A discussion of "growth stocks" may not thrill investors quite the way it did just a year or two ago, but this type of investment is quite the horror show some make it out to be. Share prices are a bit more volatile across many sectors at the moment, but there are some great businesses still generating impressive financial results even as the threat of a recession grows.
Here are two no-brainer growth stocks still worthy of the designation to consider adding to your portfolio before the end of January.
1. DexCom
DexCom (DXCM 0.49%) has a relatively small portfolio of products, with its flagship product being its G series of continuous glucose monitoring (CGM) devices. Its latest product is the G7 CGM. This was just approved in the U.S. in December and is currently being distributed across the U.K., Europe, and Asia, with expected launches in markets including South Africa, New Zealand, and others slated for the months ahead.
Each of DexCom's CGM launches are designed to expand upon the previous generation. For example, the G7 is said to have the fastest warm-up time of any CGM on the market and is 60% lighter than the widely used G6 CGM. These devices are used by both Type 1 and Type 2 diabetics to monitor blood sugar levels and trends.
DexCom's leadership in the diabetes care industry helped it generate enviable growth over the years, and it's rewarded faithful shareholders in the process. Over the past decade, DexCom's annual revenue is up more than 1,400%, and the stock delivered a total return of nearly 3,000% in that same stretch of time. While profitability has fluctuated, the company grew its bottom line by more than 50% over the trailing five-year period, while witnessing bottom line growth of 16% in the third quarter of 2022 alone.
NASDAQ: DXCM
Key Data Points
With the ongoing global launch of the G7 CGM taking place, management expects to grow its 2023 revenue by as much as 20%. The healthcare stock recently released its preliminary financial results for the full-year 2022, with revenue projected to come in around $2.9 billion, a 19% jump from 2021.
Although widening public and private insurance coverage is making CGM adoption more accessible, there are still large segments of the Type 1 and Type 2 diabetic populations that still do not use (but could benefit from) these devices. This gives DexCom tremendous room to grow in the years ahead, and long-term investors can enjoy the fruits of this promising trajectory.
2. Airbnb
Airbnb (ABNB +0.73%) has certainly made a name for itself in the competitive travel industry in the 15 years since it was launched out of Brian Chesky and Joe Gebbia's San Francisco apartment. The company, which started as two friends looking to make extra cash by renting out an air mattress in their living room, has since grown to the $64 billion behemoth it is today. There are more than 4 million hosts on the platform globally, having hosted more than 1 billion guests since the company's inception.
While the height of the pandemic was an undeniably rough period for any travel-oriented business, and Airbnb was no exception, the company's growth trajectory since that time has largely eclipsed the recovery of the broader travel space. In the third quarter of 2022, its revenue and net income represented increases of 70% and 260%, respectively, from pre-pandemic levels in 2019.
NASDAQ: ABNB
Key Data Points
The most recent quarter also saw the company reach a landmark adjusted EBITDA figure of $1.5 billion, up 44% year over year if you exclude the effect of foreign currency weaknesses. And looking back over the trailing 12-month period leading up to the end of the third quarter, Airbnb generated a whopping $960 million in free cash flow. Guests booked nearly 100 million nights and experiences on the platform in the three-month period.
A key catalyst for Airbnb's stunning recovery and continued growth in a tough economic period goes back to the fact that the company isn't just relying on favorable tailwinds from the broader travel industry. From remote workers looking for alternatives to traditional leases to digital nomads embracing the travel-and-work lifestyle, Airbnb's platform is set up to deliver to both the present and future needs of all kinds of travelers around the world. This is already bearing out, as about 20% of nights booked on Airbnb's platform in the most recent quarter were long-term stays of 28 days or more.
This could indicate that Airbnb's business isn't wholly predicated on discretionary spending. Management already indicated that the vast and growing adoption of remote and hybrid work could be a key growth catalyst for the company in the years to come that they have only just begun to tap into. For investors with a healthy dose of risk tolerance, Airbnb's current valuation could be too good to pass up.
