Growth-oriented businesses can make excellent additions to a well-diversified portfolio.
Bull markets and bear markets come and go, but great stocks can grow in your portfolio and deliver compelling returns over the years. While recent stock market volatility isn’t what any investor wants, when some investors are staying on the sidelines in fear, you can be putting capital to work in quality businesses potentially trading on sale.
You shouldn’t be investing money that you’ll soon need for bills or other financial commitments. Otherwise, if you have cash to spare, now could be a good time to put some of it to work in businesses that align with your investment objectives and risk appetite.
If you have $500 on hand, here are two names to consider for your portfolio right now.
1. Amgen
Amgen (AMGN 0.72%) is one of the top pharmaceutical companies in the world, with a portfolio of drugs that treat concerns ranging from various cancers to cardiac issues. The company is coming off a robust second quarter, where it reported double-digit revenue growth.
During the three-month period, Amgen’s revenue grew 20% from one year ago to reach $8.4 billion. This growth was driven by 12 products that delivered sales growth in the double-digit range. These included osteoporosis drugs Prolia and Evenity, anti-inflammatory drug Tezspire, and blood cancer drug Blincyto. Just looking at these four products alone, the medicines delivered respective year-over-year sales growth of 13%, 39%, 76%, and 28%.
Amgen also generated $1.1 billion in sales from its rare disease products in the quarter. These include drugs that treat a variety of ailments including gout, thyroid eye disease, and a central nervous system condition known as neuromyelitis optica spectrum disorder (NMOSD).
Amgen is profitable. Its Q2 net income of $746 million was a little less than half of what it reported in the year-ago period, but this was broadly due to higher operating expenses, including the company’s recent acquisition of biotech Horizon Therapeutics last year. which bolstered its rare disease drug portfolio.
The company ended the quarter with about $9.3 billion in cash and cash equivalents on hand. Looking over the trailing 12-month period, Amgen has delivered free cash flow of $3 billion and operating cash flow of $6.5 billion. This profitable company pays a dividend, which yields around 2.8% at the time of this writing. It’s also raised its dividend every single year for 11 years in a row at this point.
Investors have indicated some renewed enthusiasm about the stock, with shares up around 18% over the last six months and 24% from one year ago. If you’re looking for a market-leading healthcare stock with a diverse portfolio of products that can provide consistent dividend income to your basket of investments, Amgen looks like a choice well worth considering.
2. Airbnb
Airbnb (ABNB 0.33%) had been riding significant highs as a business following the post-pandemic surge in travel. The company has also benefited in recent years from consistent spending among a wide range of travelers, including those who are choosing to live in Airbnb homes for longer periods rather than simply a short vacation. Investors haven’t been particularly kind to the stock over the last few years, although it is growing profitably and revenue growth is robust, bolstered by a consistent uptick in stays.
In fact, guests booked 9% more nights and experiences in Q2 2024 than in the year-ago one. The online platform also has an asset-light model that is less common in the travel industry, because it doesn’t own or operate the stays listed on its platform. Despite these green flags, some investors may be concerned about the broader spending environment and what this could mean for Airbnb over the coming quarters.
I’m not saying investors should ignore economic and consumer spending signals that could affect Airbnb’s business. People with travel savings just sitting idle during the pandemic’s height have spent in droves over the last few years. Now, that spending has slowed while the broader trajectory of consumer spending remains in flux in a high-inflation environment.
However, if you’re looking at a long-term buy-and-hold investment of five years or more, Airbnb’s disruptive business still looks like a compelling choice. Currently, Airbnb controls a share of around 30% of the vacation rental market.
The company delivered profits of $555 million on revenue of $2.8 billion in the recent quarter, along with $1 billion in free cash flow. That net income figure was down from one year ago, mostly due to a jump in income taxes, while revenue was up 11% from one year ago. That follows the first quarter of 2024, where revenue grew 18% year over year to $2.1 billion, and net income skyrocketed 126% from the year-ago period to $264 million. The company has also delivered free cash flow of $4.3 billion over the trailing 12 months.
I think it’s normal to expect growth to moderate at some point as spending levels do, with many people having exhausted pre-pandemic travel savings. Still, while travel spending is cyclical, it is a consistent consumer spending category over the long term that Airbnb is well-positioned to benefit from. Investors who hold on to or initiate a position in this stock may be glad they did several years from now.