Growth stocks aren't boosting investors' returns at the rate they were a few years ago, but it's not all doom and gloom. Great businesses continue to thrive in what is arguably an uncertain macroeconomic environment that has investors divided about what to do with their money.
Here are two companies performing well on a business level that beg a second look from investors regarding their stocks. Both of these unstoppable growth stocks look ripe for multi-year buy-and-hold investments in 2023 and beyond.
1. Fiverr International
Fiverr International (FVRR 1.68%) got increased attention from investors in the pandemic era when millions of people were forced to stay at home for extended periods which resulted in a notable boom in remote work and gig work. The growth has certainly slowed from that peak pandemic period. Still, there's a lot to like about this stock, particularly when you evaluate its growth story in light of the bigger picture of the industry in which it operates and its progress over the last few years.
Fiverr finished out the first quarter of this year with 4.3 million active buyers of freelance services on its platform, and spending per buyer hitting $262 (spending, in this case, is the 5.5% service fee Fiverr collects on top of the fees that go to the seller for services rendered). These two figures represented increases of 0.3% and 4% from the year-ago period. Taking a step back, that active buyer count was up 74% compared to the same quarter in 2020, while spending per buyer rose 48% on a three-year clip.
Fiverr continues to expand the vast range of services (gigs) that freelancers can offer to clients and businesses on the platform as well. For example, the rise of AI has pervaded many segments of the labor economy, and the gig economy is no different. Even as searches and offerings for AI-focused gigs have expanded rapidly in recent months, Fiverr's management has been clear that these tools aren't replacing the need for actual gig workers. The first-quarter earnings report noted:
We are also seeing higher quality of work deliveries as freelancers leverage the latest generative AI tools. Fiverr's marketplace is highly dynamic. Just as consumer preferences continue to evolve in a physical goods marketplace, on Fiverr, services and job skills continue to evolve as well. When new waves of technology advancements occur, these often are the golden moments for category expansion on our marketplace followed by an influx of supply and demand. We believe the recent advancement of AI technology creates such a golden moment to lean into our category expansion as a long-term growth driver.
Between 2019 and 2022, Fiverr's revenue expanded at a compound annual growth rate of 47%. Compare that to the pace of growth of the broader global gig economy, which is expected to witness a compound annual growth rate of 16% in the seven-year period between 2021 and 2028, according to Business Research Insights. It's also worth noting that in 2022, 27% of Fiverr's revenue was from new buyers, while an incredible 63% was from repeat buyers. In short, once a buyer -- whether that be a solo entrepreneur or a large enterprise -- joins the Fiverr platform, they tend to stay with it for a long time. Fiverr's growth journey may be changing, but its business looks more relevant than ever.
2. Apple
Apple (AAPL 1.00%) made headlines this week for announcing a significant new hardware product: its eagerly awaited mixed reality headset. The product, officially called the Vision Pro, made its first public appearance at the Worldwide Developers Conference. The headset won't be commercially available until early next year, and it will come with a $3,499 price tag.
Vision Pro is a virtual reality headset, an augmented reality headset and it also functions as a 3D camera. Beyond running Apple's app offerings, the headset will be able to integrate with a wide range of third-party apps being created by well-known industry leaders. Microsoft and Walt Disney are just two of the companies building apps to operate on Vision Pro. Users will be able to navigate Microsoft's productivity apps from the headset or stream Disney+ shows. The Vision Pro will also enable pairings with other Apple products. It's powered by Apple's industry-leading M2 chip, and also runs a brand new R1 chip which is designed to reduce the potential for motion sickness.
When it's released, Apple hopes to seize a significant share in the highly fragmented multi-billion-dollar virtual reality headset market. According to Fortune Business Insights, the global virtual reality market was valued at about $12 billion in 2021 but is expected to balloon to a valuation of $227 billion by the year 2029. That's a compound annual growth rate of 45%. The company's focus on creating a mixed reality headset that can service a wide range of user needs, rather than focusing on gaming as the primary use case, looks like a solid strategy to capture added market share.
Beyond the Vision Pro, Apple announced several other updates this week, including a new Macbook Pro. Importantly, the company still makes most of its revenue from iPhone sales. The second-most-prominent slice of its sales comes from its services segment, which revolves mostly around subscription-based products like Apple Music.
Over the trailing 12 months, Apple pulled in revenue of $385 billion and net income of $94 billion. It also produced operating cash flow to the tune of $110 billion. While a challenging macro environment affected Apple's pace of growth, the tech giant is still a highly profitable cash machine that continues to evolve to meet the changing needs of its customers while generating growth from its industry-leading products. The future still looks very exciting for Apple and its long-term shareholders.
