The legendary head of Berkshire Hathaway, Warren Buffett, famously said that investors should be fearful when others are greedy, and greedy when others are fearful. The volatile market that's been up and down over the past few months might induce some fear among investors -- and so following Buffett's advice, now would be a good time to be greedy.
I recently picked up some shares of Airbnb, which had climbed up my prospective buy list in October. Five stocks that are currently moving up on the list are Costco Wholesale (COST 1.00%), Upstart Holdings (UPST 2.10%), Fiverr International (FVRR 2.99%), MercadoLibre (MELI 1.98%), and Amazon (AMZN 3.86%).
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1. Costco
I recently wrote that if I could buy only one stock right now, it would be Costco. The membership-only, big-box retailer has a constellation of features that make it an ideal stock to hold. It's a great business that performs well in any economy (especially in challenging times), it has outperformed the broader market over the long term, and it pays a dividend.
The business is the critical aspect of why it's such a compelling buy. Costco operates a unique membership model that creates loyalty and brings in guaranteed sales in fees, and this also allows it to offer the extremely low prices that generate high volume. This is always attractive to shoppers, but when costs rise, such as in the current economic environment, penny-pinching customers are even more likely to spend their money at Costco.
That has led to higher-than-normal results, including a 16% year-over-year sales increase in its second fiscal quarter (ended Feb. 13).
2. Upstart
Upstart was one of the hottest stocks of 2021, at one point gaining as much as 1,000% from its closing price on its first day on the market at the end of 2020. The lending platform partners with banks and credit unions to provide consumer loans.
The frenzy has quieted down since then, and Upstart stock is now down 30% year to date. At this lower price, the shares trade at 72 times trailing 12-month earnings, which is fairly reasonable for a growth stock with as much potential as Upstart's.
The company has been posting very strong results, such as a 250% year-over-year sales increase in the fourth quarter. Earnings have been even more outstanding, soaring from $1 million in the 2020 fourth quarter to $59 million in the 2021 fourth quarter. The company is expecting further high growth in 2022.
Upstart entered the auto retail space last year, a $727 billion market on top of the $96 billion personal loan market. It's also planning to enter the $4.6 trillion mortgage market in the near future.
With its well-run operations, huge addressable market, and newly reasonable price tag, Upstart looks like a great stock to buy now.
3. Fiverr
Fiverr is an online marketplace for providing freelance services. The company continues to post outstanding performance as the shift to working at home is well under way. It felt major tailwinds at the start of the pandemic when people abandoned office buildings, but those trends are sticking -- and Fiverr is enjoying the results.
Revenue increased 43% in the 2021 fourth quarter to $80 million. There were many other tangible signs of a growing business, such as a 23% year-over-year increase in active buyers and an 18% increase in spending per buyer.
Fiverr is expanding in many ways, such as acquiring freelance management company Stoke Talent, and it's focusing on its enterprise customers, which are large companies that use Fiverr's platform as they create a decentralized workforce. Management sees a $115 trillion addressable market, a tiny slice of which has moved online.
After gaining 730% in 2020, Fiverr stock slid 42% in 2021 and is down another 36% so far in 2022.
The stock looks much more compelling at this price as the company continues to post double-digit growth and has many growth catalysts.
4. MercadoLibre
Latin American e-commerce and digital payments company MercadoLibre is demonstrating phenomenal results. It posted several consecutive quarters of triple-digit growth at the height of the pandemic -- and while that's decelerated, it's still robust.
Sales grew 60% year over year in the fourth quarter to $2.1 billion on top of a 148% gain a year earlier. Gross merchandise volume and total payment volume both increased by double digits as well, and the number of active users increased 11% to 82 million in 2021.
Sales continue to be particularly strong in its home country of Argentina as well as its other large markets, Mexico and Brazil. But it's a leader in all of the 18 Latin American countries in which it operates.
MercadoLibre stock also enjoyed a fabulous run in 2020 while it was benefiting from the acceleration to digital, gaining nearly 200%. It lost 20% last year and is down another 13% so far this year. At this price, it's ripe for adding to your portfolio.
5. Amazon
Even though I look at Amazon all the time, I haven't managed to buy shares yet. It simply hasn't been the right time. But the biggest e-commerce company in the world is still a strong business with huge expansion plans and many ventures up its sleeve.
Growth throughout the early stages of the pandemic was enormous, and even though it's slowing down, the company is still piling sales on top of last year's numbers. Fourth-quarter revenue growth came in at 9% year over year, and earnings per share increased from $14.09 last year to $27.75 in 2021. With inflation, higher costs, and higher wages, Amazon is feeling the heat from macroeconomic volatility. But it's increasing the price of its Prime membership from $119 for an annual subscription to $139 to absorb some of that, and it has the pricing power to do that without losing customers.
It's also making progress on many fronts, such as moving to an electric vehicle delivery fleet and marketing its just-walk-out technology. Although it's closing some of its physical stores, it's investing elsewhere to maintain its dominance and enter new markets.
Amazon stock is about flat this year, but it's outperformed the market for many years, and has the potential to do so for many more. With shares trading at only 50 times trailing 12-month earnings, the valuation is reasonable as well, making now a great time to consider buying shares.
