Several factors are currently affecting equity markets. For instance, impending interest rates hikes in the U.S. have been causing investors to take their money out of richly valued growth stocks. Meanwhile, geopolitical tensions are also having a negative impact. While it can be hard to stay calm amid all of this, it's important to remember that the buy-and-hold strategy approach works.
Riding out the storm and perhaps even adding to your positions in excellent companies is the right course of action during market downturns. With that in mind, let's look at two stocks that are worth buying no matter what transpires in the next few weeks: Vertex Pharmaceuticals ( VRTX -2.25% ) and Airbnb ( ABNB -4.39% ).
1. Vertex Pharmaceuticals
Biotech giant Vertex Pharmaceuticals has performed better than most this year with the company's shares rising by about 5% since the beginning of the year vs. a nearly 10% drop for the S&P 500. Perhaps investors felt the drugmaker's shares had already fallen enough in the past couple of years, and the price was finally right.
Image source: Getty Images.
Whatever the case, there are good reasons to be optimistic about the future of Vertex. First, it is still making headway within its most important target market: the population of cystic fibrosis (CF) patients in North America, Europe, and Australia. Of the 83,000 CF patients in these regions, there are more than 25,000 that could benefit from the company's current medicine but have yet to start treatment.
Vertex Pharmaceuticals has held a monopoly in this market for the better part of 10 years, and it seems it still has room to grow within it. Further, the biotech company is currently working on another therapy to address the remaining 5,000 patients who aren't eligible for its current drugs. And Vertex boasts other promising pipeline programs as well. These include CTX001, a potential therapy for a pair of rare blood diseases.
Vertex Pharmaceuticals is developing CTX001 in collaboration with CRISPR Therapeutics, and the two entities plan on filing a regulatory submission by the end of the year. Vertex is also working on a potential treatment for type 1 diabetes called VX-880 although that program is still in its early stages. Then there is VX-548, a potential treatment for acute pain.
Investors can expect at least a couple of data readouts from the company's ongoing clinical trials this year, and impressive results will positively impact Vertex's stock. More importantly, Vertex Pharmaceuticals is looking to diversify its lineup away from its CF franchise, and that's something investors should cheer. In the long run, the biotech company should continue delivering excellent results, regardless of a volatile stock market.
2. Airbnb
Airbnb is disrupting the hospitality business. The company offers home rentals and experiences via its popular platform. Airbnb's options are often cheaper than traditional hotels, not to mention that they come with added perks, including various amenities. That's in addition to the deals customers can get on experiences.
The power of Airbnb's business lies in the flywheel effect. The more that home renters join its platform, the more attractive it becomes for clients since it results in more rental options. An increase in the number of customers on the platform will also attract more renters, and so on. The flywheel effect is a potent, competitive edge and will help Airbnb remain a leader in the industry despite intense competition from various other companies.
In the fourth quarter, Airbnb's revenue soared 78% year over year to $1.5 billion. The company's top line increased in the period despite the negative effect of the omicron variant on the economy and travel activity. Further, Airbnb's revenue for the quarter was 38% higher than its fourth-quarter 2019 revenue. In other words, Airbnb's top line is well above its pre-pandemic levels.
Airbnb's net income for the quarter was $55 million. The company reported net losses in the comparable periods of 2020 and 2019. Importantly, Airbnb continues to see increases in long-term stays. The company's average trip length has increased by 15% in the past two years. Also, stays of 28 nights or more represent Airbnb's fastest-growing category.
That is precisely what Airbnb is hoping to achieve in the long run. It prides itself on offering people a home away from home. Airbnb sees a total addressable market of $3.4 trillion across the range of its offerings. While the company won't capture the entire pie, even grabbing 10% of this market would help its revenue and earnings grow substantially in the coming years. That's why this tech giant is an excellent buy-and-hold stock.
