If your investing plan involves buying shares of great companies and holding them for the long run, it's always a good time to invest in the stock market. That's true even when the market is somewhat volatile, a reality that investors have had to contend with for some time now.
Remember that volatility is a short-term issue. The S&P 500 is trading up about 12% from the beginning of the year. Over the last three years, the S&P 500 delivered a total return of around 30%. That's an annualized return of about 10%, which is on par with the market's average yearly return for the last five decades and counting. What seems volatile is actually just about average for the market. It's the reality of growth stock investing.
Of course, how your specific portfolio is performing will depend on the type of companies you own and how your capital is allocated across them. If you have a long-term buy-and-hold perspective, there is no shortage of strong growth stock contenders to consider. Here are two top growth stocks worth a closer look.
1. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.06%) is known for its cystic fibrosis medicine franchise, a business that earned billions in revenue and profits for the company over the years. The company's profits in the first half of 2023 alone totaled $1.6 billion, on revenue of close to $5 billion.
Vertex's cystic fibrosis medicines revolutionized the way that patients manage and live with the disease. Its products are the only ones on the market that treat the underlying cause of the genetic illness. The company is also working on a new cystic fibrosis medicine with Moderna to help individuals who can't take its existing lineup of medicines. This represents a target population that totals thousands of additional patients and could bring in billions in additional revenue for the business.
Other rare disease drug markets with little to no penetration by competitors could present additional sources of revenue for Vertex. For example, the company is awaiting regulatory review for a gene therapy it developed with CRISPR Therapeutics that would be the very first functional cure for not one but two rare blood disorders. It's also testing a non-opioid therapy to treat various acute pain ailments, another multibillion-dollar addressable market.
This healthcare stock is worth watching for its probable growth and its secure market share in cystic fibrosis treatments. Most pharma businesses have either safety or growth potential, which makes Vertex more appealing for having both. Growth-oriented investors may want to snag a slice of the action to see what happens over the long term.
2. Airbnb
Airbnb (ABNB 0.75%) is thriving in what is a rapidly changing travel economy. People are actively booking experiences and trips as the company demonstrates the versatility of the use cases its platform provides. Travelers generated a whopping $19 billion in gross booking value on Airbnb in the second quarter of 2023 alone. That's a 94% increase from pre-pandemic levels. Airbnb saw its profits balloon to $650 million in the most recent quarter, while free cash flow came in just shy of $1 billion.
The broad travel resurgence since the worst of the pandemic certainly benefited Airbnb, but I would argue there are other factors behind the company's continued success (especially in the current tough macroeconomic landscape). Travelers are not just booking Airbnb spots for vacations, but to live in them. Roughly one-fifth of all stays booked on the platform are long-term reservations.
Airbnb is also actively looking for ways to make stays more affordable and keep attracting travelers in a cash-constrained environment. For example, it launched Airbnb Rooms, where the average cost of a nightly stay is just $67, as well as discounts on long-term stays of three months or more. More hosts are looking to list their homes on Airbnb too, with the supply of stays jumping 19% year over year in the most recent quarter.
Airbnb is a business primed to tap into the growth trajectory of the present and future of travel, a reality that investors may not want to overlook when they shop for stocks. The fact that Airbnb's price-to-earnings and price-to-sales ratios are at or near five-year lows right now adds to the reasons to give this stock a closer look sooner rather than later.
