Let's face it: finding the best investments for your portfolio in the current environment isn't easy. With so many companies trading at or near historic lows, it's important to separate the wheat from the chaff. Just as you don't want to buy a company only because it's trading on sale, you shouldn't invest in a stock only because the shares are trending upward while the rest of the market is down.
In other words, you need to choose wisely. Following are two fantastic businesses you may want to consider parking some of your cash in now and holding onto for at least the next several years.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.06%) has a unique competitive edge over the average healthcare stock in that it is the market leader in a multibillion-dollar industry with minimal competition. Vertex develops and manufactures drugs that treat cystic fibrosis patients. These products are part of a class of drugs known as CFTR modulator therapies, which essentially help to tweak the faulty protein that causes someone to develop cystic fibrosis.
CFTR modulator therapies are changing the landscape of the fight against cystic fibrosis -- a disease that afflicts 40,000 individuals in the U.S. alone -- and there are only four of these therapies that have as yet been approved and made it to market. All four of these -- Trikafta, Kalydeco, Orkambi, and Symdeko -- are made by Vertex.
Trikafta is by far Vertex's top-selling CF drug. The product raked in $3.9 billion in revenue in 2021 and $1.3 billion in the most recent quarter alone. Over the past three years, Vertex's total portfolio of products has enabled it to grow its revenue by more than 80% and its net income by nearly 100%.
While its dominance of the $7 billion cystic fibrosis treatment market, coupled with its strong history of top and bottom line growth, are all green flags for Vertex, there's more. The company has a robust pipeline of promising drugs that target a variety of rare genetic illnesses and other diseases. This includes beta-thalassemia, sickle cell disease, Type 1 diabetes, and a variety of pain disorders. One drug candidate it's developing with CRISPR Therapeutics -- called exa-cel -- is on track for regulatory submission soon.
Currently, Wall Street forecasts that Vertex could have an upside of more than 30% from its current share price. It's also worth noting that the stock is already up by more than 33% year to date, compared to the S&P 500's negative return of approximately 23%. Now could be exactly the right time for long-term investors to take a second look at this high-flying healthcare stock.
2. Match Group
According to a report by Grand View Research, the global online dating market hit a valuation of $3.7 billion in the year 2021. Match Group (MTCH 0.63%) accounted for a stunning share of that valuation, reporting revenue just shy of $3 billion in 2021. Looking ahead, estimates show that the global online dating industry will hit a valuation of nearly $6 billion by the year 2028.
Match Group's dominance of the online dating app universe, fueled by its well-known products like Tinder, Hinge, Match, and OkCupid, remains largely unchallenged. While there is certainly room for new entrants in the space, Match Group's apps aren't the only game in town, but they are certainly the biggest in town.
In 2021, Match Group's revenue and operating income rose 25% and 14%, respectively, compared to the prior year, while Tinder revenue alone jumped 22%. Outside of Tinder, its other dating app brands saw revenue surge 29% compared to 2020.
Fast forward to the most recent quarter. While revenue growth wasn't on par with quarters past, it still rose 12% year over year, with Tinder alone generating revenue growth of 13% from the year-ago period. The company also had a healthy cash position of $473 million on its balance sheet at the end of the quarter.
Match Group is trading down nearly 70% from the beginning of this year. The growth-oriented stock has been hit by the headwinds afflicting the broader market, as well as fluctuating investor sentiment, as growth has remained more moderate in recent quarters.
A big eyesore for investors in the most recent quarter was the operating loss the company reported to the tune of $10 million, a large part of which was due to a write-down of its 2021 acquisition of the social media company Hyperconnect. Although this could impact the company's balance sheet in the near term, its market leadership and diverse sources of income, from apps to advertising revenue, paint a picture of a resilient business with fantastic long-term growth potential.
Plus, analysts are estimating that the stock could have an upside of more than 120% over the next 12 months alone. For more risk-resilient investors with a long-term buy-and-hold perspective, this business could pose a compelling buy in the current market and beyond.
