Being a successful investor doesn't mean you need to find the little-known companies that yield life-changing returns overnight or time the market in hopes of suddenly experiencing a portfolio windfall. In fact, few investors will ever succeed in building a portfolio this way.
Instead, if you focus on regularly investing your cash into companies with robust core businesses, solid moats, and the competitive advantage to drive consistent growth, and stay with those companies through the market's ups and downs, you can throw unreliable strategies like market-timing straight out the window.
If you're on the hunt for more great companies to buy and hold for the long haul, here are two names you won't want to overlook.
1. Fiverr
Fiverr (FVRR 3.74%) is tapping into a fast-growing segment of the global labor economy with a platform that connects freelancers with small and large businesses all over the world. While the gig economy was already growing rapidly before the pandemic, the changing world of work along with increased economic uncertainty is leading more and more people to consider doing freelance work.
According to a recent study by Fiverr, there are nearly 7 million freelancers in the U.S., who together earned approximately $286 billion last year. That dollar amount represented a 10% increase from 2021. This also means that freelancers now account for about 4% of the entire workforce in the U.S.
Another study by Fiverr of Gen Z respondents around the world found that 67% of those surveyed either freelance already or are planning to. There are roughly 70 million Gen Zers in the U.S. alone, the second-largest generational group in the country after millennials.
The continued adoption of freelance work by Gen Z and others, combined with demand for remote/hybrid/flex work, suggests diverse forms of employment will drive the labor economy moving forward.
For investors, this can create a compelling buying proposition to capitalize on the the future of work. Few freelance platforms are operating at the size and scale that Fiverr is.
The platform raked in $88 million in revenue in the first quarter of 2022 alone. It also has 4.3 million active buyers of freelance services on its platform as of last count. Fiverr's management seems to have its finger on the pulse of what the individuals and businesses retaining freelancers want to find on its platform.
As demand for AI-related services has risen -- buyer searches in this area have jumped more than 1,000% in recent months -- Fiverr has launched a host of new gig categories to meet that need. It also recently rebranded its business services for larger brands hiring freelancers on its platform. Now called Fiverr Enterprise, this service helps companies working with a network of freelancers handle everything from talent sourcing to more seamless project management from a single platform.
Even as the pace of growth has slowed from the pandemic period, Fiverr's proven ability to capitalize on both the supply and demand sides of the freelance economy while achieving steady growth could compel some investors to take a second look.
2. Upstart
Upstart (UPST 2.76%) has built a remarkable platform in an industry that has long been in need of disruption, the multitrillion-dollar lending space.
With a business that targets some of the most lucrative segments of this space -- including personal loans and auto loans -- all while leveraging the power of artificial intelligence and machine learning to drive approvals and denials, it's not hard to see why lending partners continue to jump aboard even though lending volume is still down.
The stock is up by triple-digits this year, a fact that goes back to some investors heavily shorting shares as well as what appears to be a gradual shift in sentiment from other shareholders regarding the company's long-term growth prospects. Two of the toughest hurdles that Upstart has faced in recent quarters has been a contraction in lending volume as well as in loan funding.
Since Upstart's platform is constantly reacting to an applicant's default risk, loan approvals have shifted downward from past periods. Fewer applicants are looking to get loans anyway, especially larger loan amounts, as interest rates remain higher.
Upstart's platform has always revolved around facilitating loans rather than funding them. As the cost of buying loans has risen for its institutional partners, the company's balance sheet has had to carry more loans than usual, although these partners (like banks) are still funding the lion's share.
All this has led to a steep dip in revenue and a series of eye-popping net losses in the last few quarterly reports. But now, the tide could be starting to turn. Upstart has secured numerous rounds of multibillion-dollar purchase agreements from institutional investors. Platform automation is at a record high, with about 84% of all loan approvals happening without a human involved.
Upstart has 99 lending partners signed up to its platform and counting, almost 10 times the size of its network when the company went public less than three years ago.
The company also just announced that it intends to enter the $2.7 trillion home equity lending market. CEO Dave Girouard said in the first-quarter earnings call that "95% of [home equity lines of credit] are financed by banks and credit unions, so it's an asset our lending partners know and value."
Upstart is also making considerable strides in the auto lending market, an addressable market worth nearly $800 billion, with 39 dealerships nationwide now having adopted its auto lending software. There's so much more room for this business to run, and for patient investors, now could be an appealing moment to buy in.
