Even as many stocks across industries have plunged in and out of bear territory over the past year, the market has proven throughout its history that it can outlast these periods and grow investor returns with time. While no investor can predict with precision when the next full-fledged bull market will take place, great businesses that have continued to deliver promising growth stories can be well-positioned to capitalize on the market's upward trajectory when it happens.
Let's take a look at two such companies you shouldn't overlook the next time you go stock shopping.
1. Airbnb
Airbnb (ABNB 0.75%) is building a business designed to withstand the changing dynamics of the travel industry, a space that has shifted considerably since pre-pandemic times. While people are returning in droves to long-favored modes of travel, the emergence of new types of travelers -- helped by the surge in remote-based work in the last few years -- looks to be here to stay.
In the first three months of 2023, 18% of all stays booked on Airbnb fit into the long-term category. Those are stays of 28 days or more. As demand for the wide variety of stays on Airbnb's platform continues on an upward trajectory -- nights and experiences booked in the first quarter soared 50% on a four-year basis -- new hosts are joining the platform in droves.
The active listings on Airbnb in Q1 2023 represented an 18% increase from the same time in 2022. This followed the previous quarter, in which its supply of listings soared 16% year over year.
Airbnb has recently rolled out a steady stream of new platform upgrades designed to help guests and hosts. From better pricing tools to more affordable stay options, including a new category of stays called Airbnb Rooms where the average price of a stay is just $67 per night, this business isn't close to slowing down.
Management has also said they plan to introduce a range of new products and services on Airbnb starting next year. Even as competition abounds in the multitrillion-dollar travel industry, there's plenty of room for multiple winners. The future for this profitable business looks bright indeed.
2. Chewy
Chewy (CHWY 2.99%) has taken the tried-and-true model of the classic pet store and turned it into a multibillion-dollar business that is 100% online. The company doesn't have any retail stores. Instead, it relies on the power of its flagship e-commerce platform that features thousands of products from third-party brands, as well as its own private-labeled offerings. It also leverages the power of its in-house fulfillment network, which features a growing base of automated fulfillment centers.
Chewy sells products geared toward larger animals like livestock too. It also has its own pet supplement brand, an online pet pharmacy, a telehealth service, and a pet health insurance wing. Beyond its online focus and its pattern of steady diversification into the multi-faceted segments of the pet care market, a core part of Chewy's model is its subscription-based program, Autoship.
When customers choose Autoship, they can have the products of their choice delivered every month while accessing other perks such as product discounts. Estimates show that roughly 60% of pet owners in the U.S. use subscription-based offerings to buy products for their furry friends.
Autoship sales continue to be the leading driver of Chewy's top-line growth. In the first three months of 2023, the company raked in just shy of $3 billion in net sales. About 75% of that figure was attributable to Autoship sales. Net income totaled $22 million for Q1 2023, compared to $18 million in Q1 2022.
Unlike certain segments of the retail market, pet spending has proven to be relatively resilient through the years. Even when habits shift, such as pet owners buying more or less expensive products for their pets, this is not a purely discretionary source of consumer spending. For investors wanting to capitalize on the growth potential of the pet care industry, Chewy looks like an ideal place to park some capital.
