Now might be a difficult time to invest a lot of money in stocks. A challenging economy limits how much investors have to put into the market, which means it's important to be more selective in deciding which stocks to add to your portfolio.
But if you can afford to invest $5,000, a couple of exceptional growth stocks to consider are Eli Lilly (LLY 1.19%) and Airbnb (ABNB 0.75%). These businesses have been generating solid results, and there are good reasons to believe that should continue. Here's why.
1. Eli Lilly
Eli Lilly looks to be on the path to become the first trillion-dollar healthcare company. The business is worth over $500 billion, and it's coming off an encouraging quarter where sales of $8.3 billion rose 28% year over year.
What's promising is that there is still plenty of growth ahead. Mounjaro, its diabetes treatment that some analysts have pegged as one of the best drugs ever with peak annual sales in excess of $50 billion, brought in just under $1 billion in sales for the most recent quarter (which ended on June 30).
It has been demonstrating impressive results in clinical trials as a potential weight-loss treatment, with patients losing more than 25% of their body weight. Although it hasn't obtained approval for that indication yet, it could be coming this year.
The company also has donanemab, a drug that may help in treating Alzheimer's. It hasn't obtained approval yet, but that appears likely given that it has achieved similar results to Leqembi, which recently received the green light from the Food and Drug Administration (FDA). Treating Alzheimer's is another multibillion-dollar opportunity for Eli Lilly that could propel the company's revenue and profits higher for years to come.
This month, multiple analysts have boosted their price targets for the stock to at least $600. And more upgrades could be coming as the company continues posting strong numbers -- especially if donanemab obtains FDA approval and the agency approves Mounjaro as a treatment for weight loss.
In the long run, this is a company that doesn't look to be stopping or slowing down. Although the stock is up around 70% in the past 12 months, it's still not too late to invest in Eli Lilly given the potential that the business possesses.
2. Airbnb
Airbnb is another business that has been performing well this year. The company, which allows people to rent vacation homes and condos through its online platform, has benefited from strong travel demand this year.
In its most recent quarter, sales of $2.5 billion for the period ended June 30 were up 18% year over year. Net income of $650 million grew at a stellar 72% rate. And for the current quarter, the company is projecting sales to rise to at least $3.3 billion, with year-over-year revenue growth to be between 14% and 18%.
One of the things that makes Airbnb attractive is that it allows tourists to book experiences that aren't comparable to those offered at large hotel chains. One example is Barbie's Dreamhouse in Malibu, which guests have been able to book this summer as a one-of-a-kind listing on Airbnb's platform. Those types of unique experiences can keep customers coming back.
The company also announced plans this year to roll out 50 new features and upgrades that make its booking experience even better for hosts and guests. This includes an Airbnb Rooms category, where people can book private bedrooms for more-affordable booking options. Guests can now also pay over time using Klarna.
Overall, Airbnb has been performing well amid inflation. And with more improvements to its platform this year, the company is likely going to continue growing. This is an unstoppable business that can make for an incredible long-term investment.
While it's up a relatively modest 9% in 2023, analysts project an upside of 15% from where it trades today. And analyst price targets typically look at where a stock will go in the next year or so; over the longer term, there could be much more upside for Airbnb.
