Stocks have dealt with tumultuous economic waters and highly volatile investor sentiment over the last few years. While no one can say when these choppy waters might subside, it's worth pointing out that the S&P 500 has still delivered a total return of 200% over the past 10 years and 67% over the last five.
While those periods were fraught with peaks and valleys, investors who stayed in the market amid the ups and downs have a much higher chance of compounding favorable returns rather than those who try to time or dip in and out of the market.
If you're on the hunt for great stocks with businesses that can drive continued share-price returns in the years ahead, and enrich long-term investors in the process, here are two names to consider right now.
1. Intuitive Surgical
Intuitive Surgical (ISRG 0.59%) operates in one of the most non-cyclical industries on Earth -- the healthcare space. The company specializes in a very lucrative sub-sector of this industry: the surgical robotics market, a space that Grand View Research estimates is on track to be worth $18 billion by the year 2030. Bear in mind, Intuitive controls about 80% of this total market and has been the market leader since its first da Vinci surgical system was first approved more than two decades ago.
The impressive growth trajectory of the surgical robotics market as a whole has been fueled by multiple factors, including the rising adoption of these tools and solutions by medical providers. Still, the cohort of medical procedures using surgical robotics still only accounts for about 20% of all surgeries performed in the U.S. at the time of this writing, creating a significant runway of growth still ahead.
As the market share leader, Intuitive Surgical stands to be a direct beneficiary of these trends. Its surgical robotics systems are used in everything from urological to gynecological to colorectal to general surgeries.
Another key growth factor that has enabled Intuitive Surgical to succeed in a fragmented market goes back to its razor-and-blades business model. While it can make millions in revenue from the sale of a single system, it derives even more growth from selling the software solutions, tools, and instruments that go with these systems.
Over the trailing-12-month period, the company has raked in $6.4 billion in revenue, while reporting net income of $1.3 billion in that same window of time. Its trailing-12-month operating cash-flow position stands at a cool $1.6 billion.
Even as the resurgence of COVID-19 in certain markets has impacted procedure volumes, the company's continued profitability and wide moat bode well for its long-term outlook -- a fact that buy-and-hold investors may want to take advantage of now.
2. Fiverr
Fiverr (FVRR 3.74%) has built a thriving platform around the ongoing and future potential of the gig economy, a space on track to generate $455 billion in 2023 alone.
The growth of the gig economy didn't start with the pandemic, even if that period accelerated the number of individuals looking for flexible ways to earn an income on their own terms. Even as hiring initiatives are slowing down across a range of sectors and industries as fears of a recession persist, this doesn't dim the long-term potential of this space.
It's also worth pointing out that while companies may be more hesitant to hire full-time employees in a tough economic environment, the ability to retain talent to meet workplace needs on a contract basis can be even more appealing.
Fiverr reported revenue of $88 million in the first quarter of 2023, up 2% on a year-over-year basis. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $11 million for the three-month period, a 190% jump from one year ago. While the company is still operating at a net loss, that figure shrunk from $17 million in the year-ago period to $4 million in the first quarter of this year.
Buyers of freelance services, which range from large companies to small businesses, are continuing to consistently spend money on the gigs available on Fiverr's platform. Average spend per buy rose 4% year over year in Q1. Fiverr is also continuing to increase its take rate from gig transactions, which was up 80 basis points year over year at 30.4% as of the end of the quarter.
Demand for AI-related services has also fueled a surge of new gig categories that are now available on the platform. Fiverr unveiled 20 new gig categories in 2023's Q1 alone, many of which were AI-related. Importantly, management noted in the Q1 shareholder letter that "we haven't seen the development of AI displacing the need for human talent; on the contrary, we are seeing the increasing need for human skills to deploy and implement AI technologies."
The demand for the gig talent available in Fiverr's platform is only going to grow in the years ahead. As the company continues to innovate to meet the changing needs of freelancers and the companies that work with them, this can create a golden opportunity for long-term investors who want to buy into the future of the multibillion-dollar gig economy.
