The best stocks to invest $10,000 in right now
If you have an extra $10,000 that you won’t need for necessities for at least the next few years, investing it in the stock market can be a great place to grow your funds.
In particular, two stocks you can consider buying are Airbnb (ABNB -6.38% ) and Amazon ( AMZN -2.13% ). The travel facilitator will benefit from increased mobility as the pandemic subsides. And Amazon is growing the most profitable business segments even as its online sales slow.
Unsurprisingly, global hotel and resort industry spending plummeted at the onset of the pandemic in 2020. Indeed, market size fell to $610 billion in 2020 from $1.47 trillion in 2019. As economies reopened, the industry recovered in 2021 to $950 billion, but was still well below 2019.
Interestingly, Airbnb’s revenue in 2021, at $6 billion, was 25% higher than in 2019. So while the industry as a whole was down nearly 33% from its level of 2019, Airbnb was 25% higher. This means Airbnb is gaining market share. More and more people are choosing Airbnb over traditional hotels and resorts, which makes sense. The wide choice of accommodations increases the chances that travelers will find what they are looking for.
No one likes to pay more than they need or book accommodation that is smaller than they want. Airbnb is a great alternative to the one-size-fits-all offerings of traditional hotels.
Perhaps equally important is that Airbnb did not sit idle at the start of the pandemic. Management acted quickly to reduce costs, and the measures are bearing fruit. The company posted positive net profit for the first time in two consecutive quarters.
To make Airbnb even more attractive, it sells at a price-to-free cash flow ratio of 44.1, the lowest in its young history as a public company.
Unlike Airbnb, Amazon thrived early in the pandemic. Remarkably, sales increased by $106 billion between 2019 and 2020. Most companies go through their life cycle without ever reaching $100 billion in sales. Amazon grown up sales of more than 100 billion dollars in one year.
Admittedly, the market environment was very supportive, with hundreds of millions of people seeking to avoid shopping in person. That said, it took brilliant business management and execution to capitalize on this customer demand. (Not all directions are equally capable — look what happened at Platoon.) As a result, Amazon has gained millions of new customers and recently felt confident enough in its value proposition to raise Amazon Prime fees.
Subscription services brought $8.1 billion in revenue to Amazon in the fourth quarter ended Dec. 31, up 16% from a year earlier; with increasing fees, this figure is likely to increase.
Additionally, Amazon has rapidly expanded its advertising business. In Q3 2020, the segment generated $4.9 billion in sales; in the fourth quarter of 2021, this figure was $9.7 billion. Finally, its web services segment, with an operating profit margin of almost 30%, grew from $11.6 billion to $17.8 billion during the same period.
These fast-growing, profitable segments more than offset the effects of slowing online sales growth, which was just 1% in the last quarter.
Like Airbnb, you can grab shares of Amazon for a low price. Amazon is selling at a price-to-earnings ratio of 45.4, the lowest in five years.
So if you have a few thousand dollars that you want to invest over the next few years, Amazon and Airbnb are great stocks to buy and hold.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.