The current market discourages many investors, and this is completely understandable. No one likes to see their portfolio value drop for months on end, and even the most robust companies have seen their stocks fall in the 2022 market.
It’s also wise for long-term investors to check the balance of their portfolios from time to time to make sure their thesis holds true for every stock they hold, or to make adjustments accordingly.
But fully cashing in on the stock market simply ensures that volatile portfolio moves become permanent losses, which can significantly derail long-term financial goals.
If you’re able to keep investing in today’s market, there’s no shortage of wonderful companies just waiting to be purchased at discounted prices. Here are two you might consider if you have $1,000 to spend before the end of 2022.
1. Fluffy
While consumers could cut spending in some areas, some expenses are non-negotiable, even in the current environment. And given that two out of three American households own a pet, spending on your furry friends seems like one of the essentials.
The number of pets insured in the US alone has exploded in recent years, up 63% in 2021 from 2018. All of this bodes well for Chewy (CHWY -1.44%), one of the nation’s leading pet brands. .
It’s anything but a simple pet food company. The growing and diverse business model is designed to cover all the bases for pet owners. He not only sells products for pets, but also for large farm animals like horses.
Beyond branded and private label pet products like food, toys, treats and supplies, Chewy offers a growing range of services that include pet telehealth, health insurance plans for pets and a pharmacy that sells generic and compound drugs.
The company launched a series of pet health insurance plans in partnership with Trupanion in 2021, and is launching another round with artificial intelligence-based health insurance company Lemonade in 2023.
Meanwhile, the company announced last quarter that it surpassed 20.5 million active customers, with gross customer additions up 9% from the same quarter in 2019.
Chewy has also just launched Vibeful, a line of supplements that is its first private label pet wellness brand. Management noted in the latest earnings call that over-the-counter pet health and wellness products represent a total addressable market of more than $2 billion.
Speaking of the launch on the latest earnings call, CEO Sumit Singh said “…given the heightened consumer focus on wellness and the current trend towards humanizing pets, we believe this launch gives us another opportunity to strengthen our bond with customers and drive up and down results.”
During the last quarter, the company saw its revenue increase by 15% over the previous year to reach $2.5 billion. Although Chewy posted a net loss a year ago, it generated net income of $2.3 million in the last quarter, as well as adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). of $70 million.
According to a 2021 study by Morgan Stanley, the pet industry is on track to reach a valuation of $275 billion by 2030, with 65% of 18-34 year olds intending to buy a pet in the next few years. As a leading player in this space, Chewy stands to benefit from an increase in pet ownership and consumer spending on pets for many years to come. Investors who buy and hold these stocks in the years to come can also capitalize on this growth story.
A $1,000 investment in this growth stock would add 26 stocks to your portfolio.
2. Match Group
Some industries go up and down, but dating is not one of them. In fact, the dating industry is on track to hit a $16 billion valuation by 2030.
Match Group (MTCH 0.97%), which owns some of the most well-known and widely used dating apps, represents a substantial portion of this rapidly growing space. The global online dating market was valued at $9 billion in 2021, a year in which Match Group reported total revenue of $3 billion, giving it a global market share of just over 30%.
The company’s family of apps includes Tinder, Hinge, Match.com and OkCupid. Like most dating apps, Match Group’s products operate on a freemium model. This means that users can register, create a profile and start corresponding with people they are interested in for free. but they cannot access certain benefits (for example, increasing profile visibility or improving matchmaking opportunities) without subscribing to a paid subscription.
Match Group derives most of its revenue from these subscription fees, although it derives some revenue from other sources, such as advertising. Even though there are incentives to sign up for paid tiers on its various apps, CEO Bernard Kim said in the latest earnings call that about 85% of the company’s users aren’t subscribers.
So while Match Group maintains a significant presence in the online dating market and continues to grow revenue while remaining profitable, there is a significant untapped market opportunity for the company.
Foreign currency weaknesses and the resurgence of COVID-19 cases in some regions weighed on Match Group’s revenues and results in the last quarter. That being said, on a currency-neutral basis, total revenue grew 10% year-over-year to $810 million, while the total number of paying users in its family d jumped 2% year over year. Net income totaled $129 million for the three-month period.
Stripping out the impact of foreign currency weaknesses, Tinder alone saw revenue jump 16% year-on-year, while paying users of the popular app grew 7%. The company ended the period with approximately $400 million in cash and investments on its balance sheet.
Even though Match Group remains a key figure in the online dating market, large swathes of this space (such as Japan, which is the world’s third largest economy) remain largely underserved. This creates plenty of opportunities for even an established player like Match Group to grow and continue to monetize users in the years to come, a tailwind that long-term investors can also benefit from.
A $1,000 investment in Match Group would add 25 stocks to your portfolio.
