The stock market's short-term volatility can be scary. When in doubt, however, it helps to zoom out and consider the performance of equities over a more extended period of time -- say, 10 or more years. History clearly shows us that the market's erratic behavior tends to have much less of an impact in the long run.
That's why the buy-and-hold strategy approach to investing still works, provided of course that one picks excellent companies in which to invest. Here are two great stocks, both of which have lost some ground lately, but could handsomely reward their shareholders in the next decade: Moderna (MRNA 0.02%) and Match Group (MTCH -2.72%).
Here are two reasons why Moderna could have a bright future ahead. First, the company's COVID-19 vaccine has been highly successful and helped generate a significant amount of cash flow. Second, this will allow the biotech to advance its other programs; Moderna boasts a promising pipeline full of exciting candidates.
Moderna projected that it would generate between $15 billion and $18 billion from its coronavirus vaccine in 2021. Note that the biotech was founded in 2010 and, until recently, had never launched a product on the market. But thanks to its coronavirus vaccine, the company ended the third quarter with $15.3 billion in cash and equivalents.
With this much money in the bank, expect Moderna to make significant headway with its pipeline programs. The biotech is targeting a raft of viruses with its mRNA-based approach to vaccination. These mRNA-based vaccines are faster to produce -- a significant perk that could give the biotech an edge over many of its competitors in the vaccine market, not to mention the potential cost savings.
Moderna is working on vaccines for infections that currently have none, including the Zika virus and cytomegalovirus. Elsewhere, it's working on vaccines against HIV and several forms of cancer.
These programs won't all earn regulatory approval. Still, some undoubtedly will -- and investors can expect at least a few data readouts from ongoing clinical studies in the next couple of years. Within half a decade, Moderna will likely have some approved candidates.
The company's shares look attractive after dropping by nearly 63% in the past six months as many investors thought the stock had gotten too expensive. Moderna now sports a forward price-to-earnings ratio of 5.8, compared to 11 for the biotech industry in general.
This biotech stock looks like an excellent pick to buy and hold at current levels.
2. Match Group
Match Group is a leader in online dating with more than a dozen services under its umbrella, including its namesake website and its most popular app, Tinder.
The company's business is an excellent example of the flywheel effect: Since it boasts a large ecosystem of users on its dating apps, future online daters will likely be attracted to one of Match Group's platforms because of the sheer number of potential partners. And the more people who join the company's platforms, the more attractive it becomes to other would-be users.
In addition to its leadership in online dating, Match Group is expanding into what it calls the social-discovery market. In June, the company acquired South Korea-based tech company Hyperconnect in a cash and stock transaction valued at $1.725 billion.
One of Hyperconnect's apps is Hakuna Live, which allows people to meet new friends through live streams. Hyperconnect also owns Azar, an app that helps people meet friends worldwide, thanks to live language-translating features that enable people from different countries to communicate with one another.
Match Group's main dating business should continue to make headway as the industry is expected to expand at a compound annual rate of 5.6% through 2028, according to some estimates. And the company's ventures in the social-discovery market -- which is on an even faster upward trend -- will help supercharge its growth in the next decade.
Following a recent sell-off, mainly caused by the market shifting away from richly valued growth stocks, Match Group's stock is trading at a forward price-to-earnings ratio of 40, the lowest it's been in more than a year. Look for this tech company to recover from its recent woes and provide market-beating performances in the next 10 years.