Premium content from Motley Fool Stock Advisor Canada
North American markets remain mired in a funk, and many investors (including me) are wondering if the end is in sight. My team at Stock Advisor Canada and I love receiving questions about the market.
The thing is, many of the questions we get don’t have an answer from anyone — or at least anyone you should pay attention to.
These questions tend to follow along two lines:
- Any question that starts with “when.” Unless it relates to a pre-announced date that’s widely known, we don’t know what the future holds. Asking “when” implies that we do. Sorry — we simply don’t!
- The word that usually follows or is associated with “when” is “will.” Furthermore, both words are generally attached to a stock price. For instance, “When will stock XYZ go higher?” Or these days, “Will stock XYZ stop going down?”
“Will” implies predicting with certainty. The reality is, especially in the short term, stock prices are anything but certain. The same goes for company performance. Certainty is not possible when it comes to the future.
Many people in the financial industry tout their ability to “call” short-term stock price movements, but we highly suggest seeking out their track record of success before following along. Frankly, if someone does have this ability, they need not offer their services to the general public.
The best we can do at Stock Advisor Canada is to study businesses, find great companies with promising investment potential, and ride along in the market with you. Here are five we especially like this month.
Foolishly yours,
Iain Butler, CFA
Advisor, Stock Advisor Canada
“Best Buys Now” Pick #1:
Airbnb (NASDAQ: ABNB)
By Tom Gardner: Airbnb’s (NASDAQ: ABNB) stock has certainly recovered from its late-2022 lows but is still down by about 26% from its 52-week high and is more than 10% below where it ended its first day as a publicly traded company in late 2020. This is in spite of the fact that Airbnb is much larger and more profitable. In fact, Airbnb’s 2022 revenue was about 150% greater than it was in 2020, and the company went from a $4.6 billion net loss to a $1.9 billion profit. Plus, all signs point to even stronger numbers in 2023.
Airbnb trades for about 9 times TTM sales, but you get what you pay for. This is a business with a 25% net margin over the past four quarters, 18% year-over-year revenue growth in an increasingly difficult economy, and a multi-trillion-dollar addressable market opportunity.
If we were to ask you what Airbnb’s strongest growth period was, you might assume it was around the time of the COVID-19 pent-up demand surge that occurred in the travel industry in 2021 and 2022. But in some ways, the platform’s most impressive growth is happening right now. In the second quarter of 2023, Airbnb added more net active listings to its platform than any other quarter in its history.
One of the reasons the company continues to grow so impressively is that management is constantly finding ways to improve the platform, make it appealing to hosts, and add new capabilities. Not long ago, Airbnb added the ability for renters (not just homeowners) to list their properties, just to give one example. The company recently rolled out new pricing tools for hosts, as well as certain fee changes to encourage more long-term stays.
Regulatory uncertainty is one of the biggest question marks Airbnb investors should keep in mind; however, the company is in a category all by itself and is a tremendously profitable business that still has a large market opportunity ahead.
