Equity markets have been pretty volatile since the year started, and there is no end in sight. That may cause some investors a bit of anxiety. It's never fun to watch shares of the companies you own drop substantially in a short period.
Even so, zooming out provides a bit of perspective. The stock market has performed splendidly in the past 10 years. For those willing to ride out the current storm, the next decade could provide excellent returns again, provided your money is invested in the right companies.
Let's look at two stocks that are worth buying right now and holding onto for a while: Intuitive Surgical (ISRG -0.55%) and Pinterest (PINS -0.52%).
Image source: Getty Images.
1. Intuitive Surgical
There is a lot to be excited about when it comes to medical devices specialist Intuitive Surgical. The company's da Vinci Surgical system continues to make significant headway. This robotic-assisted surgery (RAS) device is one of the leading on the market. It helps surgeons perform minimally invasive surgeries, which confer health and cost advantages over traditional open surgeries.
In the fourth quarter, Intuitive Surgical's installed base grew to 6,730, representing a 12% year-over year-increase.
Intuitive Surgical is racking up growing revenue from the sale of instruments and accessories that go along with the da Vinci system. In the fourth quarter, the company's total revenue jumped by 17% year over year to $1.55 billion. Intuitive's instrument and accessories segment recorded sales of $842.8 million, 11.6% higher than the year-ago period.
It's worth noting that the number of procedures performed with Intuitive Surgical's crown jewel dropped because of the pandemic, and while the outbreak had started to subside a bit, a surge in cases during the fourth quarter due to the omicron variant affected the company's business. Since instruments and accessories revenue is tied to procedure volume, it has suffered as well.
But the good news is that there is plenty of room for growth in this market. RAS enjoys very low penetration worldwide despite the benefits it confers to patients.
Expect the number of procedures performed robotically to increase in the next decade. Here's what that means for Intuitive Surgical. First, the company will ship more of its da Vinci system to healthcare facilities. Second, procedure volume will continue on its upward trend, thereby helping Intuitive Surgical generate more revenue.
Even with increased competition in the field, Intuitive Surgical has already jumped through the many regulatory hoops it takes to be a leader in this industry. The company is unlikely to be kicked off its leading position in the RAS market anytime soon. Those who buy shares of this healthcare stock should be glad they did so in 10 years.
2. Pinterest
Investors have been selling off shares of Pinterest due to the company's disappointing user growth metrics. Pinterest's monthly active users (MAUs) decreased by 6% year over year to 431 million in the fourth quarter of 2021. Note that Pinterest's MAUs decreased sequentially for much of last year. As the company relies on ads to generate revenue, it isn't surprising that dropping MAUs would spook investors.
But top-line growth remains healthy. During the fourth quarter, the company's revenue came in at $847 million, 20% higher than the year-ago period. For 2021, Pinterest's revenue of $2.6 billion increased by 52% compared to 2020. The company has been able to grow its revenue even with declining users for one simple reason: Its average revenue per user (ARPU) has continued to increase. In the fourth quarter, Pinterest's ARPU jumped by 23% year over year to $1.93.
The company's international ARPU was especially impressive, soaring to $0.57 during the quarter, 62% higher than the year-ago period. Why is this important? Of the company's 431 million users as of the end of the fourth quarter, 346 million were outside the U.S. The fact that businesses seem willing to continue to pour advertising dollars into Pinterest's platform is an excellent sign for the future. Growth in ARPU, particularly in international markets, will be instrumental for the company.
To that end, Pinterest will continue to add tools to help advertisers reach their target audience in a cost-efficient way on the platform, just as it has in the past.
Another potential opportunity for the company is e-commerce. As an image discovery platform, Pinterest can use the power of visual imagery to inspire shopping ideas. Last year, it introduced new tools to help businesses market to customers, including "slideshow for collections." This nifty feature picks out a set of products from a company's catalog and turns it into a video-like collection ad.
Pinterest's users enjoy video content, according to the company. Features like these promise to turn Pinterest into a more shoppable platform. While the company blamed competition from TikTok, changes to Google's search engine algorithms, and dynamics related to the pandemic as the reasons why its MAUs declined in the fourth quarter, Pinterest is seeking to remedy these problems.
In my view, Pinterest will successfully turn its dropping user growth around, and given its increasing ARPU and e-commerce ambitions, the tech company still looks like a buy.
