While investors may not be out of the woods in terms of stock market volatility, a series of strong market days and encouraging inflation reports has seen many beaten-down companies rebound on high investor hopes. Share price alone shouldn't ever lead you to buy a stock -- or sell it, for that matter -- but when robust businesses are succeeding, it can be a great time for long-term investors to start or add to positions.
If you're looking for compelling stocks to add cash to, here are two names to consider right now.
1. Amazon
Amazon (AMZN 3.43%) dealt with its share of bumps in the road over the last year. With a difficult economic environment and slowing levels of growth from the heightened period that the e-commerce giant, as well as others, experienced during the worst of the pandemic, Amazon has been one of many tech stocks that has had to right-size and streamline its operations.
It's done so through a series of well-publicized layoffs that have come alongside efforts to return to sustained profitability and growth. As they say, the proof is in the pudding. Amazon's efforts appear to be paying off already.
The most recent quarter saw the business rake in approximately $134 billion in net sales, an 11% increase from the same quarter in 2022. Net income came to $6.7 billion, compared to a $2 billion net loss in the year-ago period. Amazon's flagship e-commerce business and its cloud computing segments continue to account for the two largest drivers of overall growth.
Its e-commerce business raked in $53 billion in the second quarter -- comprising more than half of its overall net sales for the three-month period -- while Amazon Web Services generated net sales of $22 billion. In total, net sales from those two segments were up 4% and 12%, respectively, from the year-ago period. Over the trailing 12 months, Amazon has raked in an operating cash flow of $62 billion, while earnings in that same window total approximately $14 billion.
This isn't the story of a business with its best and most glorious days behind it. A full-blown recession, which may or may not happen at this point, could pose fresh challenges for this business, as it would for others. However, the diversification of Amazon's overarching business model and its demonstrated ability to improve cost efficiency and streamline profits even in a challenging environment is a testament to its long-term growth story, one that investors can still capitalize on.
2. Upstart
Upstart (UPST 2.76%) is still dealing with a constrained lending landscape, where the cost of funding loans is high for its institutional partners, and consumers are facing high interest rates as well as a lower likelihood of approval than in past periods. All of this has contributed to the state of Upstart's balance sheet in the last several quarters, where revenue has declined, profits waned into the red, and lending volume contracted considerably.
However, all is not lost. Upstart's platform holds considerable promise as the cutting-edge technology it runs on continues to demonstrate valuable use cases for lenders and consumers. Upstart is now approving 87% of all loans on a fully automated basis. This is a record high and a notable increase from its automation rate in the first quarter, which was 84%.
Even though Upstart's second-quarter revenue of $136 million was down by double digits from the year-ago period, it was a nice bump from its first-quarter revenue of $103 million. The company also pulled in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $11 million in the three-month period, way up from the negative $31 million it reported in the prior quarter and double the figure it reported in the same quarter in 2022.
Upstart finished out the second quarter with 100 lending partners onboarded to its platform, up 41% year-over-year. Meanwhile, adoption of its auto lending software is growing at such a clip that the number of dealerships offering loans through Upstart jumped 56% between the first and second quarters of 2023 alone. The company also just launched the pilot program for its home equity line of credit product.
Upstart's business is cyclical. Even as the current economic environment is improving, lending volume will take time to recover. Upstart is one of the few artificial intelligence-powered businesses of its size disrupting the stale patterns of the lending industry. It's also continuing to expand its lending network and optimize the accuracy of its platform. Shareholders could still witness enormous growth potential as Upstart builds its presence within the multitrillion-dollar lending market in the coming years.
