It has been more than six months since the first case of COVID-19 was confirmed in the US, and the economic disruption caused by the disease is unprecedented. Many small businesses have closed down, millions lost their jobs or had their salaries cut, and as a result the economic slowdown and repeated shutdowns made it harder for businesses to open. But despite all that, there are already some companies showing signs of recovery that show they will rise out of this crisis even more strongly.
Etsy (NASDAQ: ETSY), square (NYSE: SQ)and AppFolio (NASDAQ: APPF) has beaten the market well for the past six months and is building a strong foundation during this crisis to set the stage for a bright future. Let̵7;s find out why these three stocks are the top stocks you can buy and hold for the next decade.
Etsy: Growing up when faced with challenging times
Etsy is an online marketplace where artisans can list their craft goods for sale to millions of interested buyers. This business is particularly flexible as more than 90% of its sellers are a home team. With no warehouse, no supply chain or traditional store, this business is well protected from coronavirus disruption.
In addition, its sellers have shown themselves to be adaptive to market needs. In the past quarter, 110,000 sellers increased their sales of masks, bringing in $ 346 million in revenue. But it is not just the mask that is in demand. Etsy said it saw a three-digit increase in annual sales from the previous quarter of home-stay items like home appliances and home furnishings (+ 128%), crafts (+ 138 %), and beauty and personal care items (+ 187%). The growth in these categories helped drive the most recent quarter’s staggering top results and has positioned the market as a place to buy everyday goods in addition to handicrafts.
Total merchandise sales (GMS) in Q2 grew by 147% year-on-year in the most recent quarter, fueling revenue growth of 137% (including the company’s acquisition of Reverb). What’s even more interesting is the expansion of its community during the quarter. Active buyers and sellers (those with at least one purchase or sale in the past 12 months) are up 41% and 35% y-o-y, respectively. This will likely drive future growth, as customers stick with the market once they have discovered it. During the quarter, the number of repeat buyers increased by 51% (those with two or more “purchase days” in the past year) and 64% in “habit” buyers who had more than six purchase days in a year.
The company is innovating with artificial intelligence-based search and augmented reality item visibility to make the purchase experience better. These are just a few ways to help maintain the online market for specialty and related daily crafts for many years to come.
Square: Benefiting from a diverse ecosystem
Square’s recent headline results for Q2 revenue increased 64% year-on-year due to a 600% increase in bitcoin sales that hides the panorama of what’s going on with its business. . Sales from the seller segment fell 17% to $ 723 million as small businesses faced shrinking spending due to the economic slowdown. But its Cash app, which provides consumers with banking-like services, such as deposits, debit card payments, person-to-person payments, bitcoin transactions and stock purchases, is a bright spot in the quarter.
Excluding bitcoin, Cash App revenue increased a staggering 140% to $ 325 million thanks to 6 million new sign-ups, increased product adoption, and increased usage. These returns yield an impressive $ 264 million in gross profit, up 156% year over year.
Bitcoin sales totaled $ 875 million in the quarter, but this was a low-margin business that only yielded $ 17 million in gross profit. However, although it does not contribute much to profits, it helps to attract customers to the Cash App. Without bitcoin revenue, the company’s highest revenue remained unchanged from last year at $ 1.05 billion. The result isn’t so stellar, but the economy will eventually change, and when it happens, Square’s customers will grow again. Add to the growing popularity of Cash Apps and the resilience of a diversified ecosystem, and investors will likely buy and hold this stock for the next 10 years or more.
AppFolio: Provides essential services for property managers and legal firms
AppFolio provides cloud software that allows property managers and legal firms to run their businesses. It charges a subscription fee, but generates 64% of revenue from value + transactional services like marketing, billing, or tenant screening. You would think a company that gets 90% of its revenue from a rental real estate business is in trouble right now, but it isn’t. It turns out that its software delivers essential business-critical features that are more important than ever in our socially distant world. Communication with tenants, collecting rent, managing maintenance requests or even renewing a lease can all be done online with its platform, allowing the property manager to stay efficiently and safe when working remotely. The essential nature of these services helped drive overall sales up 27% year-on-year in Q2, thanks to a 32% increase in the Value + segment.
The company is innovating by adding a “virtual slideshow” feature and a streamlined online lease renewal process to make it easier to retain tenants. It has released a rental dashboard for its premium clients to summarize key metrics and reduce manual data collection. For its legitimate clients, it has extended the functionality of digital signatures to help keep away from society.
It is entirely possible that the real estate rental business will continue to slow down as the pandemic drags on. But with a solid growth history and an impressive annual customer base of 9% for real estate management and 6% for legal in the most recent quarter, it is clear AppFolio products are very important for regardless of the economic environment. That will give investors confidence to buy and hold this stock for the next decade or so.
Coming to 2030
Enterprises are facing the most difficult economic conditions since the 2008/2009 financial crisis, with no end. Regardless, these three companies have shown extraordinary resilience and focus on improving customer experience, which will give them a foothold as the pandemic subsides.
It’s fine to buy one or all of these growth stocks and hold them for the next 10 years or so.