Cryptocurrency can prove a viable investment opportunity for some and -- if you have a significant tolerance for risk -- may be a profitable addition to your personal portfolio. But you don't have to invest in digital assets to set yourself up for potentially life-changing returns. Great companies abound in any market, even one that has been plagued by volatility, a reality that investors who have stayed with the market have experienced often in the last few years.
If you're on the hunt for great stocks to add your portfolio in the coming weeks, don't overlook these three names the next time you hit the "buy" button.
1. Airbnb
Airbnb (ABNB 0.75%)continued to surprise some investors with its strong financial performance and resilience in what one could assess to be a difficult operating environment. Even as consumer wallets are constrained compared to several years ago, many people are continuing to spend money on experiences despite the rising cost of travel as well as geopolitical and economic unrest. While there are many companies that can benefit from these trends, Airbnb's platform offers a unique range of offerings that cater to all types of travelers and budgets.
This is likely a significant differentiating factor behind Airbnb's continued growth in a wide range of market environments. Whether a traveler is looking for a short- or long-term stay, an entire house or a single room, Airbnb offers options across hundreds of countries with little overhead cost to the actual business since it doesn't own or operate the homes listed on its platform.
The company also made steady strides to garner spending volume from all types of travelers and travel needs. These updates include heightened discounts on long-term stays, new stay offerings with the average nightly booking starting at just $67, improved search filters for guests, price-setting tools for hosts, and other perks for hosts and guests.
Active listings on the platform were up 19% year over year in the third quarter, while guests spent $18 billion in gross booking value, 17% more than in the prior-year period and 89% more than four years ago. Profits totaled $4.4 billion for the three-month period, while trailing 12-month free cash flow totaled $4.2 billion. This is a solid business with the financials to match, and one that investors might want to capitalize on now to benefit from its growth story in the years ahead.
2. Vertex Pharmaceuticals
Vertex Pharmaceuticals (VRTX -0.06%) continues to go from strength to strength with its market-leading portfolio of cystic fibrosis drugs, a promising pipeline of potentially disruptive medicines (many of which target rare or underserved diseases), and new approvals on the horizon. The company is the only one that has drugs on the market that treat the underlying cause of cystic fibrosis, a genetic disease that afflicts around 160,000 globally at the time of this writing.
It also just won approval for the world's first CRISPR-based medicine to treat not one, but two rare blood disorders in multiple countries, including the U.S. The gene editing therapy, called Casgevy, was developed in partnership with CRISPR Therapeutics and is a one-time functional cure for both sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT).
Initial approvals affect specific cohorts of patients with these diseases. For example, the U.S. Food and Drug Administration's approval of Casgevy for SCD means that around 16,000 patients are eligible for the treatment, while the TDT indication affects around 1,000 eligible individuals. Bear in mind, there are approximately 100,000 individuals with SCD in the U.S. alone, so there is a tremendous market opportunity there. The financial impact of these approvals will take time to materialize. The process of preparing the patient and administering the therapy is deeply intricate and time consuming. It also involves obtaining and editing the patient's own blood stem cells before infusing them back in.
Vertex's next approval could be its non-opioid drug candidate for acute pain, which clinical studies have shown to be safe and effective in both surgical and nonsurgical settings, and for which the company plans to submit the regulatory paperwork in the coming months. For now, though, Vertex has a robust financial track record to fall back on. Its mainstay products bring in billions of dollars a year in profits and cash flow, also waving green flags for long-term investors.
3. Chewy
Chewy (CHWY 2.99%) has certainly been in the doghouse with some investors, with shares trading down by over 60% from where the stock was a year ago. What seems to be the issue here? Well, a combination of mixed investor attitudes toward growth stocks, concerns about pet spending amid economically strained conditions, fluctuating profitability, and somewhat tepid near-term guidance have all had an impact.
Looking forward, though, Chewy's management has been clear that it believes the company can continue to expand market share and capitalize on consumer spending patterns. This would seem to be a fair assessment, given the continued overall growth of the business, the diverse lineup of segments that Chewy operates, and the general resilience of the pet industry as a whole.
While consumer outlay may fluctuate in challenging macro landscapes to a certain extent, pet spending is seen as an essential expense for most households. Chewy generates most of its top line from recurring sales rather than one-time purchases by pet owners. In fact, 76% of the company's net sales is attributable to its Autoship program, which allows shoppers to set up recurring shipments of products. Autoship sales jumped a healthy 13% year over year in the third quarter of 2023.
And 85% of Chewy's net sales in the recent quarter were from nondiscretionary and health spending by pet owners. In other words, consumers are still spending money on pet essentials, and Chewy derives most of its growth from this type of spending rather than discretionary pet purchases. The company reported net sales of $8.3 billion in the first nine months of 2023, along with trailing 12-month cash flow of $300 million as of the end of the third quarter.
The market may be underestimating this stock, which could be an opportunity for the forward-thinking investor.
