There was a time when stock-picking was left up to your advisor rather than the crowd. The advent of the internet and online access to stock research put some of that power in investors' hands, but they were still ultimately steered by professionals. The web's investment advice bulletin boards, conversely, were the proverbial wild west.
The amateur crowd has gotten rather savvy in recent years, though, collectively identifying quality names with plans to hold onto them for the long haul. Here's a closer look at two of the Reddit crowd's favorite stocks right now that make good sense as long-term picks.
1. Advanced Micro Devices
In an arena that includes powerhouses like Intel (INTC 0.32%) and Nvidia (NVDA 1.47%) as competitors, it's easy to look past Advanced Micro Devices (AMD 1.23%). But that would be a mistake. See, AMD has found its niche as a computer tech manufacturer.
That niche is value, by the way. While Intel's processors are still the preferred brand among consumers as well as corporations operating data centers, the company's CPUs aren't cheap. Advanced Micro Devices offers solid processing performance at a more affordable price. Certainly, there are exceptions to this generalization, but not many. And, AMD does particularly well with individual video gamers, who are generally far more budget-minded than an enterprise customer might be.
Advanced Micro Devices' graphics cards also fit the bill for cost-conscious consumers. Although Nvidia's overall portfolio of graphics processing tech may be superior -- particularly for artificial intelligence applications -- AMD's lower prices makes its wares far more accessible to most consumers. In fact, four of the top five picks on Techspot's current list of cost-effective GPUs are AMD cards.
The company's hold on its sliver of the computer hardware market is at least partially evident in last quarter's results. Revenue of $5.9 billion was not only record-breaking and 71% better than year-ago levels, but topped analyst expectations of just over $5.0 billion. Operating earnings of $1.13 per share also beat the consensus of $0.91, more than doubling the bottom line of $0.52 per share booked during the first quarter of last year.
It was the reason for the beat, however, that makes AMD such a compelling name to step into here. While it's a hit with consumers, the company is clearly upping its enterprise game. Sales of computer processors used in servers more than doubled for the third quarter in a row thanks to last year's acquisition of Xilinx, data centers are a key reason Advanced Micro Devices is modeling 69% top-line growth for the quarter now underway.
Simply put, AMD is working its way deeper into the institutional market without losing sight of the consumer market. It's a shift that could have a multi-year impact, particularly in light of Intel's 7-nanometer foundry woes.
The other surprisingly favorite stock among Reddit's users worth pointing out here is the home-rental platform Airbnb (ABNB 1.47%).
It's difficult to say to what degree the pandemic altered the leisure travel landscape. It's not exactly a stretch to say, however, that hotels were fighting a significant cultural shift -- as well as affordability issues -- even before COVID-19 rattled the world. As it turns out, a great number of leisure travelers are OK with staying at an individual's rental house as a lower-cost alternative to a hotel stay, and more people are embracing the idea every day.
AirDNA (not to be confused with AirBNB itself) says short-term rental demand grew 22.4% in 2021, and despite the unofficial, effective end to the pandemic, the market research company estimates demand for such rentals will grow another 14.1% this year. That growth isn't expected to cool anytime soon either. Precedence Research estimates the annual vacation rental market will swell from 2020's $22.7 billion to $111.2 billion per year by 2030 as more individuals convert homes into travel-lodging spots and more consumers gain comfort with the idea.
This outlook puts Airbnb in an enviable position. It's already one of the industry's biggest players, boasting a portfolio of more than 6 million rental homes. As the business matures, though, look for people with homes to rent to gravitate to the listing sites attracting the biggest crowd of would-be vacationers. That again makes Airbnb a compelling prospect, as it's arguably the most recognized brand name in the business.
The proof of its growing reach is evident in the numbers. Last quarter's total booking of 102.1 million nights was not only record-breaking but 26% better than pre-COVID bookings from three years back. Revenue of $1.5 billion was 80% better than it was three years ago, indicating its 4 million home-owning hosts' pricing power is firming up. That's pricing power that helps Airbnb's top and bottom lines as well.
The company isn't yet profitable, for the record. But, this year's projected 31% increase in revenue should carry Airbnb out of the red and into the black, with full-year earnings of $1.26 per share in the cards. That swing to a profit could be a game-changer for the stock's performance.