Day trading is often portrayed in a glamorous light, but the reality is much less glamorous. According to a recent study, only 3% of day traders are profitable in an average year, and just 1.1% earn more than minimum wage. So, if you want to build wealth that will change your life, the first thing you’ll need is a long-term mindset. A buy and hold strategy softens the impact of transient market volatility, and that also means you pay less tax because short-term capital gains are taxed more aggressively.
Of course, you’ll also need a diversified portfolio of high-quality stocks, and that’s the tricky part. There is no magic formula for identifying smart investments, but I usually start by looking for companies that have three qualities: competitive advantage, strong revenue growth, and huge market opportunity. For example, Airbnb (NASDAQ: ABNB) and intuition (NASDAQ: INTU) tick all three boxes, and both look like the building blocks of a portfolio that beats the market.
Airbnb is disrupting travel and tourism, an industry that represented 10% of the global economy before the pandemic. Airbnb connects 4 million hosts with potential travelers, helping travelers find unique places to stay in 100,000 cities around the world. Likewise, its platform also connects travelers to experiences in over 1,000 cities, from London’s hidden jazz clubs to maple syrup tasting in Vermont.
Social distancing crippled travel last year and the industry is still in the early stages of recovery. But the pandemic is likely to have a lasting impact, and Airbnb is well placed to capitalize on it. Remote working has made people more flexible, which means they can travel anytime. To meet demand, Airbnb introduced flexible search parameters, allowing users to search a range of dates, prices, and destinations.
Airbnb has also made it easier for hosts to buy into the platform, offering artificial intelligence (AI) -based tools to improve photo layouts and text descriptions. These changes highlight another key benefit: Onboarding a new host is much easier (and cheaper) than building a new hotel. This makes Airbnb’s business model more dynamic and resilient, which has resulted in strong sales growth over the past year.
$ 3.6 billion
$ 5.3 billion
The future looks even brighter for this disruptive tech company. Management assesses its market opportunity at $ 3.4 trillion, which includes short term stays, long term stays and experiences. On a recent earnings conference call, CEO Brian Chesky said, “We expect a rebound in travel unlike anything we’ve seen before.” That’s why this unstoppable stock looks like a smart buy right now.
It’s almost tax season. For many consumers, that means it’s almost time to launch Intuit’s TurboTax, a product that has a 73% market share, making it by far the most popular tax preparation software. While TurboTax is the company’s best-known product, it’s only a small part of Intuit’s portfolio.
QuickBooks has become the gold standard in accounting software, helping the self-employed and small and medium-sized businesses (SMBs) track expenses, accept payments, and manage employee payroll. Here again, Intuit has established itself as the industry leader, currently holding a 77% market share in the United States.
Last year, Intuit paid $ 8.1 billion in cash and stocks to bring another well-known brand under its umbrella: Credit Karma. This platform uses artificial intelligence to connect consumers with financial products such as credit cards, loans and insurance. Additionally, the acquisition creates synergies with TurboTax, as consumers can have their tax refunds deposited directly into high-yield savings accounts through Credit Karma.
Intuit’s line of industry-leading brands have made it a financial powerhouse, and the company has seen strong revenue growth over the past year.
$ 7.8 billion
$ 10.3 billion
Intuit also recently acquired Mailchimp, a platform that helps small business owners create digital storefronts, launch targeted marketing campaigns, and manage customer relationships. The acquisition had a hefty price tag of $ 12 billion (paid for in cash and stock), but it seems like a brilliant move. Mailchimp’s portfolio complements the QuickBook platform, enhancing Intuit’s value proposition to SMBs and adding $ 30 billion to its addressable market.
Overall, management assesses its market opportunity at $ 260 billion, a figure that includes TurboTax, QuickBooks, Mailchimp, and Credit Karma in both domestic and international markets (i.e. the United States, the United Kingdom, Canada and Australia). In short, Intuit has a lot of room to grow, and given its rock-solid competitive position, I think this tech stock looks unstoppable in the years to come.
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 motley! 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.Source link