2 smart stocks to buy with $ 20 right now

Over the weekend, the S&P 500 the index was only 2% below its all-time high. This may make some investors nervous, but it’s important to remember that no one can consistently time the market because no one knows the future. Today’s 52 week high could be 52 week low in a year. Or the market could collapse tomorrow (as it did on Monday).

In any case, the best strategy is to invest regularly, even if it is a small amount of money. This approach, known as cost averaging in dollars, helps minimize the impact of short-term market volatility on your total returns. With that in mind, here are two stocks that look like long-term smart investments that could be best bought with an average dollar cost of, say, $ 20 with each purchase.

Image source: Airbnb.

1. Airbnb

Travel and tourism combine to form one of the largest industries in the world, accounting for over 10% of the global economy in 2019. As such, that means Airbnb (NASDAQ: ABNB) is successfully disrupting a multi-billion dollar market. Its platform connects more than 4 million hosts with potential customers, helping travelers find the types of immersive accommodations that simply aren’t financially feasible for traditional hotel chains.

For example, Airbnb lists properties such as private cottages along the coast, cozy gazebos in the mountains, and luxurious estates on sprawling vineyards. To add, the platform also lists 170,000 unique stays, such as a detailed recreation of Winnie-the-Pooh’s house in the Hundred Acre Wood (as seen in the image above). Hotels cannot match this level of privacy or this type of unique experience. But that’s not the only advantage of Airbnb.

By outsourcing real estate to hosts, the business can bring in new inventory in minutes, without paying a significant amount of money. This is significantly different from hotels, which cost millions to build and take months (or years) to complete and just as long to ultimately reap the benefits.

This means that Airbnb can afford to operate in places that would not be profitable for companies like Marriott. And it fits perfectly with current travel trends. Until May 2021, 22% of nights booked on Airbnb were for rural stays, up from 10% in 2015. Last time I checked, there weren’t many large hotel chains operating in rural areas .

Collectively, these benefits have translated into strong financial performance over the past year, despite the considerable headwinds created by the pandemic.

Metric

Q2 2020 (TTM)

Q2 2021 (TTM)

TCCA

Returned

$ 3.9 billion

$ 4.4 billion

13%

Source: Airbnb SEC repositories, Ycharts. TTM = 12 rolling months. CAGR = compound annual growth rate.

To put the company’s performance in perspective, Marriott’s sales fell 41% over the same period. It shows the resilience of Airbnb’s business model, and I think the company is well positioned to maintain momentum.

Collectively, Airbnb values ​​its market opportunity at $ 3.4 trillion. More importantly, it has a clear advantage over traditional hotels, and as travel rebounds from the pandemic, I think Airbnb’s share price will skyrocket. That’s why this growth stock looks like a smart buy right now.

2. Zillow Group

Historically, residential real estate transactions have been complicated affairs, involving many different parties (i.e. agents, lenders, closing service providers). Zillow Group (NASDAQ: Z) (NASDAQ: ZG) is a technology company that aims to make the process less complex. Its platform helps people buy, sell, finance, and close homes across the United States, providing an end-to-end solution that simplifies one of the biggest purchases most people will ever make.

In 2006, Zillow revolutionized the real estate industry by introducing the Zest, his estimate of the value of the house in real time. This brought more transparency to the market and helped the company establish its brand. Today, Zillow has become synonymous with real estate, and its web properties and mobile apps receive many more visits than Realtor.com and Red tuna combined. This advantage keeps the cost of acquiring the business low.

Financially, Zillow is on solid foundations. Gross profit has grown rapidly in recent years and the company is profitable under GAAP, unlike its brokerage colleague Redfin.

Metric

Q2 2018 (TTM)

Q2 2021 (TTM)

TCCA

Returned

$ 1.1 billion

$ 1.982 billion

22%

Net revenue

($ 89.7 million)

$ 147.2 million

N / A

Source: Ycharts. TTM = 12 rolling months. CAGR = compound annual growth rate.

In the last quarter, Zillow Offers – the company’s home buying business – sold 2,086 homes, up 45% from the previous year. And its gross margin per home has more than doubled, suggesting that Zillow is successfully expanding its home buying business.

At the same time, Zillow Offers purchased a record 3,805 homes in the last quarter, showing management’s confidence in its business model. Investors should look for strong home sales in the coming quarters, as the median selling price of existing homes is expected to rise 14.1% in 2021, according to the National Association of Realtors.

Looking further ahead, Zillow has a lot of room to develop. In 2020, residential real estate transactions in the United States totaled $ 1.9 trillion. Assuming a 5% commission, real estate transaction fees totaled $ 94 billion. However, taking into account Zillow’s mortgage and closing services, rental listings and advertising, the company’s addressable market is closer to $ 350 billion. That’s why this growth stock looks like a smart long-term investment.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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