TThe stock market is known for its volatility, but it could well be giving investors a whiplash because of how quickly it moves up and down. the Nasdaq Composite the index sank in the first three months of 2022, falling 20% in mid-March. After that, it shot up again. As of this writing, it is only down 10% YTD.
Predicting where the market will go over the next week or month is next to impossible, so buying companies you feel confident in over the next five years is usually the best strategy. With this in mind, you should have a watchlist full of stocks that you’re ready to buy no matter what the stock market does next.
My watch list is full of companies right now, but figs (NYSE: figs) and five (New York Stock Exchange: FVRR) they are near the top of it.
Figs is in a unique position with one of the strongest brands in a niche market. The company sells hospital gowns for nurses and other healthcare professionals, but it has two hallmarks: a strong brand name that no competitor has been able to match, as well as a gold standard product in the industry. The company’s Net Promoter Score (NPS), which measures customer satisfaction on a scale of -100 to 100, where a score of 70 is considered “world class,” topped 80 at the end of 2021. This is phenomenal. , outperforming even some of the strongest brands. platoon It only has an NPS of 68.
Figs scrubs are much higher quality than the competition. The company realizes that its customers use its products every day, often for 10 hours or more, so it has prioritized comfort and utility. As a result of this quality and brand, Figs has been able to price its products at a penny, with the company achieving a gross margin of nearly 72% in 2021.
To be clear, Figs faces stiff competition and pushback from price-sensitive buyers. Jaanuu, another scrubs maker, may be more appealing to the price-sensitive consumer, and since Figs’ scrubs are a few dollars more expensive than their counterparts, that could hurt business. Still, Jaanuu has yet to reach Figs’ level of brand recognition, which is a major selling point.
The company’s adoption by healthcare workers has been impressive. Figs had 1.9 million active customers in Q4 2021 generating nearly $420 million in revenue for the year, up 60% from a year ago. And now, the company has expanded into a broader range of products, offering everything from outerwear to lifestyle products like sweatshirts and joggers that can be worn outside of work. Lifestyle products only accounted for 17% of revenue in the fourth quarter, but management believes this segment is just getting started.
With a US healthcare apparel market valued at $12 billion, Figs still has plenty of room to grow. The company also has aspirations to expand internationally, which could take its opportunity to $79 billion.
There is no doubt that the potential of the company is immense, and considering that Figs is trading at only 8.6 times sales, not much more than other clothing companies I like Lululemon — it’s near the top of my watchlistand it should be in yours too.
Fiverr has taken a hit recently, falling more than 77% from its all-time high set in January 2021. The company is one of the leading platforms for connecting freelancers with businesses, so it naturally gained popularity during the pandemic. of COVID-19.
However, as the world began to reopen, many investors lost faith in the company, thinking demand for its services would drop. Otherwise, Fiverr has had continued success. Fiverr posted record revenue of $298 million for 2021, which grew a staggering 57% from 2020.
One driver for this was the rise in the company’s acceptance rate, the portion of revenue Fiverr reserves for itself from each transaction, which is now over 29%. Considering that active buyers on the platform grew 23% year over year at the end of 2021, the value that Fiverr provides to its buyers seems to be worth the price increase.
The company lost $65 million in 2021, but this is not as worrying as one might think. His $35.4 million in 2021 Free cash flow can fuel most of this loss, and the $192 million in cash and securities on its balance sheet could help fund the rest.
It’s clear that Fiverr’s service remains valuable to millions of businesses around the world, and that may not change as long as freelancers continue to enjoy working from home. Nine times sales, stocks look especially attractive today. Investors might want to consider owning this company.even if the market continues to oscillate up and down in the coming months.
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jamie louko is the owner of FIGS, Inc. and Fiverr International. The Motley Fool owns and recommends Fiverr International, Lululemon Athletica, and Peloton Interactive. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.