2 Supercharged Stocks With Multibagger Potential to Buy on the Dip

To borrow some wise words from the great Warren Buffett, "Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years." As investors, it's difficult to contend with the ups and downs of the market. However, long-term investors can benefit from both aspects of these market dynamics, enjoying the compounded returns that often follow the best market days and using the down periods to buy great stocks on the dip.

If you're looking for wonderful businesses with compelling growth stories that the market has discounted amid last year's mayhem, here are two names to consider buying without hesitation.

1. Intuitive Surgical

Intuitive Surgical (ISRG -0.50%) is an established name in the healthcare space. The market-leading business controls about 80% of the surgical robotics industry and has remained the foremost presence in this space for over two decades and counting.

Increasingly more medical providers are relying on surgical robotics systems to streamline a wide range of procedures, including thoracic, cardiovascular, gynecologic, and general surgeries. These systems can enable more precision for surgeons in the operating room and offer patients a host of benefits, from shorter recovery times to a lowered risk of complications during recovery.

The company generates its revenue and profits from various sources. This diversified business structure and the range of services it offers the medical providers purchasing its systems have helped fuel long-lasting market leadership and favorable financials. Intuitive Surgical saw its installed base of surgical systems jump 12% in 2022 alone, ending the year with 7,544 da Vinci Surgical systems installed around the globe.

Of its $6.2 billion in revenue generated in the 12-month period, $1.7 billion was derived from sales of the surgical systems, while $4.5 billion came from recurring revenue streams, including instruments, accessories, and services it sells along with them. With replacement tools, technical support services, software solutions, education seminars teaching medical providers to use its surgical systems, and more, Intuitive Surgical has built a thriving business around its razor-and-blades business model that few have come close to rivaling.

The surgical robotics market is on track to hit a valuation of $120 billion by 2030. For investors who want to put cash into a market leader with a clear runway to growth and plenty of profits and cash to fall back on -- the company ended 2022 with cash and investments of $6.7 billion on hand -- now looks like an intriguing time to scoop up the healthcare stock, even in a volatile market environment.

2. Airbnb

Airbnb (ABNB 0.10%), like many travel stocks, has faced a strange dichotomy in its industry over the last year. While concerns about a recession remain high, household savings rates are depressed, and consumers' tendency to spend on discretionary items is more heavily in flux, people are still spending money on travel.

Some of this is certainly attributable to the ongoing travel recovery as consumers can more easily get out into the world again versus during the height of the pandemic. However, Airbnb's growth trajectory is a stand-alone example in the world of travel stocks.

Last year saw the company rake in revenue of $8.4 billion, while free cash flow came to an eye-popping $3.4 billion. These two figures alone represented increases of 40% and 49%, respectively -- and 75% and 3,072% on a three-year basis off the pandemic lows. Last year was also Airbnb's first full year of profitability, with net income for the 12-month period reaching $1.9 billion. As of the end of 2022, more than one-fifth of all bookings -- 21% to be exact -- were long-term stays of 28 days or more.

Beyond the durable habits of leisure and business travelers that drive the travel space over the long term, management has identified the emergence of new travel patterns also integral to its growth story. More travelers have flexibility due to the increase in remote work -- a trend that will likely be permanent. As CEO Brian Chesky noted in the 2022 earnings call:

We're seeing a permanent like shift in some of the travel booking behaviors on Airbnb since before the pandemic .... And probably one of the most pronounced ones is just this incremental flexibility for people. We noticed more people are searching with more locations and using more flexibility features. And even before we built these features, we were seeing people entering a lot of different date variations when they were searching. And so, we were just really responding to where things were going.

It only makes sense that when more people than ever before can work remotely, part-time or full-time, this can and will translate to a different type of traveler than the industry has seen in times past. More people are living in an Airbnb, and more consumers are combining work and travel habits into a singular lifestyle.

These elements, combined with broader, more traditional travel behaviors that could persist for years even if near-term economic headwinds induce a recession, create a compelling buying proposition for this high-growth, profitable travel stock.