly 75% of the population uses e-commerce. As more Latin American consumers have the ability to go online, MercadoLibre’s strong competitive position is expected to draw ever-increasing numbers to its e-commerce and fintech platforms. And given the scale of the untapped market, I wouldn’t be surprised to see this $54 billion company quintuple, if not tenfold, in value over the next decade.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.