The stock market has tested even the most resilient of investors over the last two years, as bouts of volatility followed by surges across multiple sectors have become common. That's why most investors are better off buying stock in quality companies and holding it longer term (at least five years) and continuing to add to their investments in those businesses in both up and down markets. A few years of volatility shouldn't make or break your investing thesis.
If you are looking for growth stocks to buy right now in order to hold long-term, here are two names to consider for your shortlist.
1. DexCom
DexCom (DXCM -9.90%) makes and sells continuous glucose monitoring (CGM) devices, which have broad utility for both Type 1 and Type 2 diabetics, and can offer life-saving benefits for some users. The company has been rolling out the newest generation of its flagship CGM this year, the G7.
The G7 continues to gain approval in key markets around the world. Canada, which has a diabetic and pre-diabetic population that numbers around 12 million, is one of the latest. Moreover, broadening access to DexCom's products through growing commercial pharmacy coverage, its new and existing relationships with insurers, and coverage by sponsored national healthcare systems domestically and abroad are making its CGMs within the reach of record swaths of customers.
One example is a recent decision by the U.S. Centers for Medicare and Medicaid this past spring. The gist of the decision is that CGMs are now covered for Type 2 diabetics who take basal insulin, as well as some people who have hypoglycemia but do not use insulin. This means that 7 million people can now use DexCom's products who couldn't before.
In the third quarter of 2023, DexCom brought in total revenue of $975 million, a 27% increase from the prior-year period. Profits for the quarter totaled $121 million, up 20% from one year ago. The company also hit a gross profit margin of about 65% in the quarter. It finished out the quarter with cash and investments on its balance sheet to the tune of about $3 billion.
The company's financials look great, and the business is serving a need that is not only essential but growing as the incidence of diabetes rises globally. Investors with even a modest amount of cash to invest right now may want to consider a position in this top healthcare stock.
2. Etsy
Etsy (ETSY 0.34%) is known for its marketplace where sellers from around the world can list vintage, unique, handmade, and specialty goods. The business occupies a very specific space in the multi-trillion-dollar world of e-commerce, one that few companies focus on at the scale that Etsy does.
Management has estimated that its total online addressable market is about $466 billion, with Etsy controlling about a 3% slice. There's a lot of room for this company to grow, even if the space becomes more crowded in the years ahead.
It's true that Etsy's growth has slowed from pandemic levels, and this has discouraged some investors. However, it's important to recognize that a slowdown of pandemic-era growth was inevitable at some point, and the difficult macroeconomic backdrop of the last few years only compounded that reality. As consumer spending recovers, a wide range of companies that make money from non-essential purchases can benefit, including Etsy.
Speaking of the current spending landscape, in September, consumer spending rose 0.7% month over month when adjusting for food and energy prices. That figure was up 3.7% from one year ago. There's also an argument to be made that people might be inclined to spend on generally more affordable items like secondhand or handmade goods, as opposed to retail items from big-box stores in tight spending environments. This is another area where Etsy can benefit.
Even with spending levels remaining depressed from pandemic highs, Etsy still brought in profits of $136 million on revenue of $1.3 billion in the first half of 2023. As of the end of the second quarter of 2023, the Etsy marketplace saw repeat buyers soar 140% from four years ago. Habitual buyers (customers that spent at least $200 in six or more purchase days in the last 12 months) were up 218% on a four-year basis and accounted for about 43% of all gross merchandise sales generated on the platform.
Patience will be required with this stock, and with any stock that has high exposure to discretionary consumer spending, but it might be a miscalculation to think that Etsy is down for the count.
