If you're tempted to sit on the sidelines of the current market, you're not alone. The stock sell-off over the past six months has spooked plenty of investors. But today's market offers a reminder of two investing truths: one, that volatility is a given, and two, that buying smart stocks at a sale can have a big payoff down the line.
That's right: now might be exactly the time to put money into the stock market. There are two companies in particular -- Tesla (TSLA 4.72%) and Upstart Holdings (UPST 4.80%) -- that I think could make great long-term investments despite the market's current downturn.
Some investors have become wary of high-growth electric vehicle (EV) stocks because many of these companies have struggled during the market's recent tumble. But experts suggest that EVs are here to stay and we're still in the early innings of this trend. Consider this: research firm Canalys reports that in 2021, EV sales made up only 9% of global passenger car sales, but estimates that percentage will increase to nearly 50% by 2030.
While many smaller EV companies are still trying to ramp up production and compete in an increasingly crowded market, Tesla is firing on all cylinders. In the most recent quarter, Tesla's vehicle production soared 70% year over year to nearly 306,000 vehicles. That's impressive vehicle production growth at face value, but it looks even better when you factor in that this growth came before Tesla's newest factories in Texas and Germany came online.
Tesla is already a leading position in the EV market, and its recent vehicle production shows that the EV company has been able to grow during a time when manufacturing delays, semiconductor shortages, and supply chain constraints have put massive pressure on the automotive industry.
With the company's current growth path and new plants opening up, putting $1,000 toward this EV leader could end up being a wise decision as the EV market continues to expand. Of course, you'll have to buy fractional shares of the company considering that Tesla's share price is currently above $1,000 -- or wait until the company's proposed stock split.
2. Upstart Holdings
Upstart Holdings' stock isn't for the faint of heart right now. Its share price has already fallen more than 60% over the past six months, and considering that Upstart is a growth stock, more short-term instability is certainly possible.
But in a few years, investors may be very glad that they put money in Upstart early. The company is disrupting the loan origination market by using artificial intelligence, helping lenders secure better customers and borrowers secure better loan terms. Upstart goes beyond the traditional credit agencies and lenders by considering factors like education and work experience to match borrowers with the right loans.
Upstart reports that its personal loan rates are, on average, 10% lower than those from traditional lending sources. This, of course, is great news for borrowers. But there's great news for lenders too: Upstart claims it has 75% fewer defaults than traditional lenders at the same approval rate. Additionally, 70% of Upstart's loans are fully automated, making the lending process easier than ever.
But wait, there's more. The company is growing like a weed: in the fourth quarter of 2021, Upstart bank partners originated nearly 500,000 loans, a 301% increase compared to the same quarter in the year prior. In the same period, revenue skyrocketed 252% year over year to $305 million. Just as impressive is the fact that operating income surged from $10.4 million in fourth quarter 2020 to $60.4 million in that period of 2021.
Upstart is already successfully tapping into the personal loan market and is beginning to expand into the automotive lending space. This should be of particular interest over the next few years because Upstart's management says that its total addressable market in the auto lending business is a staggering $635 billion.
As a young growth stock, Upstart's share price may experience some more swings in the short term. But Upstart's growth, paired with its huge potential in the auto lending market, makes this company a wise buy.