Market sell-off: where to invest $5,000 right now

With the S&P500 down 23% this year, investors rightly lament the disappearance of their gains. Yet some also see a silver lining in the form of large inventory on sale. For those who can afford it, it can be a great opportunity to find stocks that could reward them multiple times when they need the money.

PayPal (PYPL 5.24%), Airbnb (ABNB 8.14%)and Wholesale Costco (COST 1.97%) are three great stocks to buy with $5,000 on sale in the market right now. Let’s take a closer look.

Get ready for something big

PayPal was one of the first tech stocks to be crushed in the current sell-off after posting a disappointing outlook for 2022 in its fourth-quarter earnings report. There is no other way to look at it; things are slowing down. That’s hardly surprising after posting its all-time best quarters at the start of the pandemic. Macro trends are moving at a rapid pace, and PayPal has made a complete turnaround from a peak to a downturn.

The reason to buy is not only its cheap price, but it is an important factor. PayPal stock is trading at its lowest valuation on record, at just 24x trailing 12-month earnings and a price-to-earnings growth ratio below one, suggesting the stock is undervalued at the current price. .

But the cheap valuation only makes sense if the business continues to grow, and that’s why PayPal looks compelling right now. It is likely to post weaker growth with rising inflation rates and slower spending. But e-commerce – the daily bread of business – continues to grow. PayPal is well positioned to reap much of this for many years to come.

The first quarter of 2022 was far from a disappointment. Total payment volume increased 13% year-over-year, and revenue increased 7%. One caveat is that in 2021 PayPal terminated its agreement with eBay to provide payment services on its site – and so removing that, revenue increased by 15%. That’s on top of a 31% increase last year, the strongest first quarter in company history.

PayPal also added 2.4 million new net active customers in the first quarter of 2022 and expects 10 million for the full year. The updated guidance was for 11% to 13% revenue growth for fiscal year 2022. Overall, the quarter was strong.

PayPal stock is down 61% this year, and it could stay weak until the economy gets better. But you don’t have to wait for the stock to drop to make that deal.

The travel bounce is on

Airbnb has seen phenomenal growth over the past year, and the reason its stock is down 40% in 2022 appears to be a combination of high valuation and general tech selling. Even at this price, the stock is trading at a 55-year P/E ratio of 55. But growth stocks with great potential tend to trade at a premium, and Airbnb is a company with great long-term prospects. term.

The company demonstrated this in the first quarter of 2022 with another excellent performance. Revenue grew 70% year-over-year to $1.5 billion, and nights and experiences booked increased 59%. I would note that revenue exceeds bookings, which means he makes more money per booking overall. There was a net loss of $19 million after several quarters of profit, but that’s an improvement from more than $1 billion last year. Free cash flow was $1.2 billion, nearly double last year, as the business is booming.

And it only looks like the beginning. Despite multiple headwinds in the form of inflation, high travel costs and geopolitical challenges, bookings continue to grow. People just want to travel, and Airbnb gives travelers flexible options for getting away from it all, whether upstate, interstate, or abroad. At the same time, these potential threats may begin to harm business growth at some point, especially if they are prolonged, as they are now.

However, the company has shown that it can withstand short-term pressures and remain resilient. In the long term, its prospects appear robust. It is able to offer services that respond to changing trends, such as longer stays driven by the work-from-home movement and migration to smaller towns. The fact that it’s nimble enough to easily move in that direction bodes well for when the trends change again. This is a stock with so many upsides, and now is the perfect time to buy.

Where Americans shop when there’s inflation

Americans, and many others around the world, shop at Costco, inflation or not, for potentially big savings. But when prices rise and people run out of money, shoppers have even more reason to head to the company’s huge warehouses where prices are marked by wafer-thin markups that are much narrower than those of competitors. But what Costco doesn’t get in profit margin, it gets in volume, and so far, sales have skyrocketed in 2022.

The third quarter earnings report was eagerly awaited after rivals Target and walmart exhibits sluggish growth. But Costco has shown no signs of slowing down with sales still high compared to before the pandemic. Revenue was up more than 16% year over year, with earnings per share of $3.05 versus $2.75 last year. Margins were, of course, slightly lower year over year. But dues revenue has reached nearly $1 billion, with a global renewal rate of around 90%.

So far, this continues in the fourth quarter. May sales were up nearly 17% from a year ago. In this tense atmosphere, members are even less likely to give up their Costco cards.

Costco shares typically trade at a premium for this exact reason. But now that it’s down 20% this year, shares are trading at a multiple of 36 times past 12-month earnings. It’s still not cheap, but it’s a discount worth considering. Costco is an easy-to-buy stock that does well under pressure and always — and that’s why it consistently outperforms the market.

Leave a Reply