The thought of a market crash makes many investors nervous, but recessions are probably more common than you think. In the last 50 years, the S&P 500 it has fallen by at least 10% on 26 different occasions, including the current market correction. That’s about once every two years. Unfortunately, it is impossible to predict the start or duration of those events, which means you will eventually get burned out if you try to time the market.
Yet despite frequent corrections, the S&P 500 has generated an annualized return of 7.6% over the past five decades. That’s why investors should put money into the market on a regular basis, whether stock prices are going up or down. Starting from that idea, nvidia (NVDA -6.24%) Y airbnb (ABNB -4.09%) They seem like smart stocks to buy and hold during any market downturn.
This is why.
Nvidia is often branded as a semiconductor company, but that description only tells part of the story. Yes, its product portfolio is based on the graphics processing unit (GPU), a chip designed for visual effects and data-intensive applications. But Nvidia also offers data center networking solutions and a growing number of subscription software products for artificial intelligence (AI) and 3D design.
That comprehensive approach has made the Nvidia brand synonymous with ultra-realistic graphics and accelerated computing. In fact, the company has more than 90% market share in both industries and has consistently set the bar in MLPerf Benchmarks, a series of standardized tests intended to measure the performance of AI technologies.
Not surprisingly, Nvidia’s strong competitive position has generated huge financial results. Over the past year, revenue soared 61% to $26.9 billion, driven by especially strong growth in the gaming and data center segments, and free cash flow soared 72% to the 8 billion dollars. But this innovative company still has plenty of room to run.
Going forward, Nvidia should benefit from the continued evolution of the data center and gaming industries, the proliferation of AI, and the arrival of the metaverse. In fact, the administration puts its market opportunity at $1 trillion, a figure that includes $100 billion for games, $300 billion for chips and systems, $300 billion for enterprise software, and $300 billion for autonomous vehicles. . On that note, Nvidia’s status as the gold standard in graphics and accelerated computing should help it capture a significant chunk of those numbers, and no market downturn is going to alter the long-term trajectory of those markets. That’s why this growth stock is a smart buy.
Hotels struggled in the wake of the pandemic, but Airbnb quickly bounced back thanks to its asset-light business model. By crowdsourcing host properties, the business does not have to deal with the cost or time commitment of building and maintaining hotels. That means Airbnb is more agile, as it can onboard new hosts in minutes with very little expense.
Airbnb can also turn around faster to meet consumer demand. Their platform lists a wider variety of accommodation options, both in terms of type and location. Guests can book stays in country cottages, city apartments, and anywhere in between. Airbnb even lists thousands of unique accommodations, including the Mongolian yurt featured above. How many hotels could give you an immersive experience like that?
From a financial point of view, Airbnb had a strong performance last year. Revenue rose 77% to $6 billion, and the company generated $2.2 billion in free cash flow, versus a loss of $667 million in 2020. Better yet, gross book value soared 96 percent. % up to 47 billion dollars. As a leading revenue indicator, it bodes well for 2022.
Airbnb is continually tweaking its platform in an effort to capitalize on its $3.4 trillion market opportunity. Last year, the company streamlined the host onboarding process and launched AirCover, a service that offers free liability insurance and damage protection to all hosts. Those efforts have already paid off. Airbnb’s host community is larger than ever, with 6 million active listings on its platform, which should speed up the network effect that drives your business: more hosts (and listings) attract more guests, and vice versa.
Going forward, Airbnb’s brand authority and flexible business model should keep it at the forefront of the travel and tourism industry. That is why this growth stock is worth buying. If the market crashes and the price falls, consider increasing your position.