If you’re tempted to stay on the fringes of today’s market, you’re not alone. The sell-off in stocks over the past six months has spooked many investors. But today’s market is a reminder of two investing truths: first, volatility is a given, and second, buying smart stocks when selling can be very profitable in the long run.
It’s true: now may be the time to invest money in the stock market. There are two companies in particular — You’re here (TSLA 0.65% ) and Assets received ( UPST -0.06% ) – who I think could make great long-term investments despite the current market downturn.
Some investors are wary of high-growth electric vehicle (EV) stocks, as many of these companies struggled during the recent market drop. But experts suggest electric vehicles are here to stay and we’re still in the early innings of this trend. Consider this: research firm Canalys reports that in 2021, electric vehicle sales accounted for just 9% of global passenger car sales, but estimates that percentage will rise to almost 50% by 2030.
While many small electric vehicle companies are still trying to ramp up production and compete in an increasingly crowded market, Tesla is firing on all cylinders. In the last quarter, Tesla’s vehicle production soared 70% year-over-year to nearly 306,000 vehicles. That’s an impressive growth in vehicle production at face value, but it looks even better when you consider that this growth has come before Tesla’s new factories in Texas and Germany have come online.
Tesla already has a leadership position in the electric vehicle market, and its recent vehicle production shows that the electric vehicle company has been able to grow in an era of manufacturing delays, semiconductor shortages and supply constraints. supply chain have put massive pressure on the automotive industry.
With the company’s current growth trajectory and new factories opening, investing $1,000 in this EV leader could prove to be a wise move as the EV market continues to expand. Of course, you’ll have to buy fractional shares of the company since Tesla’s stock price is currently above $1,000 – or wait for the company’s proposed stock split.
2. Assets received
Upstart Holdings stocks are not for the faint-hearted right now. Its stock price has already fallen more than 60% in the past six months, and given that Upstart is a growth stock, more near-term volatility is certainly possible.
But a few years from now, investors could be very happy that they invested in Upstart early. The company is disrupting the lending market using artificial intelligence, helping lenders get better clients and borrowers get better loan terms. Upstart goes beyond credit bureaus and traditional lenders by considering factors like education and work experience to match borrowers with the right loans.
Upstart reports that its personal loan rates are, on average, 10% lower than traditional loan sources. This, of course, is great news for borrowers. But there’s great news for lenders, too: Upstart claims it has 75% fewer defaults than traditional lenders at the same approval rate. Plus, 70% of Upstart’s loans are fully automated, making the loan process easier than ever.
But wait, there’s more. The business is growing like a weed: in the fourth quarter of 2021, Upstart’s banking partners issued nearly 500,000 loans, a 301% increase over the same quarter of the previous year. During the same period, revenue skyrocketed 252% year-over-year to $305 million. Equally impressive is the fact that operating profit grew from $10.4 million in the fourth quarter of 2020 to $60.4 million in this period of 2021.
Upstart is already successfully tapping into the personal loan market and is beginning to expand into the auto loan space. This should be of particular interest over the next few years, as Upstart’s management says its total addressable market in auto lending is $635 billion.
As a young growth stock, Upstart’s stock price may experience further fluctuations in the short term. But Upstart’s growth, coupled with its huge potential in the auto loan market, makes the company a sound buy.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.