The stock market has been a remarkable place to build and sustain meaningful returns with the passage of time. The performance of your individual portfolio will depend on how much you invest, how often, and where you put your cash to work.
Diversifying your investment capital across a wide range of companies and consistently investing when the market is up as well as down can compound your portfolio performance through the years. If you have cash to invest in stocks right now, here are two top names to consider in the new bull market.
1. Fiverr
Fiverr (NYSE: FVRR) is trading down about 5% from a year ago, despite the fact that its business continues to make strides in a challenging operating environment and is rapidly improving its bottom line. The artificial intelligence boom is changing many industries, and the freelance world is no exception.
While some may fear that tools and technology like generative AI will replace the need for talented freelancers, the future is likely far more nuanced. These tools are far from perfect, and while some tasks may be done entirely by AI, many require the aid of human expertise to deliver an exceptional final work product.
Fiverr is capitalizing on this vision. Over the last year-plus, it’s launched a series of AI-driven services, including everything from a matching service that helps businesses find the right freelancer to new AI-focused gig categories. The company has also been focusing on offering more complex services, which are those that may involve the use of AI but require a skilled human freelancer to get the job done.
The growth of complex services, which include tasks like financial consulting, AI development, and mobile app development, is driving steady growth for Fiverr in a competitive environment. In the company’s first-quarter shareholder letter, management noted a boom in the amount of AI services offered on the platform, which now include offerings like AI avatar design and custom GPT (Generative Pre-training Transformer) applications. At last count, Fiverr had 10,000 AI experts on its marketplace.
On the financial front, Fiverr delivered revenue of about $94 million in the first quarter of 2024, a 6% increase from the same period in 2023. It also reported net income of $0.8 million, compared to a $4.3 million net loss in the prior year’s quarter. That follows 2023, in which Fiverr delivered annual net income just shy of $4 million, its first profitable year as a business.
Active buyers were down 6% year over year in the first quarter of 2024, but spending per buyer actually rose 8% from the year-ago period. On top of that, Fiverr’s cohort of high-value buyers (those who spend over $500 per year) rose 4% in the first quarter of 2024 on a year-over-year basis.
Fiverr delivered an operating cash flow of around $21 million, a notable 57% bump from a year ago. It also continues to keep up with its track record of high gross margins, reporting 83.5% in the recent quarter, a 130-basis-point bump from one year ago. The company’s take rate (the portion of each transaction that Fiverr makes) totaled 32.3% at the end of the recent quarter, a 190-basis-point increase from the prior year.
While the company may be facing some continued doubts from investors about its ability to perform in a post-pandemic environment, there are multiple green flags for this business. That could present a compelling buying opportunity for those with the appropriate investment horizon.
2. Lyft
Things are looking up for Lyft (NASDAQ: LYFT). Shares of the mobility app are up a whopping 76% from their position a year ago — and about 14% higher from the start of 2024. That’s slightly more than the S&P 500‘s performance so far this year, as the index is trading up by approximately 12% since the beginning of January.
Improvements in earnings and sales, as well as overall strong growth figures, seem to have renewed investor interest in this ridesharing stock. Meanwhile, increasingly favorable cash flow numbers, rapid expansion in Canada (its only international market at present), and a steady uptick in bookings are all green flags for this business.
The rideshare market suffered significantly during the worst of the pandemic. Companies like Lyft have been working to regain solid financial footing after this period, and as competition in the rideshare space continues to heat up.
In 2023, Lyft reported that gross bookings and riders reached an all-time high. The company delivered over 700 million rides last year, while gross bookings rose 14% from 2022 to just shy of $14 billion. Revenue also rose 8% to $4.4 billion.
Fast forward to the most recent quarter, the first three months of 2024, and gross bookings jumped 21% year over year to $3.7 billion. Lyft brought in $1.3 billion in revenue in the quarter, a healthy 28% boost from the prior-year period.
It also delivered 188 million rides in the three-month stretch, a 23% year-over-year increase. Active riders, which are riders who take at least one ride in the quarter with Lyft, improved 12% year over year to 21.9 million.
While the company is still operating at a net loss according to generally accepted accounting principles (GAAP), this figure shrunk to $31.5 million compared to $187.6 million in the same quarter in 2023. Lyft also brought in $59.4 million in adjusted earnings before interest, depreciation, and amortization (EBITDA), a 162% boost from one year ago.
The first quarter of 2024 was Lyft’s second consecutive quarter of delivering positive free cash flow. That figure totaled $127 million, after the prior quarter’s figure of $14.9 million. Management has also stated that the company plans to deliver positive free cash flow for the full year 2024. There’s a lot to like about where this stock is going, and long-term investors might find this is a ride worth taking for a multiyear buy-and-hold position.
Should you invest $1,000 in Fiverr International right now?
Before you buy stock in Fiverr International, consider this:
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Rachel Warren has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Fiverr International. The Motley Fool has a disclosure policy.
2 Top Stocks That Could Explode in the 2024 Bull Market and Beyond was originally published by The Motley Fool
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