If you still have a long time horizon before retirement, a downturn is an excellent time to stock up on the many great growth stocks that are being slammed right now. And if you have $3,000 available to invest after your bills are paid and you've put aside money for emergencies, you can get some serious deals that should reward you in the long term.
Fiverr International (FVRR 4.07%), Revolve Group (RVLV 2.24%), and Airbnb (ABNB 2.77%) are three of my favorite growth stocks to buy right now.
Where have all the workers gone?
The "Great Resignation" is changing working patterns across the U.S., and that's aided in part by freelance companies like Fiverr, which offer a platform for working from home on a flexible schedule. Massive growth in the early stages of the pandemic has naturally slowed down, and Fiverr's pumped-up stock has now deflated along. But the company is still posting double-digit growth and upgrading its business to be as relevant as ever.
Sales increased 27% in the first quarter to a first-quarter record of $86.7 million, and many other metrics were strong too. Active buyers increased 11% year over year to 4.2 million, and spending per active buyer increased 17% to $251. The net loss decreased slightly over last year -- from $17.8 million to $17 million -- and the company posted positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
There's lots of progress here, and the market reacted positively to the report in May. There are also many growth catalysts. Fiverr sees opportunities from workers, who are leaving offices in droves in search of better terms and remote work, as well as employers, who are outsourcing work as offices become more decentralized. The company's enterprise business, which services larger accounts with dedicated dashboards, vetted freelancers, and other perks, is a revenue generator as well.
There's still plenty of risk here as the company continued to bleed cash, and at the same time, growth is slowing down. It's not escaping macroeconomic trends that have been affecting spending in general, and it expects revenue to increase about 15% in the second quarter. But the business looks quite solid, and with the stock down 84% over the past year, it looks like a good time to buy for the long term.
High tech and fashion forward
Revolve Group is an e-commerce fashion company that's been growing its business as other, physically based stores try to revive their flagging sales. It has a niche focus in its on-trend, high-style products geared toward millennial shoppers who are embracing the company's digital medium.
It's a data-driven approach that uses its 18 years of data collection to inform what styles it chooses. This, combined with being completely online, allows it to be agile and showcase new products quickly. It also means it knows better than other companies what styles will sell. That has led it to generate higher full-price sales and to be profitable. In the first quarter, sales increased 58% year over year. Not only is that high compared to the apparel industry in general, but it was at the same time that retail spending slowed down almost across the board, and companies such as Gap and American Eagle Outfitters were struggling. Steady profits rounded out the pretty picture, with a 1% increase in net income over last year despite supply chain issues. Management expects year-over-year comparisons to be weaker for the rest of 2022, since sales got stronger throughout the year in 2021. But the business is exploding, and it should continue to meaningfully grow over many years.
Revolve stock is down almost 60% over the past year despite the company's phenomenal performance, creating an excellent buying opportunity. Shares trade at 22 times forward earnings, which looks cheap for a growth stock with its potential.
The future of travel is now
Airbnb has been demonstrating its resilience through its quick pandemic rebound -- and it has been impressive. In the first quarter, revenue increased 70% year over year and gross booking value increased 67%.
Its flexible platform positions it well for success when traditional travel is complicated, which is why it has performed so well as travel returns. Investors should expect that to continue even after travel completely resumes, since it can adapt so well to changing trends, whatever they are.
Right now, these trends are working from home, which is driving more workers toward longer Airbnb stays, and local travel, which Airbnb can easily service through its vast network of residential hosts. Even as travelers get back to their regularly scheduled vacations, Airbnb is benefiting, as seen by a recent surge in city bookings.
The main problem here is valuation. Even down 40% this year, shares trade at 55 times forward one-year earnings. That's not cheap. Investors seem to have trouble valuing this stock, which is displaying strong growth in a shaky market. Valuations everywhere have fallen, and Airbnb's staying elevated suggests that investors see the major opportunity here.
As expensive as it is, this might be the time to buy, if you can handle some of that risk.
