Bull and bear markets come and go, but wonderful businesses can stand the test of time in your portfolio and help you compound your returns again and again. Finding those businesses doesn't have to be rocket science, either.
The types of companies you tend to buy -- and therefore the nature of the returns you experience -- will revolve around a range of factors, including your personal risk tolerance, stock buying philosophy, the industries and sectors represented in your portfolio, and the overall diversification of your basket of holdings.
If you're looking for top growth stocks to hit the buy button on in the near future, here are two names to consider including on your list when you do.
1. Airbnb
Airbnb (ABNB 0.75%) has dealt with a rapidly changing travel environment over the last few years and continues to demonstrate that the strength of its core underlying business is adaptable enough to deliver what travelers want in the current era. In my view, there are a few aspects specific to Airbnb's business model that set it apart from the average travel stock while supporting the versatility of the use cases its platform caters to.
For one, Airbnb's business model is remarkably asset-light. The company doesn't own or operate most of the properties listed on its platform, enabling it to benefit from the surge in hosts and travelers using its services without incurring significant overhead costs.
Another notable element of Airbnb's business model is that it caters to both the supply and demand sides of travel accommodation relationships. For hosts, there's a real incentive to list your home on Airbnb's platform, given the opportunity it provides to earn a side or full-time income. The numbers bear that out; in the most recent quarter, Airbnb's active listings hit an all-time high of more than 7 million, up nearly 20% from the year-ago period.
Of course, on the travelers' side, the ability to book any type of accommodation in almost any corner of the world for both short and longer durations makes the platform particularly appealing. Gross booking value was $19 billion in the second quarter of 2023, which represented a whopping 94% increase compared to the same quarter in the pre-pandemic year of 2019.
Plus, long-term stays of 28 days or more still comprise roughly one-fifth of all bookings on the platform. As of June, nights reserved for three months or more totaled 25% of total monthly stays booked on Airbnb. People are still spending money on experiences after nearly two years of spending most of their capital on things during the worst of the pandemic.
Even if a recession comes and impacts spending in the short term, the momentum that Airbnb is building now with a business model that relies on multiple types of travel spending bodes well for its long-term growth horizon.
2. Fiverr
Fiverr (FVRR 3.74%) has capitalized on the rising demand for freelance talent and services in an evolving hiring landscape. The freelance space is expanding at a notable clip, particularly as the adoption of remote and distributed teams grows. According to Grand View Research, the freelance platforms market is set to expand at a compound annual growth rate of about 17% between 2023 and 2030, hitting a valuation of $14 billion at the end of that forecast period.
Given the fact that Fiverr is one of the leading freelance platforms in the world with a fast-growing suite of services for both freelancers and the customers hiring them, the company is in a solid position to benefit from the growth of this overall landscape in the coming decade. Fiverr has certainly faced a more difficult growth landscape in recent quarters than in prior ones as corporate belts are tightening and fears of a recession continue.
However, it is steadily growing revenue as well as its take rate of transactions. While active buyers aren't increasing as in past quarters, it's worth noting that this figure remains steady in the current environment.
Fiverr reported about 4.2 million active buyers on its platform at the close of the second quarters of both 2022 and 2023. While many companies are more hesitant to bring on new hires, given the ongoing macroeconomic concerns, they may be more likely to fill that gap with freelance talent. Fiverr is certainly making it easier than ever to do so.
It has introduced a wave of upgrades to the platform recently. The company just launched Fiverr Business Solutions, an offering targeting mid- to large-sized businesses in need of a wide variety of freelance services. These solutions include updates to its premium offering, Fiverr Pro, which features a range of product management and collaboration tools as well as an AI-powered system that matches customers with freelance talent.
Even as demand for freelance talent rises, Fiverr estimates that only a small fraction of freelance/buyer relationships take place online, which means there is a broad and growing market ripe for continued disruption. The company also estimates that the revenue potential for freelancers in the U.S. alone represents a roughly $250 billion opportunity. Fiverr has raked in $343 million in revenue in the trailing 12 months, and while not yet profitable, its net loss shrunk to just $0.2 million in the most recent quarter.
Long-term investors can still find a lot to like about this stock as its growth potential still looks extremely favorable.
