Growth stocks aren't getting much love from investors these days, but overlooking this category of investments altogether in the current market could be a mistake. The market may hold more volatility ahead in 2023, but if you're investing in it for decades, the current environment shouldn't keep you from putting more cash into companies that you're willing to hold onto for the long-term.
On that note, let's take a look at two of my favorite growth stocks for investors to buy and hold in 2023 and well beyond.
1. Shopify
Shopify (SHOP 4.90%) has fallen sharply amid the broader tech stock debacle, but the business remains a compelling choice for investors with the risk tolerance to handle the volatility the business is likely to continue witnessing in the near term.
While the company has become unprofitable again in recent quarters, this is largely due to its strategy of focusing on spending to build out its platform and tools for sellers now, in order to prime itself for sustained growth over the long haul.
In the last several months alone, the company launched Shopify Payments in several new European markets, introduced an all-in-one point of sale device called POS Go, and launched Shopify Markets Pro, an integrated cross-border platform solution that allows merchants to expand into new global markets while seamlessly managing key operational concerns like tax compliance and duties.
The company is also seeing massive strides in the adoption of its Shopify Fulfillment network by merchants following the acquisition of Deliverr in July 2022.
In the third quarter, management reported that Shopify saw a 75% year-over-year increase in seller inventory accepted into Deliverr cross-docks, and an 80% jump on a quarter-over-quarter basis of merchants taking advantage of at least one of Shopify's logistics solutions across the full breadth of its supply chain management services.
Shopify is still growing revenue at a strong clip, and its cash position remains strong. Revenue was up 22% year-over-year in the most recent quarter, and up about 250% compared to the same quarter in 2019. Meanwhile, the company closed the third quarter with roughly $8 billion in cash and investments on its balance sheet.
Bear in mind, roughly 20% of all e-commerce sites globally are built using Shopify, which gives it a tremendous advantage over the long term as consumer spending levels recover and the economic tension eases, not to mention a broad untapped market still to explore. For investors with the fortitude to manage the turbulent waters that will undoubtedly continue to impact Shopify in the coming months, this e-commerce stock looks like a no-brainer buy, particularly at its current discounted price.
2. Airbnb
Airbnb (ABNB 2.77%) wouldn't appear to be a winning business if you only looked at its stock price, but even a cursory glance at its financials indicates the company is not only thriving in the current environment, but looks well-positioned to ride out any near-term recessionary headwinds.
The platform has seen an amazing recovery from travel's lows of the pandemic, and it's increasingly proving the proposition that the vacillations of the travel industry at large are merely one aspect of its overall long-term growth trajectory.
One significant tailwind that is currently driving Airbnb's long-term growth story is the fact that its platform has become a go-to for individuals looking not just for vacation homes, but places to actually live as the changing world of work roars ahead.
With so many companies adopting remote or hybrid arrangements, and even ones that aren't going fully remote introducing flexible polices to satisfy workers who might otherwise look for a different employer, this is creating an entirely new kind of consumer that Airbnb's platform is well-suited to cater to.
Case in point: About 20% of all stays booked on Airbnb's platform consist of long-term visits, meaning 28 days or more.
In the third-quarter earnings call, co-founder and CEO Brian Chesky stated:
I think more people are going to work remotely or in a hybrid way five years from now than they do today. I think increasingly, fewer people are going to have one-year leases, not to say no one will, but more and more people are going to value the flexibility and want to live in different places. And we think there's a real opportunity. And one of the things we're going to also see over the coming years isn't just that and live in different parts of the United States, but people are going to choose to live for short periods of time abroad in different countries. So we think we're going to start to see more long-term cross-border business, too.
Airbnb continues to grow its revenue and net income at rapid clips, not just on a year-over-year basis but compared to pre-pandemic levels too.
For example, Airbnb's revenue in the most recent quarter represented a 30% increase from the year-ago period, but was up 70% from the same quarter in 2019. The third quarter of 2022 was also the most profitable on record for the company, with the company reporting earnings of $1.2 billion for the three-month period.
Airbnb's platform is highly adaptable to the fluctuating dynamics of the travel industry, the changing world of work, and the needs of its consumers, which gives it a particular edge in the years ahead even if consumer spending temporarily slows amid a recession.
