The market continues to experience its fair share of tumultuous days while concerns mount about the impact of rising inflation, the ongoing labor shortage, and the supply chain crisis. If you're searching for great investments that you can depend on for years, these two stocks are for you.
Today I'm going to talk about two great companies that you can invest in even with a more modest starting sum, like $500. Not only are both stocks stand-out contenders in fast-growing markets, but I firmly believe that they can provide tremendous portfolio growth and value over the next five to 10 years -- or longer.
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1. Airbnb
Airbnb (ABNB 0.27%), like most other companies operating in the travel sector, had a tough time when the pandemic hit. While the pandemic did impact the company's balance sheet, it didn't diminish the quality of its business model or long-term growth potential. As other travel companies like airline stocks are still suffering hemorrhaging losses, Airbnb has proven its ability to rebound from the darkest days of the pandemic in both quarterly reports it's released for 2021 so far.
Airbnb's rapid financial recovery (which we'll delve into momentarily) is noteworthy in today's travel environment. Particularly, as the pandemic appears to be far from over and new, contagious variants keep popping up. Part of this is due to Airbnb's business model. Whether you want to stay in a remote cabin in Oregon, an apartment in a castle in the Alps (yes, that's a thing), or a short-to-long-term rental in the city of your choice, Airbnb offers options for every kind of traveler. And despite the fact that global travel activity isn't expected to return to pre-pandemic levels until the middle of the decade, chances are that if you're going to travel right now, you might feel more comfortable doing it in an Airbnb than at a hotel. Bear in mind, Airbnb already controlled a 20% share of the vacation rental market before the pandemic.
So how has Airbnb fared in 2021? Well, in the first quarter, its revenue grew 5% year-over-year, and was actually higher than the revenue Airbnb reported in the first quarter of 2019. The company also reported a total net loss and adjusted EBITDA net loss of $782 million and $59 million, respectively. However, it's worth noting that Airbnb's adjusted EBITDA net loss shrank considerably from the first quarter of 2020, when this metric was a negative $334 million.
Airbnb blew Wall Street's expectations out of the water in the second quarter. Not only did the company's revenue shoot up 300% year-over-year, but it turned its adjusted EBITDA profitable at $217 million. And while the company's bottom line was still negative, it reduced its net loss to $68 million, a far cry from $507 million in the second quarter of 2020. Moreover, Airbnb reported that Nights and Experiences booked on its platform and gross booking value surged 197% and 320%, respectively, from the year-ago period. Investors should watch for Airbnb's third-quarter earnings report on Nov. 4.
Shares of Airbnb are only up about 20% from its public debut last December. I think this reflects a consensus among many investors about the long recovery that's ahead for the global travel industry. Analysts still think the stock could achieve a high upside of more than 30% over the next 12 months alone. Airbnb also has tremendous market opportunity left to explore in the years ahead as the global recovery continues, the dynamics of the travel industry change, and more people seek flexible and location-independent jobs. All of this presents a strong opportunity for long-term investors to buy shares of Airbnb at a discount right now and get in on the company's long-term growth story.
2. Innovative Industrial Properties
Innovative Industrial Properties (IIPR +0.63%) hails from an entirely different industry than my previous pick. Investing in marijuana stocks can be a fantastic way to supercharge your portfolio returns, but not all companies trading in this sector boast quality businesses that warrant long-term investments. Innovative Industrial Properties is one my of all-time favorite cannabis stocks, however, for a few reasons.
The company is a real estate investment trust (REIT) that only leases its portfolio of commercial facilities to state-licensed medical marijuana growers. This gives the company a certain measure of protection and resilience in the often-volatile world of marijuana stocks -- first because medical marijuana is legalized in more states than recreational usage and is more broadly regulated, and second because it doesn't face the same level of risk or competition that a traditional grower does.
Because the company is an REIT, it must allocate at least 90% of its taxable income to its shareholders in the form of dividend payments. Not only does the company regularly increase its dividend (the most recent hike was 28%), but its dividend also yields a healthy 2.3%. The average stock trading on the S&P 500 yields around 1.3%.
Innovative Industrial Properties also regularly expands its portfolio through targeted acquisitions in key medical marijuana markets. Case in point: Over the past few months, it announced acquisitions in California, Missouri, and Maryland.
All of this is paying off in the form of tremendous revenue and earnings growth, which also means more dividend increases for shareholders. In the second quarter of this year, the company reported that its revenue increased 101% from the year-ago period, while its adjusted funds from operations (AFFO) and net income jumped by respective percentages of 104% and 124% year-over-year. With shares up more than 110% over the past year alone, this high-growth pot stock is a no-brainer investment to jump on right now.
