Amazon already had a large-cap valuation a decade ago, but the company still managed to deliver stock gains of roughly 1,710% over the last 10-year period. That performance would have turned a $3,000 investment in the company made in early 2012 into more than $54,000.
Taking a buy-and-hold approach to strong companies is a path to huge investment wins, and it eliminates many of the risks and stresses associated with trying to perfectly time the market. With that in mind, read on for a look at two promising stocks primed to deliver strong portfolio performance for patient investors.
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1. Airbnb
Airbnb's (ABNB +0.73%) approach to short-term rental bookings has already reshaped the travel and hospitality industries, and the company's growth story is just getting started. Recent turbulence for growth stocks and continued pressures stemming from the omicron coronavirus variant have meant that the stock has lost ground recently, but investors shouldn't fret. Despite shares pulling back from the significant pop they enjoyed after the company's very strong third-quarter results, sell-offs have created an opportunity for long-term investors to build positions in a great company.
Recent bouts of airline flight cancellations highlight that there are some external risk factors that could continue to impact the company's business. But Airbnb's long-term outlook remains very promising, and risk-tolerant investors can benefit by pouncing on the stock. While it's reasonable to expect that there may be some additional twists and turns in the future, the travel industry looks poised for a strong rebound, and Airbnb is ready to help lead the recovery.
Across Airbnb's third quarter in 2021, the delta variant was still at the forefront of pandemic-related concerns. Yet even with the associated challenges, the company managed to increase sales 36% from its pre-pandemic third quarter in 2019. Net income in last year's third quarter also surged to $834 million, up 280% year over year and 213% compared to Q3 in 2019.
The market has been weighing near-term uncertainty and taking a more cautious approach to Airbnb stock, but now looks like a worthwhile time to build a position in this category-leading company.
2. Despegar.com
With the omicron variant adding a new dash of uncertainty to the market equation, travel stocks have seen volatile swings over the last couple of years. Political and economic concerns in the Latin American market have added additional risk factors for companies concentrated in the region, and Despegar.com (DESP +0.00%) has been hit hard by these conditions. The company's share price is now down roughly 45% from its 52-week high.
While pandemic-related challenges are certainly a contributing factor, the travel specialist's poor stock performance in recent months may have more to do with the unfavorable macroeconomic backdrop in Latin America than specific issues related to the business. Bouts of political instability, rising inflation, and other unfavorable economic factors have put a hurting on many leading companies with a focus on the Latin American market. So it's not surprising that Despegar has been caught up in the sell-off despite encouraging business performance.
Despegar's gross bookings rose 298% year over year in the third quarter and 34% on a sequential basis. While bookings in Q3 were still down roughly 44% from Q3 in 2019, there are signs that a travel industry recovery is underway. Mexico, in particular, appears to be seeing a strong travel rebound, and ongoing restrictions in Europe and other popular travel destinations could cause people in the U.S. to look toward Latin America if they plan on making international trips in 2022.
Despite the potential for its business and stock performance to be uneven in the near term, Despegar looks like a top way to benefit from the Latin American travel industry's recovery, and its stock trades at attractive levels. With the company valued at roughly $682 million and trading at just 1.3 times this year's expected sales, Despegar could deliver explosive returns for investors as travel restrictions ease and macroeconomic conditions improve over the long term.
