While 2022 proved to be an unpleasant year for the market, it was not out of the ordinary. Markets experience periods of volatility, which provide opportunities for savvy investors to buy solid stocks at bargain prices. Buying and holding high-growth stocks for the long term is a wise investment strategy.
The two stocks I find interesting are visual-based tech company Pinterest (PINS -0.52%) and the owner of the world's largest cannabis dispensary, Planet 13 Holdings (PLNH.F). Both companies have unique business models that set them apart from peers in their respective industries. Let's take a look at why these two are good buy-and-hold investments now.
Image source: Getty Images.
1. Pinterest
Pinterest received a lot of attention during the pandemic, when online-based platforms were one of the best ways to spend time. The market has been harsh on all pandemic-related businesses, anticipating their failure in the post-pandemic market. Surprisingly, Pinterest is still thriving and established a solid foundation from which long-term investors can benefit.
The company's recent quarterly results are proof of that. Compared to pre-pandemic levels, the fourth quarter of 2022 saw Pinterest grow its revenue and monthly active users (MAU) by 120% and 34%, respectively, compared to the same quarter in 2019 -- an impressive jump.
After reporting a loss in previous quarters of 2022, Pinterest returned to profitability in Q4 with GAAP net income of $17 million.
Management believes its focus on creating more personalized, timely, and engaging content is what is driving the company's MAU and mobile app users' growth. Global mobile app users grew 14% year over year in Q4.
Pinterest spent more than $949 million on research and development in 2022, with sales and marketing accounting for up to $933 million. This demonstrates that it is heavily spending money to drive user engagement and attract more advertisers. It is also in robust financial shape, ending 2022 with $2.7 billion in cash and cash equivalents.
Pinterest continues to be a popular and innovative platform from which merchants in a variety of industries can draw customers. Once the ad market recovers, the company has a long way to go. This social media tech stock, with a price-to-sales ratio of 5.9, is cheap to buy now if you want to earn some big gains when the company becomes a success in the long run.
2. Planet 13 Holdings
When President Joe Biden took office and Democrats won both houses of Congress, investors expected federal cannabis reforms to be simplified. However, this has not yet occurred, which is weighing heavily on marijuana stocks.
But that hasn't stopped some cannabis stocks from expanding to reach profitability. Currently, 21 states and the District of Columbia have legalized recreational cannabis, while 37 states made it legal for medical use.
What's special about the Nevada-based multistate operator (MSO) Planet 13 Holdings is its superstore strategy. The company owns gigantic cannabis outlets in key markets that are impossible to miss.
Its well-known Las Vegas location houses the world's largest cannabis space. It offers a diverse selection of branded products, such as edibles, vapes, and cannabis extracts. Recently, the company got approval for a consumption lounge license in its Las Vegas store. According to the company, it will allow consumers to "watch products being made, purchase and consume all under one roof." It's a smart move to attract customers in a tourist-friendly location.
Rising inflation and lower consumer spending are headwinds for cannabis stocks, which also affected Planet 13's recent quarterly results wherein revenue declined 22% from the prior-year quarter. In the past five years, the company's annual revenue grew 446%.. Planet 13 isn't profitable, but as the industry evolves, it may soon see green in its bottom line. Florida, should it legalize recreational cannabis, would be another big market for Planet 13. Recently, Planet 13 announced plans to open its fourth dispensary in Florida.
Florida, Illinois, and California are difficult markets to penetrate as the bigger players like Green Thumb Industries, Trulieve Cannabis, and Curaleaf Holdings have a vast presence there. But customers are drawn to Planet 13's superstores because of the unique shopping experience they provide.
Marijuana is regarded as a consumer discretionary product, but consumers will continue to purchase it regardless of the state of the economy. When the cannabis industry reaches its full potential, cannabis stocks like Planet 13 could provide solid returns for long-term investors willing to buy and hold the stock.
Though long-term prospects for Pinterest and Planet 13 appear promising, keep in mind that both stocks are in highly volatile industries, so diversifying your portfolio with some stable stocks is a good idea.
