The bull market hasn't arrived yet, but when it does, growth stocks could be hot buys again. Three growing businesses stand out to me as good buys for investors to consider right now: UnitedHealth Group (UNH 0.30%), Shopify (SHOP 1.11%), and Airbnb (ABNB 0.75%). All three have bright futures, and investors shouldn't count on these businesses slowing down anytime soon. Here's a closer look at each one.
1. UnitedHealth Group
UnitedHealth Group may not sound like your typical growth stock but this health insurer is a potential growth beast. Consider that since 2019, the company has grown its top line by 34%. And its bottom line has jumped by an even more impressive rate of 45%.
Health insurance coverage is a necessity, and with Baby Boomers retiring and the demographics of the U.S. changing and becoming older, this is a business that could see more demand for its products and services, leading to even better financials.
Plus, UnitedHealth isn't shy when it comes to making big acquisitions to bolster its business further. Within the past year, the company closed on a couple of key deals, including the purchase of health tech company Change Healthcare and home healthcare business LHC Group.
This year, the healthcare company projects its adjusted net earnings will come in between $24.50 and $25.00 per share. That's up around 12% from the $22.19 in adjusted earnings per share it reported for 2022.
Shares of UnitedHealth are currently trading at a price-to-earnings multiple of 23. That's a bit high given the S&P 500 average is 19. Yet, considering the growth that the company is likely to achieve in the long run, it still looks like a solid value buy for long-term investors.
2. Shopify
Shopify's business isn't profitable, and staying out of the red could be a challenge for the tech stock. But this is another example of a company that's destined for more growth.
What's appealing about Shopify's business is the ease of use of its e-commerce platform. By simply paying a monthly fee, the company can make it easy for people to sell products and services online and reach customers all over the globe. Not only does it allow existing brick-and-mortar businesses to expand online, but it can also allow regular people to potentially unlock new ways to make money, which can be particularly important if a recession hits this year and unemployment rises.
In the long run, there's the argument for the overall growth in e-commerce, which seems destined to continue growing as more people shop online. Shopify has already benefited significantly from much of that growth, with sales of $5.6 billion last year being more than eight times the $673 million in sales it generated just five years earlier.
The company's growth rate has been slowing down of late, but this remains a top e-commerce stock to buy and hold. What's mystifying is that the stock is still trading near its pre-pandemic levels. While investors are bearish on the business right now, that's not something I expect will last for the long run, and the stock could make for an excellent buy right now.
3. Airbnb
Airbnb's stock isn't struggling, but it is down around 24% from its 52-week high. And although it's trading at a hefty 41 times earnings, this is a stock that could still look like a bargain in a year or two.
For starters, the company's operations are still showing strong growth. In the last three months of 2022, Airbnb's sales totaled $1.9 billion and were up 24% year over year. And there's reason to believe that growth isn't going to stop anytime soon -- just consider some of the recent results coming in from other companies.
In April, American Airlines posted its first quarterly profit in four years, with sales for the first three months of the year soaring 37% year over year. The company noted that "the strong revenue performance was driven by the continued strength of the demand environment." Similarly, top hotel chain Hilton is coming off a strong quarter for the same period as well, in which sales jumped 33%. As a result of the strong demand, the company also announced it was raising its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) guidance for the year.
Time and time again consumers are showing that regardless of inflation or economic concerns, they are willing to spend money to travel and go on vacations. That's a promising trend, one that could make Airbnb an underrated stock to own, even if a recession hits.
There appears to be strong enough demand that Airbnb's business could do well regardless of what happens this year. Not only can the platform benefit from more bookings due to more flights, but it could also see strong demand from people who may not want to venture out too far and instead just want a more unique vacation experience, as opposed to staying at the Hilton.
Airbnb's diverse platform and overall versatility makes this an ideal stock to hold right now, especially heading into what could be a busy travel season.
