Equity markets attract a variety of people with very different investing approaches. One thing many of them do have in common, though, is their desire to outperform the broader market. Doing so isn't an easy task, but history suggests that the buy-and-hold strategy is one of the best ways to beat the market.
Keeping shares of great companies through thick and thin allows both time and compounding to work their magic. On that note, let's look at two excellent stocks that are worth holding onto for a long time: Abbott Laboratories (ABT +1.00%) and Airbnb (ABNB +0.35%).
1. Abbott Laboratories
Medical devices giant Abbott Laboratories has been a leader in its industry for decades. While past performance isn't a guarantee of future success, the company's expertise in the highly regulated healthcare sector shouldn't be overlooked. It takes jumping through various clinical and regulatory hoops before earning clearance for medical devices.
And that's not counting the fact that developing these machines is highly capital-intensive. These barriers to entry ensure that established leaders like Abbott are likely to remain at the top for a while. To that end, the company boasts several products that can keep driving top-line growth. Within its structural heart unit, Abbott Labs markets the MitraClip, a minimally invasive option for the treatment of mitral regurgitation (when the heart's mitral valve fails to close properly).
Let's look at one example. Last year, the U.S. Centers for Medicare & Medicaid Services (CMS) expanded coverage for the MitraClip, thereby significantly expanding the number of people who will benefit from it.
Image source: Getty Images.
There are about 4 million people in the country who suffer from mitral regurgitation. The MitraClip was first used in 2003 -- initially outside the U.S. and since 2013 in the U.S. -- and it has since helped treat approximately 100,000 patients through 2020. Yet, there remains a significant market opportunity for this leading device. Last year, sales by Abbott's structural heart division increased 29.1% year over year to $1.6 billion.
NYSE: ABT
Key Data Points
Another exciting product for the company is the FreeStyle Libre, a continuous glucose monitoring (CGM) device to help diabetes patients keep track of their blood glucose levels. Last year, sales of Abbott's diabetes care segment grew by 32.5% year over year to $4.3 billion. The FreeStyle Libre accounted for $3.7 billion of that amount.
CGM technology helps diabetes patients achieve better health outcomes, such as reduced hemoglobin A1C levels. That, coupled with the fact that the proportion of diabetes patients is projected to continue growing, should be a tailwind for Abbott Laboratories' FreeStyle Libre. The company's other segments, including diagnostics, nutrition, and established pharmaceuticals, are also performing well and help diversify its top line.
The company's total revenue for 2021 was $43.1 billion, 24.5% higher than 2020. The healthcare giant's adjusted earnings per share jumped by 42.7% to $5.21. Overall, Abbott's business looks healthy enough to continue performing well for many years to come.
2. Airbnb
There is no doubt that the COVID-19 pandemic initially harmed Airbnb's business. Home rentals weren't as popular at the peak of the outbreak when people were stuck in their houses, trying to avoid catching and spreading the disease. But there is one development that happened amid all this chaos that was arguably good for Airbnb: The rise of remote work.
More people than ever can work away from the office, allowing them to travel more often. While on the road, they need a home away from home, which is precisely what Airbnb offers. The company's rental options are often cheaper and more convenient than traditional hotels. And Airbnb is looking to ensure that its clients book longer stays. According to the company's CEO, Brian Chesky:
Every length of stay on Airbnb is going up, whether it's two nights, three nights, a week, a month, or a season, all lengths of stay except for single nights are up on Airbnb. And we want to design for this new world by making it even easier for guests to live on Airbnb.
NASDAQ: ABNB
Key Data Points
In the fourth quarter of 2021, about half of the company's bookings were for a week or longer. About 20% were for a month or longer. These trends bode well for the company's future. Airbnb once estimated its total addressable market to be worth roughly $3.4 trillion. The company is merely scratching the surface of this opportunity, and even grabbing a small slice of it will help it increase its revenue and profits for many years to come.
In 2021, Airbnb's top line grew by 77% year over year to $6 billion. The company's revenue also increased by 25% compared to 2019, a year that was not impacted by the pandemic. Airbnb's net loss of $352 million for the year was better than the loss of $4.6 billion it reported in 2020 as well as the loss of $674 million recorded in 2019.
Once the pandemic subsides for good, expect bookings to continue growing for the company. The company had 300.6 million bookings last year, a 56% year-over-year increase but an 8% decrease compared to 2019. Once Airbnb's business fully recovers, revenue will soar even more, and the company will eventually turn green on the bottom line. Given Airbnb's long-term opportunity, it'd be wise to hold shares of this company for a long time.
