Even though the stock market has rebounded a bit in recent weeks, I've continued to invest rather aggressively while it's well off the highs it touched last winter. To put it mildly, there are some excellent opportunities for long-term investors to put money to work, both in tried-and-true winners and in up-and-coming growth companies with clear competitive advantages.
Full disclosure: I actually bought these stocks at the end of last week, but that was still less than a full week ago when I wrote this. But enough with the technicalities. Let me tell you about three stocks I purchased for my own portfolio, and why I'm a fan of each one.
The future of real estate
Real estate is an industry that is clearly in need of disruption. The home buying and selling processes are clunky at best, and the industry standard 6% commission structure is about as outdated as paying a broker $50 for a stock trade. The mortgage origination process isn't much better. And for that matter, the process of finding and renting an apartment could use some improvements as well.
NASDAQ: RDFN
Key Data Points
That's where Redfin (RDFN +0.00%) comes in. There are plenty of tech-focused real estate brokerages, but Redfin is the only major player that is disrupting the traditional pricing model, charging half of the traditional selling agent's commission. The company has a fast-growing mortgage operation and an iBuying unit (RedfinNow) that buys and sells homes directly. It also recently acquired RentPath. To be sure, there's quite a bit of uncertainty in the real estate market right now, but Redfin shares trade at a 90% discount to their 2021 high, giving it a market cap of less than $950 million. That seems like a great bargain given the long-term potential of the business.
A great backbone for my portfolio
To be perfectly clear, I think it's always a great time to buy Berkshire Hathaway (BRK.A 1.24%)(BRK.B 1.33%), and that's exactly how I've invested in it, adding a few of the more accessibly priced class B shares to my portfolio many times throughout my investing career.
NYSE: BRK.B
Key Data Points
For one thing, Berkshire Hathaway is like a diversified portfolio in a single stock. It owns more than 60 subsidiary businesses and a $350 billion stock portfolio with dozens of positions. Not only that, but most of the company's investments are positioned to thrive no matter what the economy is doing. For example, GEICO is a Berkshire Hathaway subsidiary, and people continue to pay their auto insurance premiums even in recessions.
There aren't any sure bets in investing, but buying Berkshire Hathaway while it's trading 20% below its recent high feels pretty close to me.
The risk/reward dynamics on this fintech have shifted
After having it on my watch list for the past year or so, I've finally added Upstart (UPST 2.21%) to my portfolio. To say this fintech stock has been hammered would be an understatement -- its shares are about 93% below their 52-week high. And to be fair, there are a few good reasons that investors have bid it down. Recession fears are a big one, as we simply can't know how Upstart's proprietary credit model will hold up in a downturn. Rising interest rates are another, as loan demand could significantly decline as borrowing gets more expensive.
NASDAQ: UPST
Key Data Points
However, with Upstart trading at just 2.2 times its trailing 12-month revenue despite bottom-line profitability and 85% gross margins, the risk/reward dynamic is starting to look very interesting. Upstart's revenue grew 156% year over year in the first quarter, and $18 billion in annualized loan volume was originated through the platform. Upstart has demonstrated its superior ability to assess risk in strong, low-interest-rate environments. If it can prove itself able to do that in less-friendly economic conditions, that could be a massive long-term catalyst for the stock.
Long-term investments
As a final thought, I want to emphasize that I bought all three of these as long-term investments and plan to hold them for as long as they remain excellent businesses. I have absolutely no clue what these stocks will do in the coming weeks or months, and it's possible that a disappointing earnings report, increasing inflationary pressure, or other headwinds could cause short-term volatility and declines. In a nutshell, I'm not entirely confident that I'll be happy about what these stocks are doing a few weeks from now. But I'm almost certain that a few years from now, I'll be glad I decided to hit the buy button.
