For many Americans, the stimulus checks they are receiving from Washington will help them to cover bills, pay down debt, and rebuild depleted savings. But if you are fortunate enough that you have those immediate needs covered, you might want to consider investing this minor windfall. If that’s the case for you, these two stocks are particularly attractive buys today.
1. Costco Wholesale
Millions of people will spend some of their stimulus money stocking up on food and other supplies at Costco Wholesale (NASDAQ:COST). The warehouse club’s sales and profits have soared during the pandemic, and they’re set to grow further in the months and years ahead.
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Costco has a simple, membership-based business model. It purchases items packaged in bulk, which it then offers to its customers at prices only slightly above cost. These low prices entice more people to become members, which generates higher membership revenue (and profits).
The chain’s low prices are difficult for its competitors to match. That makes it unlikely that its customers will switch to patronizing a rival retailer. Moreover, once a person has purchased a membership, they have a strong incentive to make as many of their retail purchases at Costco as possible to maximize their savings.
For these and other reasons, Costco’s sales growth has accelerated during the COVID-19 crisis. At a time when limiting the number of shopping trips one makes means greater safety, its strategy of offering bulk goods at bargain prices is perfectly suited to people’s needs.
As of the end of its fiscal 2021 first quarter on Nov. 22, the company had more than 107 million members, an increase of 7.2% from the prior-year period. Its sales jumped 17% year over year to $42.3 billion, while its net income surged 38% to $1.2 billion.
With more people turning to Costco for savings on quality goods, investors can expect the retail giant’s profits — and, by extension, its stock price — to climb steadily higher.
2. Airbnb
Airbnb (NASDAQ:ABNB) is one of the hottest recent IPO stocks on the market. The popular online marketplace for vacation rentals saw its stock price soar on Dec. 10 — its first trading day — and more gains lie ahead for investors who buy shares today.
Over 4 million hosts have used Airbnb’s platform to welcome more than 800 million guests to their homes and rental properties. With 5.6 million active listings in 100,000 cities across 220 countries and territories, it can help its users find a nice place to stay nearly anywhere in the world.
The travel industry, however, was forced to retrench during the pandemic as people canceled vacations and trips en masse. To weather the downturn, Airbnb slashed expenses and laid off employees. With a leaner cost structure, it is now in a stronger position to benefit from a rebound in travel when the COVID-19 crisis eventually subsides.
After being cooped up at home for months, many people are itching to book vacations as soon as it’s safe to do so. With health officials predicting that most Americans will be able to get vaccinated by mid-2021, the end of the pandemic — and with it, a recovery in the travel market — may come about sooner than many investors currently expect.
Analysts’ estimates for Airbnb’s sales and profits, in turn, might be too low. Should the vacation rental leader surprise to the upside when it reports its financial results in the coming quarters, its stock price could soar.
Some investors may balk at Airbnb’s market value, which already stands at roughly $100 billion after its post-IPO share price gains. Yet as a disruptive leader in a $1.5 trillion market, you can be assured that Airbnb can become a far larger company in the years ahead — while delivering handsome returns to its shareholders along the way.
