It’s not hard to find beaten-down stocks in today’s environment. After all, equity markets have been southbound since the year started. However, finding stocks worth buying at current levels and holding on to for good is another story. Forever stocks aren’t run-of-the-mill, and many companies whose shares are down are better left alone.
If you need some inspiration, let’s look at two companies that have lagged in the struggling stock market this year but could be excellent, long-term stock picks: Zoetis (ZTS -2.83%) and Match Group (MTCH 0.49%).
Zoetis is one of the most prominent animal health specialists in the world. The company markets pharmaceutical products for companion animals and livestock, and according to some estimates, it held a leading 14.7% market share in 2020. Zoetis’ portfolio includes more than 300 product lines and 13 products that generate at least $100 million per year.
Despite the negative impact of the pandemic — not to mention market-wide geopolitical and economic issues — Zoetis continues to deliver solid financial results. In the first quarter, the company’s revenue grew by a decent 6% year over year to $2 billion. Net income of $595 million also increased by 6.
What makes Zoetis a stock worth holding on to forever? First, the company has built a solid reputation as a leading provider of quality animal health products. Consumers tend to stick with what they know works, and when looking for new products to buy, a company’s reputation can be instrumental in attracting customers. That’s why Zoetis will likely remain a leader in animal health for a very long time.
Second, the company continues to develop new products or add indications to existing ones. Zoetis has already announced three regulatory nods this year, one of which was the European Union’s approval of Apoquel — a tablet that treats inflammation in allergic dogs.
The company also earned a U.S. label expansion for Simparica Trio, a chewable tablet that protects dogs and cats against various ticks and worms. Simparica Trio first earned approval in the U.S. in 2020.
The third reason Zoetis’ future looks bright is that the animal health market will continue to grow. Pet ownership increased noticeably during the pandemic and should continue on its upward trajectory. Also, population growth will lead to an increased need for protein food sources — such as livestock — and the products needed to care for them properly.
That’s why the animal health industry is expected to register a compound annual growth rate of 10% through 2030. Don’t miss out on the healthcare company that is arguably as well-positioned as any to profit from this growth.
2. Match Group
Match Group is the leader in online dating, owning such popular brands as Tinder, Hinge, and many other websites and apps. While this industry is competitive, Match Group arguably benefits from a competitive edge — namely, the network effect. This refers to the value of a service increasing as more people use it, and it fits Match Group’s business model pretty well.
New online daters will tend to seek those platforms with the most prospective partners, making these platforms even more attractive to future users. That’s why Match Group continues to grow its user base at a good clip. During the first quarter, the company’s total paying users increased by 13% year over year to 16.3 million.
Match Group’s user growth even exceeded that of the much smaller Bumble. Bumble’s paying users for the first quarter increased by 7.3% year over year to roughly 3 million. Meanwhile, Match Group’s revenue for the first quarter jumped by 20% year over year to $799 million, with revenue per payer increasing by 6% year over year to $16. The tech company’s net earnings per share came in at $0.60, slightly higher than the $0.57 reported during the year-ago period.
Although macroeconomic and geopolitical challenges have also impacted Match Group’s business, there is plenty of room to grow in the online dating space. Match Group has 100 million monthly active users (MAUs) across its websites and apps. The company only had 60 million MAUs as of its IPO back in late 2015. Not all of these people pay for the company’s services, but they represent potential future paying customers.
But that still does not include those who aren’t on dating apps yet. According to the company, the vast majority of single people in the world have yet to try dating apps. Between this untapped opportunity and Match Group’s sizable MAUs — the majority of whom aren’t paying users yet — the online dating specialist looks set to continue growing its user base and its revenue and profits along with it.
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