After a tough year for investors, you're not alone if you breathed a sigh of relief when 2023 officially started. No one can predict the whims of the market, and no investor can say with exact certainty what may lie ahead in the new year. However, if you're an investor taking positions in wonderful companies that you plan to hold for anywhere from several years to decades, what happens in the market in the coming months shouldn't deter you from continuing to invest in businesses you believe in.
If you're hunting for more great stocks to add to your buy list for 2023, then Amazon (AMZN 1.38%), Pinterest (PINS -0.41%), and Chewy (CHWY 4.47%) are three names you won't want to overlook. Here's a closer look at why each is worthy of consideration.
1. Amazon
Amazon has seen its shares plunge along with the broader tech sector in recent months, but this doesn't really tell you anything about how the business itself is doing. Looking beyond share price, Amazon's compelling growth story is still apparent.
Not only does Amazon remain one of the top platforms in the world for online sales of retail goods, but the company is also the unmatched global leader in cloud infrastructure services. It also continues to expand its presence in lucrative industries like healthcare and entertainment. For example, despite steep competition in the streaming space, Amazon has continued to amass such a market share in recent years that it now controls 40% of the entire U.S. streaming market. Bear in mind this is a space set to hit a valuation of roughly $55 billion by the year 2027.
Looking back over the trailing five-year period, Amazon has grown its revenue and net income by 102% and 231%, respectively. The company, which boasted a whopping $96 billion in cash and investments on its balance sheet at the end of the third quarter of 2022, has also grown its cash from operations by 51% during the trailing five-year time frame.
Amazon has plenty of cash on hand to weather any near-term storms. Its continued expansion and dominance in flourishing, fast-growing markets are distinct green flags for the company, which remains profitable even as growth has slowed in recent quarters. For investors, this could be a once-in-a-decade opportunity to snatch up shares of this tech behemoth on sale.
2. Pinterest
Pinterest is building on its vision of revolutionizing the world of shopping through its image sharing platform. For consumers, the platform is a go-to resource to gain inspiration for everything from recipes to home decor, and often to locate the products that fit in with whatever particular product or idea they're seeking. For merchants, this makes Pinterest an ideal place to market their brands to consumers with product ads, which take the form of images or videos called "pins." As of 2021, platform users (known as Pinners) were already watching roughly one billion videos a day on Pinterest.
Since ad revenue is Pinterest's bread and butter, it makes sense that the company has seen a slowdown in growth as consumer spending habits have remained in flux and businesses have pulled back on ad spending to a certain degree. Over the long term, however, the future of advertising and shopping is online, and Pinterest's platform layout and visual-only focus is a key differentiator from traditional social media platforms. The company still reported 8% year-over-year revenue growth in the third quarter of 2022, ending the period with a robust stash of cash to the tune of $1.7 billion.
Pinterest also acquired an AI-driven e-commerce shopping platform called The Yes in 2022. While details about the future integration of this platform with Pinterest remain scant at present, the acquisition makes sense given the company's broad long-term vision.
As management said when the company announced the acquisition, "Pinterest is a shopping platform that brings together the unique commercial intent of its audience and the ability to visually explore products as you would in a magazine or catalog. In a world of impulse buying, Pinterest is designed to enable inspired shopping. It's like a catalog, personalized to your unique tastes." Pinterest's burgeoning presence in the fast-growing advertising and e-commerce sectors, which remain closely intertwined, makes it a compelling buy to consider for long-term investors who can overlook the near-term volatility.
3. Chewy
Chewy has taken the popular business model of pet retailers and turned into a behemoth online-only business that meets a wide array of needs facing pet owners. The company sells everything from pet food for dogs and cats to pet toys to farm animal feed to supplies like bedding, crates, and feed bowls. However, Chewy has rapidly expanded beyond these traditional products into other areas like pet healthcare and pet insurance.
Chewy runs an online pharmacy that sells both generic and compounded medications, as well as a telehealth service that enables pet owners to connect with licensed veterinarians by chat or video call. The company also offers a growing assortment of pet health insurance plans that offer everything from wellness coverage to coverage for accidents and illnesses. Meanwhile, Chewy just launched Vibeful, its own private-labeled brand of pet supplements.
As a fast-growing e-commerce company, it's extremely important that Chewy maintains control of its supply chain processes as much as possible. Chewy operates a growing chain of automated fulfillment centers, which help reduce costs and slash processing times, and expects to open two more in the coming months. In the most recent earnings call, CEO Sumit Singh noted "In Q3, we shipped nearly 30% of our volume through our automated FC network, up from 10% in Q3 last year."
The company is growing revenue at a solid clip (up 14.5% year-over-year in the third quarter) and is also profitable. Given the broad total addressable market Chewy operates in and the steady, growing pace of pet spending in a wide variety of economic environments, this top stock looks like a compelling buy to consider for a long-term buy-and-hold portfolio.
