The Nasdaq-100 index, which is made up of stocks issued by the 100 largest non-financial companies listed on the Nasdaq Stock Exchange, started the year on a positive note. It posted gains of 14% in 2023, bringing some relief to investors who saw the index lose over 15.4% of its value in the past year.
It is worth noting that the Nasdaq has a tendency to bounce back strongly after a down year. Cooling inflation and the U.S. economy's resilience could be catalysts for equities in 2023 and send the market on a potential bull run. That's why investors may want to load up on a couple of Nasdaq-100 stocks that could soar higher in 2023 and beyond.
Airbnb (ABNB 0.10%) stock is already crushing the market this year with gains of 38%. Meanwhile, Datadog (DDOG -1.43%) has jumped 6.1%, and it wouldn't be surprising to see this fast-growing cloud software company jump higher. Let's look at the reasons why Airbnb and Datadog are two Nasdaq stocks that investors should consider buying hand over fist in February.
1. Airbnb
Airbnb stock's solid start to the year is expected to continue thanks to healthy demand for travel and tourism in 2023. International travel could spike 40% this year, according to Euromonitor International, while another report by the United Nations World Tourism Organization (UNWTO) suggests that international tourist arrivals could bounce back to pre-pandemic levels in 2023.
Specifically, the UNWTO forecasts that international tourist arrivals could range between 80% and 95% of pre-pandemic levels in 2023. That would be a nice increase over last year when international arrivals stood at 63% of pre-pandemic levels. This should pave the way for yet another good year for Airbnb.
The company's 2022 revenue increased an estimated 39% to $8.35 billion. More importantly, the vacation rentals and accommodation marketplace provider is expected to swing to a profit of $2.59 per share from a loss of $0.57 per share in 2021. Wall Street expects Airbnb to post attractive growth over the next two years as well.
ABNB EPS Estimates for Current Fiscal Year data by YCharts
There are a couple of reasons why Airbnb should be able to post healthy growth in the short and long run.
First, TechNavio estimates that the global vacation rental market could add $79 billion in revenue between 2021 and 2026. So Airbnb's addressable market is expected to increase substantially over the next few years.
This brings us to the second reason why the company's impressive growth should be here to stay. Europe is said to be Airbnb's largest market. As it turns out, Europe is expected to account for 37% of the incremental vacation rental spending through 2026, according to TechNavio.
Meanwhile, Airbnb remains the preferred vacation rental platform in the world's largest vacation rental market, the U.S. The U.S. vacation rentals segment is expected to generate $19.4 billion in revenue in 2023. With 80% of vacation rental users in the U.S. reportedly preferring Airbnb for their bookings, the company is in a nice position to make the most of this lucrative market.
Even better, Airbnb's solid position in key vacation rental markets across the globe is likely to translate into annual earnings growth of 20% for the next five years, according to consensus estimates. All this indicates that investors may want to double down on Airbnb in February, as a strong earnings report from the company later this month could give its stock price a shot in the arm.
2. Datadog
Datadog stock has lost 47% of its value in the past year, but the company's terrific growth rate indicates that savvy investors can buy a growth stock on the cheap here.
Datadog will release its fourth-quarter and full-year 2022 results on Feb. 16. The company is expected to report eye-popping full-year revenue growth of 61% to $1.65 billion, along with a 90% spike in earnings to $0.91 per share. Even better, Datadog is expected to maintain its outstanding growth in the future.
DDOG EPS Estimates for Current Fiscal Year data by YCharts
Analysts are estimating impressive 47% annual earnings growth from Datadog over the next five years. A closer look at the company's addressable opportunity tells why it is capable of achieving such impressive growth.
Datadog is a provider of security, analytics, and monitoring platforms for cloud applications. Its offerings are used by developers, IT (information technology) teams, and enterprise cloud users. Its tools allow customers to monitor cloud infrastructure, application performance, and security in real-time, along with other services such as monitoring user experience and network performance.
Datadog is said to be one of the leading players in its space thanks to its comprehensive platform, which explains why the company is witnessing a nice increase in customer spending and stronger adoption of its platform. For example, the number of Datadog customers with more than $100,000 in annual recurring revenue jumped 44% year over year in the third quarter of 2022 to 2,600. Its total customer count jumped 27% year over year to 22,200 during the quarter.
Additionally, 40% of Datadog customers were using four or more of its products in Q3 2022, up from 20% during the same period in 2020. Not surprisingly, the company reported an impressive dollar-based net retention rate of over 130% for the 21st consecutive quarter in Q3 2022, which points toward an increase in the usage and adoption of its products by customers.
As such, the company is in a solid position to tap its large addressable market, which was worth an estimated $41 billion last year. What's more, the company's addressable opportunity could increase to $62 billion by 2026.
In all, Datadog has the potential to become a top growth stock in the long run, so investors should consider doubling down on it before it starts soaring.
