Having a diversified portfolio of quality stocks is the key to investing. It helps minimize risks. Choosing stocks from different (high-growth) industries helps maximize returns. The troubled market now has made investors skeptical to put their money in it. But the three stocks featured here have shown how resilient they are even in a distressed market.
The market helped each of these businesses boom at a certain point in time, but like every good business, these stocks are facing some pressure. However, that doesn't make them bad investments. These companies have yet to show their full potential and could solidify any portfolio. Let's take a look at what makes these three stocks so resilient.
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1. Etsy
The COVID-19 pandemic gave a solid boost to e-commerce retailer Etsy's (ETSY 0.08%) and stock buyers responded as well. But as pandemic pressures eased and consumers could again return to brick-and-mortar retailers, investors worried and began to abandon Etsy's stock, pulling the share price down roughly 67% from its all-time high.
But Etsy's business model has what it takes to bring in long-term rewards, regardless of short-term volatility. Etsy operates as a two-sided online marketplace that brings buyers and sellers together globally. It has operations in the U.S., U.K., Germany, Canada, Australia, France, and India.
NYSE: ETSY
Key Data Points
Despite the inflation fears currently gripping e-commerce businesses, Etsy acquired 7 million new buyers in the first quarter, according to management. Also in Q1, the company's gross merchandise sales (GMS) jumped 3.5% year over year to $3.3 billion, and that led to revenue of $579 million, a 5.2% year-over-year surge.
Etsy's consumer personalization strategy helps it gain habitual buyers. Various small businesses sell unique or customized products on Etsy, which acts as a moat in the hypercompetitive e-commerce sector. According to third-party researcher AppFigures, Etsy's app was downloaded roughly 2.2 million times in May.
When economic activity returns to normal, consumer demand on the platform could rise substantially over the long term. Investors will know more about its strategies for this year when Etsy releases its second-quarter results on Wednesday, July 27.
2. Teladoc
Virtual healthcare company Teladoc Health's (TDOC +0.19%) stock is bearing the same burden as Etsy. The pandemic helped its business soar as offline healthcare demands peaked amid the lockdowns. But now that lockdowns have eased, investors are starting to question whether Teladoc can retain its business, which helps explain why the stock price is down nearly 54% just in 2022.
But Teladoc has good long-term potential even in a post-pandemic era. Its continuing efforts to bring in new customers and drive revenue every quarter is proof of that. Its first-quarter revenue jumped 25% year over year to $565 million, driven by a surge in demand both in the U.S. and internationally.
NYSE: TDOC
Key Data Points
The quarter saw a huge net loss, which management attributed to a goodwill impairment charge of $6.6 billion. I wouldn't read too much into this, as it seems like a one-time charge.
While investors are concerned the easing of patient restrictions and patient access in doctors' offices and hospitals could reduce its business, Teladoc's total visits for the quarter still rose 35% to 4.5 million. Various surveys of patients suggest telehealth services are more enjoyable and less stressful medical experiences for patients, saving them time and money. Fortune Business Insights projects the global telemedicine market will grow at a compound annual rate of 32.1% by 2028. This suggests Teledoc won't fade away even in a post-pandemic market.
Teladoc management said it expects 2022 to be a strong year with a revenue jump of 20% and a surge in total visits around 19 million, versus 15.4 million in 2021. Teladoc's second-quarter earnings report (out on Wednesday, July 27) should tell us more about its plans for this year.
3. Cresco Labs
The marijuana industry is a volatile and nascent space. It also doesn't help that the drug is illegal at the federal level, which means it can't be transported across state lines. This hampers the growth of U.S. companies in the sector to some extent. Given these headwinds, it is impressive how Cresco Labs (CRLBF +2.44%) continues to grow its revenue. It generated $822 million in revenue in fiscal 2021, an increase of 73% year over year.
Cresco's resilience is also evident from the striking merger deal it made this year with New York-based cannabis operator Columbia Care (CCHWF +10.19%). The U.S. cannabis market is expanding rapidly. Acquiring another rising cannabis company when it could so as to minimize competition was smart.
OTC: CRLBF
Key Data Points
Cresco's consistent performance every quarter suggests the company's expansion plans are working. Its $214 million in revenue in Q1 was up 20% from the prior-year quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also showed an increase of 45% year over year to $51 million.
Cresco operates just 50 stores nationally. But with Columbia's assets in its portfolio (the deal is expected to close in the fourth quarter of 2022), it will own more than 131 dispensaries in 18 states. Combined with Columbia, Cresco could be a much bigger, stronger, and more profitable company. This acquisition will help it compete with two other rising cannabis stars, Trulieve Cannabis and Curaleaf Holdings, which respectively operate 165 and 128 retail stores nationwide.
Bullish outlooks in the long-term
Wall Street analysts, on average, are bullish on all three stocks. Now is the right time for those with an investment horizon of five years or more to take a closer look at these growth stocks while they are trading at bargain prices.
