After a rough 2022, the stock market continues to demonstrate volatility in 2023. Based on what's been seen so far, it's still unclear if the market will retain its bearish characteristics or switch to bull mode. But either way, there are some great companies out there with strong track records of growth, robust balance sheets, and clear paths forward to future growth. These companies can outlast any near-term economic storm.
If the market keeps up its bearish ways in 2023, you might want to take a closer look at two stocks with the above characteristics. They will be good options to buy and hold for the long haul.
1. Airbnb
Airbnb (ABNB 1.17%) is dealing with a travel industry battling a lot of economic contradictions right now. While fears continue about a potential global recession, millions of people keep spending billions on travel. Trillions, even. While some of this could be pent-up desire to travel as pandemic pressures eased, it's unlikely that the pandemic is the only catalyst at play here.
A recent report from the World Travel and Tourism Council suggested the global travel industry is close to 95% of its way to matching pre-pandemic spending levels. The report estimates that the travel industry will be valued at $9.5 trillion this year, only a hair behind 2019's total. And 2019 was a year when travel spending as a whole was setting spending records. Still, some travel-centric companies are seeing fluctuating growth stories in the current environment.
Airbnb is not one of them.
Its growth remains strong and the online marketplace for short-term homestays and experiences continues to record highly impressive financials and rake in profits. The growth comes from both long-term and short-term travelers. Regarding long-term travelers, Airbnb's numbers suggest that the changing work habits accelerated by the pandemic may be driving a new kind of traveler that blends work and tourism together.
Long-term stays of 28 days or more account for more than one-fifth of all Airbnb's bookings. Stays of seven days of longer are 50% of bookings. Airbnb's revenue of $8.4 billion in full-year 2022 grew 40% from the prior year and 75% from pre-pandemic levels in 2019.
All this growth even in an uncertain global economy suggests Airbnb has a long way to run regardless of what the economy does in the next several months. Its resilience in an environment where other travel peers are struggling bodes well for its ability to manage well in any economy.
2. Amazon
Amazon (AMZN -1.64%) faced the same challenges other growth-oriented businesses saw over the last year. With operating costs rising, consumer wallets more constrained than in times past, and inflation still higher than normal, it hasn't been an easy time for the tech giant. After a supersized period of growth early in the pandemic sparked a lot of spending and expansion, Amazon was eventually forced to lay off thousands of workers in recent months when the growth eased off and returned to more normal levels. The company's first bout of annual unprofitability in nearly a decade made some investors antsy.
As a long-term investor in this business, the past year's stock performance has definitely been disappointing. However, it didn't dissuade me from my overall thesis about the business. Regardless of market conditions or the economy over the next year, the continued rise of online commerce is not going away. The e-commerce market is expected to grow to $27 trillion globally by the year 2027 (from $9.1 trillion in 2019). Amazon currently accounts for about 13% of the global e-commerce market and about 40% of all online sales generated in the U.S.
Amazon also has a leading share of the cloud computing market (34% as of last count), which also bodes well for its continued growth over the long term. In 2022, the company generated $80 billion in revenue from its Amazon Web Services (AWS) division, which grew 30% compared to 2021.
What sometimes doesn't get enough attention is the growth of another segment of Amazon's business: advertising. In the first quarter of 2023, Amazon's advertising business generated $9.5 billion, which represented 21% growth year over year. While this figure was a relatively small part of its top line for the quarter, that growth rate improved on the 16% growth generated by its AWS division in Q1.
Amazon has tons of cash on hand. It recorded cash and investments of $70 billion on its balance sheet as of the end of 2022, plenty to get it through any near-term difficulties. And even the annual net loss it recorded ($2.7 billion) in 2022 was almost entirely due to the decline in its Rivian stock investment, rather than an operational issue.
Amazon stock remains a buy in my book, and the current environment (down 43% from all-time highs) could present an opportune moment for some investors to swoop in and scoop up shares at what historically speaking looks like an incredibly low valuation.
