Building wealth is similar to making a cake. It necessitates the appropriate elements, a suitable recipe (or strategy), and time to prepare. Even little investments may become a special treat if all of these factors are met. Nvidia is an instructive example. If you had purchased $3,000 worth of Nvidia stock ten years ago, that money would be worth over $147,000 today.
Given enough time, there are stocks today that could potentially return more than Nvidia. Let’s explore two of these companies.
1. Alphabet
Alphabet, the parent company of Google, is a huge force to be reckoned with. Its most well-known product – Google Search – is the leading search engine in the world, holding 84% of the market share.
Some of Alphabet’s key growth engines include YouTube and Google Cloud. These segments have helped the company achieve double-digit revenue growth year after year. In fact, over the last 12 months, Alphabet generated $278 billion in revenue.
Furthermore, Wall Street is optimistic about Alphabet’s future growth. Analysts anticipate the firm to bring in $324 billion in revenue by 2023, a 12% increase over this year.
Despite these benefits, Alphabet shares have been underperforming this year. The stock is down 16% so far this year. The poor first half of the year is one reason, as the Nasdaq Composite fell 30% in the first half of 2022.
Investors, however, may find opportunities in this recent decline. The price-to-earnings ratio for Alphabet shares is presently 22.6, significantly less than its three-year average of 28.3.
2. Airbnb
Airbnb (ABNB 0.71%) is a booking and reservation software that links travelers with accommodation providers. While the concept of Airbnb is not completely novel – connecting homeowners and renters – what sets the company apart is its passion for travel.
Airbnb’s app does not presume that visitors are familiar with their next destination or when they will leave. It is meant to pique one’s appetite like a restaurant menu on the street. Its algorithm illuminates listings with open booking dates that have been marked as favorites by users.
What is the result of this? Airbnb guests consistently discover more than a one-night vacation; they discover a long-term rental. Over 45% of nights that are booked on Airbnb are now part of a longer stay that lasts about seven nights. Stays that last 28 days or more accounted for nearly 19% of bookings.
That is good news for hosts, as those long-term rentals are beneficial. First, they provide a steady stream of income, and second, because there are fewer ‘resets’ between visits, hosts save time and money.
Analysts on Wall Street have a lot of faith in the company’s prospects. They anticipate Airbnb to make $8.3 billion in revenue this year, up 38% from 2021. Additionally, they anticipate revenues to reach $9.5 billion by 2023.
The stock’s price-to-sales ratio, or P/S ratio, is 11. This may seem high, but since Airbnb went public in late 2020, its typical P/S ratio is 20.5. Furthermore, the stock has dropped 26% thus far this year, providing investors a great chance to buy shares on the cheap.
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