Just because the stock market is continuing to face choppy waters doesn’t mean you have to sit on the sidelines. In fact, trying to time the best periods to dip in or out of the market as a means of building your returns with time is a strategy that can set you up to fail.
On the flip side, if you have the capital to put to work in great companies and the patience to hold on to those companies for at least several years, it’s always a good time to be a long-term investor. Here are two top stocks to consider adding to your buy basket right now.
1. Johnson & Johnson
Johnson & Johnson (JNJ) has garnered a few distinctions over the years that have set it aside from many fellow healthcare stocks, not to mention stocks in general. It has an extremely long-standing track record of not only paying out but raising its dividend, which currently yields around 3%.
In fact, the company has raised its dividend every single year for six decades and counting, a period in which it’s seen more than a few economic storms and cycles. When Johnson & Johnson spins off its consumer health division Kenvue later this year, that entity will also pay a dividend.
In addition to Johnson & Johnson’s impressive dividend track record, the company is one of just two stocks to receive an AAA rating from S&P Global’s Standard and Poor’s. That’s the highest credit rating the agency awards. Incidentally, that credit rating outpaces that of the U.S. government, which currently garners an AA+ rating from the agency. It’s no wonder that the agency has such confidence in Johnson & Johnson’s ability to cover its ongoing financial liabilities.
The company’s history goes back to the 19th century, and its diversified business includes everything from household name brands like Listerine and Band-Aid to state-of-the-art surgical tools and devices to life-saving medicines. The target markets and diversification of Johnson & Johnson’s products make it more resilient than most.
Should you invest $1,000 in Johnson & Johnson right now?
The company raked in $95 billion in net sales and $18 billion in profits in 2022 while closing out the year with cash and cash equivalents on its balance sheet to the tune of $14 billion. Johnson & Johnson also just won an appeal that would have seen it pay $120 million for one case in its ongoing talc litigation.
Litigation remains ongoing as it is still seeking to consolidate remaining talc lawsuits into a company that would declare bankruptcy, a case that may now make it all the way to the U.S. Supreme Court. While some estimates have shown that the company could have to pay billions in damages, its cash on hand at the end of 2022 appears to be more than enough to satisfy any claims that it may eventually need to pay, which could still continue to be tied up in litigation for years.
If you’re invested in Johnson & Johnson when it separates its consumer health segment into Kenvue later this year, you will hold shares of both dividend-paying entities. Investors can decide whether the growth stories of one or both businesses remain an aligned fit for their portfolios. But the company’s market-leading presence in consumer goods, medical devices, and pharmaceuticals, combined with its steady financial track record and juicy dividend, make it an intriguing investment opportunity in any market environment.
For long-term, patient investors with well-diversified portfolios, this looks like a tried-and-true egg to add to your basket of stocks and hold for years.
2. Airbnb
Airbnb (ABNB) has remained something of a safe harbor in a stormy travel environment, a market that arguably remains a sea of contradictions in a landscape in which fears of a recession continue to loom. While consumer savings are low and spending is constrained in many areas, people are still spending money on travel. And while travel industry growth figures are lagging indicators, a steady stream of hosts and travelers are adopting Airbnb’s platform quarter after quarter, leading to continued revenue growth and record profits.
In the full-year 2022, Airbnb saw its revenue reach $8.4 billion, while the company’s profits for the 12-month period hit a whopping $2 billion. Meanwhile, its free cash flow came in at $3.4 billion for the full-year 2022. Those revenue and free cash flow figures represented growth of 40% and 49%, respectively, on a year-over-year basis. However, looking at those numbers on a three-year clip compared to 2019, Airbnb’s revenue and free cash flow skyrocketed by respective amounts of 75% and 3,072%.
At the end of 2022, Airbnb had 6.6 million active listings on its platform, which was not only a new record but represented growth of 16% from its listing inventory at the close of 2021. Long-term stays and short-term stays continue to grow. The company’s long-term stay segment, which is bookings of 28 days or longer, now accounts for 21% of all stays on Airbnb. Bookings of a week or longer accounted for an incredible 46% of all Airbnb’s bookings as of the end of 2022.
This isn’t just the story of a company benefiting from travel’s overall recovery, although this is one of many factors driving its increasingly stellar stream of financial reports since the worst days of the pandemic when travel spending all but came to a screeching halt.
With many more people enjoying the flexibility of part-time or full-time remote work as compared to pre-pandemic days, the average traveler isn’t nearly as predictable or linear as before. People are increasingly blending work and travel, and more people are living in Airbnbs for longer periods. Moreover, there are many benefits to staying in an Airbnb over a hotel for short-term travelers, from the flexibility these stays can afford to the ability to perform tasks like cooking or laundry in the ease of a home-like environment.
Airbnb’s growth story is far from over, and investors with the patience to wait out a potential bear market period can reap the rewards over the long haul.
— Rachel Warren
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Source: The Motley Fool