The stock market clocked a number of impressive days lately, with many stocks that have been beaten down heavily over the last year raking in gains for patient investors.
At the end of the day, investing is a journey, and most of us won't experience life-changing returns overnight. But if you stay invested in wonderful businesses, share prices tend to follow those companies upward with time. Here are two such stocks to consider adding cash to right now.
1. Amazon
Amazon (AMZN 3.43%) is trading down from its pandemic high, but investor optimism has still driven shares up by close to 60% in 2023. The company has seen an abundance of economic peaks and valleys but has kept refining its business to meet the needs of its customers.
Amazon's flagship e-commerce platform accounts for roughly 40% of all e-commerce sales generated in the U.S. -- a total market valued at about $1 trillion as of 2023. E-commerce accounted for well over half of the company's total net sales in the most recent quarter.
Many of the online stores found on Amazon are small to mid-size businesses owned by individuals. The platform offers an opportunity for them to start an online business with a range of seamless tools including advertising and order fulfillment. With the rising popularity of online businesses as a way to replace or supplement income, Amazon offers a competitive value proposition for business owners as well as shoppers.
The company also generates significant recurring sales from its subscription-based programs, like Amazon Prime, with their emphasis on speed and convenience.
In the second quarter, for example, over half the orders of Prime members in the 60 largest U.S. metro areas arrived either the same day they ordered or the next. Management said in the second-quarter report that so far in 2023, it has delivered more than 1.8 billion purchases to U.S. Prime members the same day or the next -- nearly four times the number delivered that promptly by the same point in 2019.
Its Subscribe & Save program, which has tens of millions of subscribers worldwide, allows customers to set up recurring deliveries of their favorite products.
Besides e-commerce, it has other fast-growing businesses, including its cloud computing segment Amazon Web Services, its video streaming segment, a digital ad business, and its virtual healthcare through Amazon Clinic.
Over the trailing 12 months, net sales totaled $538 billion, with net income of $14 billion. It has also accumulated $62 billion in cash from operating activities over that same time frame. The stock could benefit from continued favorable tailwinds as the economy and spending improve. Investors shouldn't give up the ship on this tried-and-true tech stock.
2. Etsy
Etsy (ETSY 0.34%) is known for its marketplace that sells vintage, handmade, and specialty goods that are difficult or impossible to find anywhere else. Its focus on this niche of the broader e-commerce landscape has enabled it to accumulate a stand-alone presence in a multitrillion-dollar addressable market.
Right now, consumers are spending less on discretionary items. Like any company with exposure to nonessential spending, Etsy has felt the impact of that. But it is still steadily growing its family of brands, and its flagship platform is seeing increases in both active buyers and sellers, as well as recurring buyers. It is also profitable again.
In the first six months of 2023, Etsy brought in $1.3 billion in revenue, a 9% increase from the same period in 2022. Gross merchandise sales and profits, which were down year over year, totaled $6 billion and $136 million, respectively.
The company ended the first half of 2023 with 96.3 million active buyers and 8.3 million active sellers, up 3% and 12%, respectively, from the year-ago period. There were 36 million repeat buyers on its platform in the third quarter of 2023, up 140% from the same quarter four years ago, before the pandemic.
One of the benefits of Etsy's business model is that it doesn't stock the products on its site or fulfill the orders, which makes it incredibly asset-light. This has led to impressive cash accumulation, with $1.2 billion on its balance sheet by the end of June. The company closed out the third quarter with trailing-12-month consolidated free cash flow of $660 million.
While growth rates may take time to recover, Etsy appears to be headed in the right direction, a welcome sign that long-term investors may want to consider.
