If you're investing in the market right now and you've been unnerved by the wild swings lately, you're in good company. From a dip into bear market territory a few weeks ago to recently, when the market clocked several days in a row of strong closes, it's been a rollercoaster for investors.
While no one can predict precisely what the market will do in the coming days and months, investors who continue to build their positions in excellent companies with quality underlying businesses can situate themselves for strong, durable returns in the future.
If you have $2,000 to invest right now -- money you don't need to pay bills, or would be better put in savings -- here are two no-brainer contenders for your buy list.
1. Airbnb: Don't let recession fears keep you away from this growth powerhouse
While the travel industry hasn't fully recovered from the pandemic, and a potential recession could derail some of this progress in the short-term, there's no denying that after nearly two years of staying indoors, people are eager to be out and about. One of the most common risks associated with investing in the travel industry is that spending in this space is often discretionary. So if businesses or individuals are scaling back spending in the event of a recession, it's likely the travel industry will take a hit again.
However, if you want to invest in the long-term tailwinds driving this industry -- which is on track to hit a global valuation of more than $9 trillion by 2026 -- Airbnb (ABNB 0.10%) could be an excellent option for a not-so-predictable play on the travel space.
Airbnb caters to all types of travelers. Even if certain forms of travel spending slow down in a recession, there are plenty of catalysts for growth the company can capitalize on. This is because Airbnb isn't just a platform for people to find vacation rentals. People are regularly using the Airbnb platform to find rentals they live in for prolonged periods of time, rather than a quick visit for a few nights.
In the most recent quarter, management noted that long-term stays on the platform (stays of 28 days or longer) are growing at a more rapid clip than any other type of stay. In fact, long-term stays surged by more than 90% from the same quarter in 2019. Total Nights and Experiences booked on the platform came to just shy of 104 million for the three-month period, a jump of 24% from the same quarter in 2019 as well as the highest number booked in any quarter on record. Plus, revenue and free cash flow jumped 73% and 426%, respectively, from pre-pandemic levels, and net income totaled $379 million in the most recent quarter.
Airbnb's financials and business have steadily headed in the right direction since the pandemic doldrums, and the diverse range of customers it caters to gives the company a certain level of resilience. While people are likely to curtail travel spending if a recession hits, the fact that more people are actually living in Airbnbs rather than staying for short periods -- particularly as the cost of living remains elevated and people are increasingly enjoying the benefits of flex and fully remote work -- indicates that the company's growth trajectory is benefiting from far more durable trends that should continue amid a recession and survive long after the storm has passed.
At its current price, a $2,000 investment in Airbnb would leave you with about 18 shares.
2. Lululemon: Not your typical apparel stock
Personally, I don't gravitate much toward apparel stocks, as margins can leave a lot to be desired, and the space can be highly cyclical. But there are always exceptions, and I would maintain that Lululemon Athletica (LULU -1.26%) is a well-deserved one.
For one, the athleisure giant has a standout financial track record. Over the last decade, the company has boosted its annual revenue, net income, and operating cash flow by 357%, 261%, and 396%, respectively. Meanwhile, it's delivered a total return of 296% for investors, compared to the S&P 500's return of 204% during the same 10-year period.
In the most recent quarter, Lululemon's total net revenue jumped 29% from the year-ago period. Its direct-to-consumer (e-commerce) revenue surged 30% year-over-year, while comparable-store sales rose 16%. The company also opened 21 net new stores during the quarter, finishing the three-month period out with 600 stores open globally. Compared to pre-pandemic levels, Lululemon's total net revenue surged 112%.
The athleisure market is on track to hit a global valuation of $793.5 billion by 2028, according to a study by The Insight Partners. As of the end of 2020, Lululemon captured an incredible 60% share of this lucrative and fast-growing market.
It's also worth noting that the athleisure market may not be prone to the same headwinds as the broader apparel industry should a recession hit. People use athleisure for everything from working out to day-to-day wear, and the versatility and comfort that products in this space offers may continue to draw customers, even as they scale back spending on other items. Lululemon's market leadership, coupled with its extensive track record of robust financials, make it a compelling investment in this space that investors can buy and hold for many years.
At its current price, a $2,000 investment in this growth stock would leave you with approximately 7 shares.
