The stock market has carried its topsy-turvy journey into the new year. While many economic indicators are showing signs of improvement, and inflation appears to be slowly tamping down, fear and greed are still widely evident in the movements of the market at large.
Even so, if your investing horizon is for the long term and you are in a position to add more capital to your portfolio at the current moment, great buying opportunities remain. Here are two such stocks to consider investing in if you have $2,500 to put into your portfolio right now.
Amazon (AMZN 3.81%) hasn’t yielded the winning returns lately that investors had become accustomed to in years past, but the key drivers that have enabled the company to build an incredible track record of financial wins and generate investor returns over the years are certainly still in play. While growth has decelerated in recent quarters, Amazon remains well-positioned for a future recovery.
Case in point: As of the third quarter of 2022, Amazon controlled a stunning 34% share of all cloud computing sales globally, with Amazon Web Services alone seeing revenue growth of 30% in the third quarter of 2022. Amazon’s streaming market share in the U.S. is the second-largest of all streaming providers, with the company controlling approximately 20% of this fast-growing space.
In fact, in the company’s third-quarter earnings call, management noted that the launch of NFL Thursday Night Football on Prime in September, which averaged over 15 million people tuning in, was responsible for “the three biggest hours of U.S. Prime sign-ups in the history of Amazon.”
Amazon’s third-quarter revenue and earnings were perhaps not what investors had hoped for, but still fell well within its guidance. The company reported revenue of $127 billion for the three-month period, a 15% increase from the prior-year quarter, along with net income of $3 billion. While free cash flow was down, Amazon still closed the three-month period with $96 billion in cash and investments on its balance sheet.
The company is implementing measures to streamline its operating expenses right now, including a series of cuts to its workforce. There’s no denying that changes in consumer spending in a tough macro environment can also continue to impact Amazon’s business in the near term.
Over the long term, the company’s market leadership in some of the most rapidly growing industries in the world — from e-commerce to cloud computing to entertainment to blockchain infrastructure — are robust tailwinds the company can depend on to drive durable financial and shareholder returns. All of these areas will continue to be key targets for consumer and enterprise spending in the years ahead.
At current share prices, a $2,500 investment in Amazon would add 27 shares to your portfolio.
Etsy (ETSY 2.21%) has built an impressive house of brands over the years with its focus on unique, specialty, vintage, and pre-owned items. All of the companies within its family of brands adhere to this broader theme.
These include the Etsy platform; Depop, which is an online marketplace for pre-loved apparel; El07, which also sells unique and handmade items and is known as the “Etsy of Brazil”; and Reverb, an online marketplace for new and pre-owned musical instruments. These four platforms brought in gross merchandise sales of $12 billion, $294 million, $32 million, and $948 million, respectively, for Etsy in 2021.
Management estimates that the various retail categories covered by the Etsy platform alone have a total addressable market of $2 trillion. And Etsy has penetrated only about 3% of the online portion of this total addressable market, which management estimates is valued at around $466 billion.
In short, Etsy has a tremendous opportunity to expand its market share in the years ahead, both with the Etsy platforms and the other businesses it owns, particularly as there are few direct competitors that have reached the size and scale it has in as many markets as it operates in.
The company delivered $594 million in revenue in the third quarter of 2022, a 12% increase from the same quarter in 2021. Gross merchandise sales totaled $3 billion for the three-month period, a roughly 1% increase year over year when taking out the influence of weak foreign currencies.
In the current market, year-over-year comparisons can be particularly tough, given the heightened spending that was still occurring at that phase of the pandemic. So taking a look at those revenue and gross merchandise sales figures for the third quarter, it’s important to note that these represented respective increases of 200% and 150% from the same quarter in 2019.
At current share prices, a $2,500 investment in Etsy would add 19 shares to your portfolio.