The volatility of the market over the past year confirms one of the basic fundamentals of successful investing: holding stocks for the long term. Another tenet is to buy low and sell high. Since you can't time the market, that essentially means buying at an attractive entry point and holding for a long time, allowing the investment to grow.
If you have $1,000 to invest after paying down debt and saving for emergencies, Airbnb (ABNB 2.74%), Revolve Group (RVLV -0.05%), and Chipotle Mexican Grill (CMG 1.08%) are three top stocks to buy and hold for the long term.
1. Airbnb: The future of travel
Not only does Airbnb continue to post record sales and nights booked, but it also continues to grow its hosts and rentals, leading to a cycle of growth. Guests love its flexibility, diverse price range, and selection of locations. These are unmatched among traditional travel companies, and Airbnb keeps improving its platform to give itself an even greater edge.
Airbnb has moved beyond its disruptor status to become fully mainstream, and in doing so, it has made innovative travel more mainstream, too. Management sees pandemic trends like long-term stays and non-urban travel as here for good, and Airbnb's platform provides access to this type of travel in addition to more typical vacations.
What I love about Airbnb for the long term is its adaptability as a platform. While it can meet these trends now, it's built to evolve and meet other new trends as they emerge. It has also been able to scale profitably, and it posted $1.2 billion in net income in the 2022 third quarter.
Airbnb stock is down 23% over the past year, but it's made up for a lot of earlier losses and is now up 28% in 2023.
2. Revolve Group: The future of fashion
Revolve Group is one of those stock secrets where you can still get in on the ground floor because this stock is going up.
It sells designer clothing on its eponymous website, and it was posting fabulous growth up until the middle of last year. It was still demonstrating growth in the past two quarters, as well as profitability, but the slowdown is substantial. That has led to a declining stock price, which provides an opportunity for investors.
Revolve targets a millennial crowd and uses artificial intelligence (AI) to power its all-digital platform. It relies considerably on social media influencers for marketing, completing the digital cycle, and engaging its tech-heavy target market.
The future looks bright for Revolve as it upends traditional fashion retail with a modern platform. Because it's all digital and has an agile, AI-powered inventory system, it has been able to meet changing demand quickly, resulting in lower markdowns and strong profitability. It has also generated increased free cash flow despite the macroeconomic environment, ending the 2022 third quarter with more than $8 billion, or more than a 500% increase from last year.
Revolve stock is down 40% over the past year but up 23% in 2023. It's likely to be a multi-bagger long-term.
3. Chipotle: A lot more restaurants in the future
Chipotle has already delivered mega-gains for investors over the years, and it's a good example of a winner that keeps on winning. A growth investor might be pulled toward newer, high-potential growth stocks like Airbnb and Revolve Group, but don't reject past winners because you didn't get in early. Consider the massive potential still down the road.
Chipotle has been demonstrating tremendous resilience despite the pandemic and then inflation, maintaining profitability and positive cash flow throughout. Even more impressive, both of those metrics have become stronger despite the increased costs that have negatively impacted many companies.
CMG Net Income (Quarterly) data by YCharts.
Part of that was due to its successful price hikes because its higher-income diners can still afford to enjoy fast-casual takeout in a pressured economy. That has contributed to consistently increased quarterly comps.
But there's so much to be confident about going forward because there's still a large opportunity for new stores. CEO Brian Nicoll upped the chain's target store count from 6,000 to 7,000, and it is still entering new markets, even in the U.S.
Chipotle stock is up 14% over the past year, and it should reward investors for decades.
