As a result, I think the equation is much more favourable for investors. And that’s something I’m thinking of taking a closer look at for my Stocks and Shares ISA.

Wise

Wise (LSE:WISE) is a stock I’ve changed my mind on several times over the last few years. But I’m feeling a lot more positive about it now than I have been before. 

The company’s 2025 numbers reveal what I used to think was the big problem. The firm’s profit for the year was £417m, but £444m came from excess interest on customer balances.

If interest rates fall this is likely to evaporate. And this is why I didn’t buy the stock before – I was concerned about what its profits might look like if this happened.

That’s still the case, but I hadn’t realised quite how much the firm has already benefitted from this. It’s given Wise a way to build out its network without raising debt or issuing shares.

As a result, the firm’s customers are up 22% (personal) and 11% (business) in the last year. And the company has managed to bring its take rate down to its lowest level in history. 

That’s bad for Wise’s short-term profits, but it significantly strengthens its long-term competitive position. So with the stock down this year, I’m taking another look in December.

Airbnb

When Airbnb (NASDAQ:ABNB) went public five years ago, I had an idea that I’d be willing to buy it somewhere around $80 a share. It emerged at around $130 and didn’t really look back. 

Now though, it’s trading at $117 a share and the company’s revenues have roughly tripled. So I think the value equation is much more favourable today for investors. 

The key points about the business are still the same. The fact it doesn’t own and maintain the properties on its platform makes it highly cash generative and its market position is very difficult to disrupt.

Revenue growth has been slowing quite dramatically over the last five years, which is why the stock hasn’t been a good investment. And that highlights some of the risks with the business.

These include oversupply driving down prices, uneven quality from hosts creating reputation risk, and shifting regulations. All of these have been challenges for Airbnb recently.

The kind of growth the firm saw after the pandemic may not be about to be repeated. But at the current level, I’m looking seriously at adding the stock to my portfolio.

Stealth stocks

Neither Wise nor Airbnb has crashed in a meaningful way over the last five years. In each case, though, the underlying businesses have grown significantly. 

As a result, they’re much better value than they once were. And I’m planning on taking a closer look at both as potential additions to my portfolio in December.

Focusing on growth stocks that have fallen sharply is one way of looking for opportunities. But I think investors who do this risk missing out on some of the best shares to buy.

The post 2 stealthy growth stocks I’ve got my eye on in December appeared first on The Motley Fool UK.

Here are three stocks that I think are worth considering as Christmas draws closer. All three have historically done well during previous festive periods.

Marks and Spencer

Marks and Spencer (LSE: MKS) is known for its higher-end Christmas food and gifts, with its London flagship store famously lit up during the season. But it’s been up and down this year ever since the April cyberattack that cost the business an estimated £101.6m.

Fortunately, insurance covered much of the loss, and it expects second-half profits to at least match last year’s levels. Online sales have been improving and food sales remain resilient, up 7.8% in the most recent quarterly results.

However, economic uncertainties such as inflation and rising costs could pressure margins. These are compounded by the ongoing fallout from the cyberattack.

To mitigate any further impact, it has implemented cost-saving initiatives and now expects a full recovery by the end of the financial year.

Card Factory

The greetings card and gifts retailer Card Factory (LSE: CARD) is always a popular choice in the run-up to Christmas, due to its proven seasonal performance. During last season, revenue grew 4.7% and like-for-like sales rose 3% — indicating strong seasonal demand for its products.

But it’s already had a good year, with H1 2025 revenue up 5.9% to £247.6m and a 74.3% surge in operating cash flow to £30.5m. With that kind of solid operational performance off-season, I expect the second half will be even better. 

However, recent National Living Wage increases prompted a £14m cost headwind, reducing full-year 2026 expectations. Through efficiency programs, management expects mid-to-high single-digit profit growth, but weakened investor sentiment could still hurt the share price.

Meanwhile, the 5% dividend yield is an attractive bonus.

Airbnb

Looking across the pond, Airbnb (NASDAQ: ABNB) is another stock likely to see increased demand during this festive season — for obvious reasons. The company operates one of the largest holiday accommodation rental marketplaces in the world.

However, it faces stiff competition from rivals Booking.com and Expedia, both of which are after its market share.

In its latest Q3 results, revenues climbed 10% year-on-year to $4.1bn while adjusted EBITDA hit a record high of $2.1bn — a 50% margin. Due to growing US demand and international expansion in Latin America and Asia Pacific, bookings increased 9% to 133.6m.

Despite this, the share price has declined 13% in 2025, amid delistings and tourist tax penalties in Spain and France. These regulatory pressures pose ongoing risks. Still, for Q4, it expects further revenue growth to approximately $2.7bn, helped by its new ‘Reserve Now, Pay Later’ feature.

Final thoughts

At The Motley Fool, we promote a long-term investment strategy that typically overlooks seasonal fluctuations. However, for those looking for shares to buy this month, the festive season could provide a welcome boost.

And these are just a few examples of the wide range of retail shares that could benefit this Christmas. Eagled-eyed investors may find even better opportunities on the FTSE indexes.

The post Consider these 3 shares to buy before the Christmas boom appeared first on The Motley Fool UK.

That sounds like it makes no sense, but bear with me. Despite the share price being up 5% in the last 12 months, I think the stock is actually much better value today than it was a year ago. 

What’s been going on?

A year ago, Airbnb’s earnings per share were being boosted by a one-off tax gain from the third quarter of 2023. As a result, they were much higher than they might normally be. 

Adjusting for excess cash and stock-based compensation, the stock traded at a free cash flow multiple of around 24. In other words, it was more expensive than its P/E ratio implied.

Fast forward to today and I think the situation is different. The price is up around 5%, but the underlying business has been growing. 

As a result, the multiple is largely unchanged from where it was a year ago. And with interest rates set to fall, I think the stock is well worth a look.

Q2 earnings

Airbnb’s share price fell 10% this week after the firm’s Q2 update. An 11% increase in bookings meant sales came in 13% higher than the previous year and earnings per share were up 16%. 

Those numbers are – in my view – pretty encouraging. The company’s revenue growth has been uninspiring over the last four quarters, but 13% growth shows acceleration. 

The reason the stock fell, however, is Airbnb announced a $200m investment in new initiatives. That includes a revamped Experiences division and this is set to weigh on margins in Q3.

The company sees it as an investment, but the stock market is viewing it differently. And it’s easy to see why investors might be sceptical at the moment. 

Experiences

Airbnb has tried an Experiences division before – and it wasn’t much of a success. Offerings on the platform were often of uneven quality, limited in number, and poorly advertised.

It’s therefore entirely understandable that investors might be wary about the company trying again on a bigger scale. Especially if it means significant capital expenditures up front. 

One of the main attractions of Airbnb is its asset-light model, which results in strong cash generation. So a large cash commitment is something shareholders are likely to take note of.

The big question is whether hosts who previously offered experiences will return to the platform. But CEO Brian Chesky stated on the earnings call that interest has already been strong.

This time it’s different?

Investors being quizzical about Airbnb having another go at a previously unsuccessful venture is entirely justified. But I think the stock falling 10% is an opportunity that’s worth considering.

In light of the weak guidance, it’s easy to overlook the fact that the company’s revenue growth is accelerating. In my view, this makes it worth considering at today’s prices.

A year ago, I thought a P/E ratio of 17 made the stock look cheaper than it was. Today, I think a P/E ratio of 30 distorts the value equation in the opposite direction.

The post As the shares fall despite strong earnings, is this a cue to buy this top growth stock? appeared first on The Motley Fool UK.

Our monthly Fire Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of growth-focused Fire recommendations, to help Fools build out their portfolios.

• Revenue for Q2 grew by 11% to $2.75bn, driven by 9% volume growth and 2% rate increases.
• Investors worried about slowing growth for Q3 (8-10% guidance was given), but we still think its accommodation network of over 5 million hosts is a powerful advantage.
• Replicating Airbnb’s network would take serious time and expense for competitors.
• Further, rates are expected to grow in the third quarter, suggesting that consumers still desire premium homes, rather than trading down.
• While the company isn’t immune from an economic slowdown, we remain attracted to the strong positioning of this network-effect business, and the influence of co-founder/CEO Brian Chesky to drive long-term growth through new products and services

The post Just released: the 3 best growth-focused stocks to consider buying in November [PREMIUM PICKS] appeared first on The Motley Fool UK.

Commitment and consistency

The first thing to note is that the sooner I start investing, the larger my final portfolio value will be.

Billionaire Warren Buffett began his investing journey as a small boy and is now in his 90s. I was still climbing trees at the age Buffett was researching stocks!

Starting from scratch, it’d take me just under 38 years investing £550 a month to reach £2.5m. This figure is important because it means I could expect an annual 4% retirement dividend yield, totalling just over £100,000.

Considerations

My strategy would require me to reinvest all my dividends. It would also need me to keep a cool head as I ride out multiple bear markets, crashes, and panics, as well as sustained bull runs (though they’re much more fun!).

History teaches that the stock market eventually recovers from setbacks and powers higher. So I’d need to trust in the process and keep committing money like clockwork each month, even when things get scary.

As Buffett said, “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful“.

It’s also worth remembering that my 10% average return is just that — an average. It doesn’t mean the market goes up by that amount every year. Far from it, as we can see from these real-life S&P 500 returns.

S&P 500 annual return with dividends

Picking stocks

So, I’ve started with the right long-term mindset and I have my end goal. Now I just need the bit in the middle, which is the investment vehicles to take me there.

One S&P 500 stock in my portfolio that I have high hopes for is Airbnb (NASDAQ: ABNB). That’s despite shares of the holiday rental disruptor falling by a disappointing 21% over the past six months.

Investors are worried about slowing revenue growth, which in Q3 is set to be 8%-10%, down from 11% in Q2. Also, its $21.6bn in cash (including $10.3bn held on behalf of hosts) will generate less interest income as rates fall.

Nevertheless, there are a number of things I like about Airbnb. First, as an asset-light business, it generates a tidal wave of free cash flow (FCF). In fact, its trailing 12-month FCF margin is a whopping 41%.

Second, Airbnb’s brand power is such that it’s a verb. This points to its strong mindshare among travelers. In the second quarter, it had over 8m listings globally on the platform.

Finally, I like that founder-CEO Brain Chesky is still super ambitious. He recently said, “We’re going to take the Airbnb model, and we’re going to bring it to a lot of different categories….Eventually, we do think there’s a path here to be doing more than just travel“. I like to back ambitious founder-led firms in my portfolio.

To be clear, I’ll prioritise income through steady dividend stocks when my portfolio reaches its 38th year. For now, though, I think growth stocks like Airbnb can help propel me toward that £2.5m goal.

The post How I’d invest £550 a month to aim for a passive income of £100,000 a year appeared first on The Motley Fool UK.

Latest earnings

The company’s recent second-quarter earnings report, released on 6 August 2024, has intensified these concerns. Following the announcement, the shares tumbled approximately 14%, reflecting the general disappointment with the performance and outlook.

So, what’s behind this downturn? Let’s dive into the details. Firstly, Q3 revenue guidance has raised eyebrows. The company’s projections suggest a slowdown in booking growth, particularly in the US. This has sparked worries about the firm’s ability to maintain its impressive revenue growth trajectory in the face of potentially reduced consumer spending on travel.

Adding to these concerns, some analysts have pointed out the lack of a clear expansion strategy beyond its core business. Some have expressed reservations about the company’s ability to transition towards an AI-powered platform effectively, especially where competitors are aggressively building new systems.

Strong fundamentals

It’s not all doom and gloom, though. The financials still paint a picture of a robust company. With a market cap of $71.5bn and revenues of $10.51bn over the trailing 12 months, the firm remains a formidable player in the travel industry. The company’s profit margins are also still impressive, with a gross margin of 83% and a net profit margin of 46%.

I’m excited about the prospect of a steady recovery here. As uncertainty hits the sector, a discounted cash flow (DCF) calculation suggests the shares are about 53% below estimated fair value. I’m a long-term investor, and even if there are a few more bumps in the road, that’s a lot of potential if management can get things back on track.

In the near term, I’m a little concerned about how much insider selling I’m seeing. CEO Brian Chesky alone has sold over $17m of his shares in the last month. Of course this can be entirely unrelated to performance, but it’s not exactly inspiring for new investors.

One for my watchlist

So, is Airbnb in trouble? While the company faces challenges, including slowing growth and increased competition, I’d say it’s premature to sound the alarm bells. The S&P 500 firm’s strong balance sheet, coupled with its innovative structure and experienced management, suggests to me it has the resources to navigate these difficulties.

I’ll still be keeping a close eye on the company’s progress in executing its strategy, particularly in expanding beyond its core business and leveraging new technologies. The next few quarters will be crucial in determining whether this S&P 500 giant can regain its momentum or if it’s facing a more prolonged period of turbulence.

In the dynamic and lucrative world of travel and technology, I’d say Airbnb’s journey continues to be one worth watching, so I’ll be adding shares at the next opportunity.

The post Down 17% in a year, is this S&P 500 giant in trouble? appeared first on The Motley Fool UK.

For example, this is how some of my stocks reacted following each firm’s most recent earnings:

• Rolls-Royce rose 11% after the company upped its 2024 profit outlook and reinstated the dividend
• Diageo fell 10% following worse-than-expected results and weak guidance
• Moderna plummeted 21% when the pharmaceutical company lowered its sales forecast
• MercadoLibre soared 10% as the e-commerce juggernaut’s net profit doubled year on year
• Shopify rocketed 23% after beating estimates and predicting sales growth of its AI-enabled tools
• Axon Enterprise surged 24% to an all-time high as the Taser-maker lifted its 2024 revenue forecast

These are big moves. Lord only knows what shares of CrowdStrike (NASDAQ: CRWD) will do later this month!

Anyway, to take advantage of this volatility, here’s a stock I’ve bought and one I plan to snap up.

Dip buying

Recently, I added to my position in CrowdStrike, the leading endpoint-cybersecurity provider. I didn’t bet the farm though as we still don’t know the damage (both financial and reputational) from the infamous buggy software update that caused the global IT outage in July. Things could get worse in the near term.

Over the long run though, CrowdStrike’s total addressable market should expand rapidly as cybersecurity solutions become more essential, especially in the coming age of artificial intelligence (AI).

If the incident was a cyberattack, so a failure of the firm’s AI-powered Falcon platform, I’d be more worried. But this was a self-inflicted software snafu, albeit a very significant one.

I thought a 30% drop in the share price was worth taking advantage of.

Airbnb

The other stock I’m going to add to is Airbnb (NASDAQ: ABNB). Offering homestays in 220+ countries, the company has reached enormous scale. Yet the shares have dropped 25% in the past month.

The chief culprit for this fall was weak guidance given for Q3 in the firm’s recent Q2 earnings. It said: “We are seeing shorter booking lead times globally and some signs of slowing demand from US guests.”

This stoked fears about the impact of a US recession on the company’s growth. While this is a legitimate concern, I don’t find this slowdown surprising. Most firms are reporting weak consumer confidence.

So I think this may be an overreaction. Q2’s numbers looked solid, with revenue rising 11% year on year to $2.75bn. Earnings did dip slightly but margins remained very healthy.

Plus, Airbnb is still growing faster than rival Booking Holdings, which posted 7% growth in Q2 revenue and nights booked.

CEO Brian Chesky said this on the earnings call: “For everyone who books an Airbnb, about nine people book a hotel. And so if we can get just one of those guests to book on Airbnb that’s currently booking at a hotel platform, we would go from nearly 0.5bn nights a year to 1bn nights a year.”

Finally, the stock is trading at around 26 times forecast earnings for 2024. If these prove accurate, I’d say that’s reasonable for a high-quality business like Airbnb.

Pair that valuation with an excellent balance sheet and asset-light business that continues to grow, and I reckon the stock looks like an attractive option.

The post Here’s what I’m buying in my ISA as the stock market goes crazy! appeared first on The Motley Fool UK.

Value investors looking for shares to buy don’t typically pay attention to high-flying growth names. But sometimes a sharp decline in a company’s share price can create an opportunity.

After a disappointing earnings report, the Airbnb (NASDAQ:ABNB) share price is 31% lower than it was a year ago. That implies a price-to-earnings (P/E) ratio of around 17, but things aren’t as straightforward as they seem.

Profitability

Airbnb’s revenues for the second quarter of 2024 came in 11% higher than the previous year. This was largely due to higher booking volumes flowing through its platforms.

Unfortunately, management warned that demand in the US is showing signs of slowing. As a result, revenues for the third quarter are likely to be lower than expected.

Worse yet, the company’s costs grew faster than its sales. As a result, earnings per share came in 15% lower than the previous year, despite a reduction in the outstanding share count.

The market didn’t take the news particularly well and it’s easy to see why. When a company like Airbnb is supposed to be in growth mode, news that things might be slowing down is a concern. 

Interest and interest rates

I don’t see slow growth over the next three months as a big reason for concern. Various companies have reported weak consumer spending in the US, so I don’t think it should be much of a surprise.

To my mind, the much bigger issue is the company’s profits declining. One reason for this is that earnings fell despite a significant boost to the interest the firm receives on the cash it holds.

Airbnb has $21.6bn in cash, including $10.3bn held on behalf of customers to be paid to hosts. And the interest it receives on this grew from $191m a year ago to $226m in the last three months.

That’s around 40% of the company’s net income – earnings per share would have been even lower without this. The trouble is, I think most of this is at risk if there’s an interest rate cut in the US. 

P/E complications

There’s a lot to like about Airbnb as a business. As an asset-light organisation (it doesn’t own the properties it lets) it has huge margins and its size gives it a major advantage over the competition.

The current share price implies a P/E multiple of around 17 based on the company’s earnings over the last 12 months. That looks incredibly cheap, but there are a couple of catches. 

One is concern over the durability of the interest income Airbnb is currently receiving. But another is the fact the business benefitted from a one-off tax boost during the third quarter of 2023.

This meant earnings came in higher than they would normally, making the P/E artificially low. That means investors need to investigate what the normalised earning power of Airbnb is.

Is the stock a bargain?

Based on analyst estimates for the next 12 months (which might well change) Airbnb shares are trading at a P/E ratio of around 23. But this is expected to fall to 14 by the end of 2027. 

That’s not bargain basement territory, but I don’t think it’s outrageous for a quality company. I therefore wouldn’t be against using the weak short-term outlook as an opportunity to do more research and consider buying.

The post At a P/E ratio of 17, are Airbnb shares unbelievable value? appeared first on The Motley Fool UK.

Historically-low valuation

First up we have ‘Magnificent Seven’ company Amazon (NASDAQ:AMZN). It’s a global leader in the online shopping and cloud computing industries (both of which are expected to grow substantially in the years ahead).

Amazon stock was trading at $200 a few weeks ago. Today however, it can be snapped up for $180 – 10% lower.

I’m very bullish on the stock at the current price. Right now, the forward-looking P/E ratio using next year’s earnings per share forecast is only about 30. That’s a historically-low valuation for this company. And given that earnings are forecast to rise 57% this year and 27% next year, I think it’s a steal.

Of course, that valuation is still relatively high. So, if there’s a slowdown in Amazon’s e-commerce or cloud computing businesses in the near term, the stock could be volatile.

Taking a long-term view though, I expect the stock to move higher. Currently, it’s my largest holding.

Taking on Nvidia

Next, we have Advanced Micro Devices (NASDAQ: AMD) or ‘AMD’ for short. It’s a leading chip company (and a major rival to Nvidia).

Back in March, this stock was trading near $210. Now however, it can be picked up for $145 – about 30% cheaper.

I’ve been contemplating buying AMD shares for a while now. And I’m very tempted to pull the trigger at current prices. The reason I’m bullish is that the company has been developing high-powered artificial intelligence (AI) chips designed to compete with Nvidia’s AI products. I expect these chips to propel its revenues higher in the years ahead as the AI revolution gathers steam.

Of course, AMD is going to have its work cut out competing with Nvidia. Today, its rival is the clear leader in the AI chip market.

I reckon there’s room for multiple players in this industry, however. And with the stock trading on a forward-looking P/E ratio of 26 using the 2025 earnings forecast, I like the risk/reward setup.

Benefitting from the travel boom

Finally, check out Airbnb (NASDAQ: ABNB). It operates the world’s largest home rental platform.

Airbnb shares were trading near $170 in March. Currently however, they’re sitting at $144 – about 15% lower.

This stock has a huge amount of potential, in my view. I expect the travel industry to experience a boom over the next decade as cashed up Baby Boomers retire, and I reckon this company will benefit.

Of course, the big risk here is government regulation. Recently, Barcelona announced a ban on short-term rentals from late 2028. We could see similar regulation from other major cities in the future.

The world is a big place though. And I see scope for plenty of further platform growth here.

The forward-looking P/E ratio is about 28 currently, which I believe is very reasonable.

The post The Nasdaq just tanked. Here are 3 US growth stocks to consider for an ISA now appeared first on The Motley Fool UK.

Here, I’m going to highlight three growth stocks I’ve bought recently in an effort to build wealth for future generations. There’s no guarantee that they’ll do well, of course, but I’m very optimistic about their long-term prospects.

The future of transport

First up is Uber (NYSE: UBER). It’s the largest rideshare company in the world.

While Uber is a large company by UK standards, it’s still small on a global scale. Currently, its market-cap is just $140bn (compared to $3.4trn for Apple).

At that valuation, I see plenty of room for growth. Today, Uber’s revenues and earnings are rising rapidly. And in the long run, I think the company should do really well as robo-taxis emerge (these could dramatically lower its operating costs).

Regulation is one risk here. Another is competition in the robo-taxi space from Tesla.

With its powerful brand and massive user base, however, I’m backing it to do well. Ultimately, I can see the group joining the exclusive trillion-dollar market-cap club one day.

Fighting the obesity battle

Next, we have Novo Nordisk (NYSE: NVO). It’s a Danish pharmaceutical company that has a listing in the US.

The reason I’ve invested in this company is that it’s the maker of Wegovy. This is a weight-loss drug that can help people with obesity lose up to 15% of their body weight.

Recently, sales of Wegovy have been extraordinary. But this could just be the beginning. According to analysts at Barclays, the weight-loss drug market could be set to grow roughly 10-fold by 2030. If this forecast proves accurate, I expect this stock (and the value of my portfolio) to be much higher by then.

Competition from other pharma companies such as Eli Lilly and AstraZeneca is a risk here. But given the projected size of the market, I think there’s room for multiple players.

A play on the travel boom

Finally, I’ve invested in Airbnb (NASDAQ: ABNB), the largest home rental platform in the world.

This company has generated amazing growth in recent years (revenues have nearly tripled over the last five years, despite the pandemic). But I reckon it’s just getting started. The reason I say this is that the next decade looks set to be a golden era for the travel industry. That’s because cashed up Baby Boomers are retiring in droves and looking to travel the world.

Like Uber, this company’s potentially at risk from regulation. New rules could stifle its growth.

I think the company has all the right ingredients to be a winner in the long run though. After all, its brand is a verb these days and has a huge market share.

Taking a long-term view

It’s worth noting that all of these stocks are US-listed, meaning there’s some foreign exchange risk for me. They all have relatively high valuations too, which is another risk.

Taking a 10-20-year view however, I believe these stocks have the potential to generate substantial wealth for my family.

The post I’ve bought these 3 magnificent growth stocks for my ISA to build generational wealth appeared first on The Motley Fool UK.