If you have $1,000 to invest in the stock market this month, there's no shortage of great companies in which you could make a meaningful investment. While the market hasn't been kind to many stocks lately, looking beyond near-term downtrends in share price and focusing on the businesses behind the stocks can reveal some remarkable specimens just begging to be bought.
Here are two such stocks to consider buying if you have $1,000 on hand to put into your portfolio.
1. Etsy: No run-of-the-mill e-commerce stock
Etsy (ETSY -2.17%) isn't your average e-commerce stock. Its continued focus on a unique slice of the global e-commerce market -- primarily vintage, unique, and handmade items -- has differentiated it from other businesses operating in this space and gives it a clear advantage in the current environment and beyond.
In the most recent quarter, higher operating costs and a challenging business environment weighed on Etsy's bottom line, but it still grew revenue by 11% from the year-ago period while its gross profits increased by 9% and operating cash flow hit just shy of $126 million. The company ended the three-month period with 7.4 million active sellers and 93.9 million active buyers.
Taking a step back from the current environment and looking over the past five years of financial performance, Etsy has consistently delivered remarkable growth. In the trailing five-year window, its revenue, net income, and operating cash flow have all surged by 428%, 503%, and 843%, respectively.
Even as consumers curb their spending habits in the near term, the global business-to-consumer e-commerce market as a whole is still on track to hit a global valuation of $15 trillion by the year 2030, according to Ameco Research. Not only does the specificity of Etsy's business model make it a standout investment with few direct rivals -- which bodes well for investors planning to buy and hold the stock for years -- but the focus of its family of brands may be particularly attractive to consumers if a recession does hit.
From the Etsy marketplace to subsidiaries like resale platform Depop, when consumers scale back purchases of big-ticket or name-brand items, they're more likely to go secondhand, vintage, or handmade. A company like Etsy is in a prime position to meet the changing needs of consumers while remaining true to its core business themes, which gives it a durable competitive edge in the broader e-commerce market.
At its current share price, a $1,000 investment in this growth stock would garner you about nine shares.
2. Pinterest: A site that inspires consumers
Pinterest (PINS -0.52%) had a banner trading day on Thursday, Oct. 6, after Goldman Sachs analyst Eric Sheridan upgraded the stock from neutral to buy and increased its price target to $31. Given its current share price, that would give shares of the image-sharing site a potential upside of nearly 20%.
Even though Pinterest's monthly active users (MAU) were down 5% year-over-year in the most recent quarter, its average revenue per user surged 20% in the U.S. and Canada, 20% in Europe, and 80% in the rest of the world. And revenue was up 9% overall from the year-ago period. This follows revenue growth of 52% in the full-year 2021.
Pinterest makes most of its money from digital advertising space that brands buy on its platform. These ads can take the form of traditional clickable ads, or often as what are known as promoted pins -- an image or video that markets specific products or services. One of the reasons the stock has fallen lately, in addition to a decline in monthly active users, is due to fears that the company may face deep headwinds should a recession hit and companies scale back their digital ad spending even further.
While this may be true in the near term, the fact remains that few businesses today can survive without a robust online presence. More often than not, that involves the use of digital ads to reach their target audience. Currently, digital ad spending is on track to hit $876 billion globally by the year 2026, according to Statista. Not only does Pinterest research show that 89% of pinners in the U.S. use the platform to gain inspiration before they make a purchase, but 83% of U.S. weekly pinners have actually hit the buy button after learning about a product or service on Pinterest.
Considering that Pinterest boasts 433 million monthly active users as of the last count, there is a strong incentive for businesses of all sizes to capitalize on the potential of this broad global audience on a platform that has a visual layout and appeal is markedly different than that of other social media stocks selling digital ad space. Not only does this bode well for Pinterest as digital ad spending recovers, but for investors who choose to buy and hold this stock throughout the near-term choppiness of the market.
At its current share price, a $1,000 investment in Pinterest would leave you with approximately 38 shares.
