These 2 stocks are stars in the making

There is no way to know for sure which stocks will be the multibaggers of tomorrow. However, some companies have excellent leadership, strong capitalization and huge addressable market opportunities. Here are two in particular that could be long-term home runs for investors entering during the 2022 bear market.

The next Berkshire Hathaway?

Boston Omaha (BDC 0.35%) is a growing conglomerate that is often compared to an earlier stage Berkshire Hathaway. And it’s easy to see why. Boston Omaha co-CEOs follow Warren Buffett’s Berkshire playbook very closely – they invest in business with low permanent capital requirements and excellent cash flow, and they are not afraid to invest in non-controlling interests when they see excellent opportunities.

The company has four main subsidiaries. Its three operating businesses are billboards, insurance and broadband. And the newly created Boston Omaha Asset Management (BOAM) is where everything else is housed, including large stakes in publicly traded companies. Houses of dream seekers and Celestial Port. The most exciting part of BOAM’s business is just beginning, as the company sees huge opportunities in built-to-rent housing and fiber infrastructure and plans to raise outside capital to pursue them.

To be perfectly clear, I’m not necessarily saying that Boston Omaha will become a conglomerate the size of Berkshire. But there is certainly potential for the company to grow in size many times over, and management has shown an ability to allocate capital wisely and think outside the box when it comes to creating value.

A massive disruptor with an even bigger opportunity ahead of him

It may seem strange that I am referring to Airbnb (ABNB -0.27%) like a coming all star. After all, the travel The disruptor saw roughly $16 billion in bookings on its platform in the third quarter alone and completely redefined the way millions of Americans travel (and monetize their homes).

Listen to me. Although Airbnb is a massive company, it has always captured only a small percentage of its potential revenue. The company estimates the addressable market for its platform — including short- and long-term rentals, as well as experiences — at around $3.4 trillion in annual booking volume.

Management has done a great job of convincing new hosts to sign up to the platform and finding new ways to increase its reach. For example, the company just announced that it was creating a way for renters of apartments in certain buildings to list their homes on Airbnb, which was historically exclusively for landlords. While not all apartments allow for short-term subletting, there are over 21 million apartments in the United States alone, so it’s fair to say that even capturing a small percentage could be a big win. With the stock down around 55% from its 2021 high, now might be a good time to consider adding it to your portfolio.

Buy for the long term

Just like most other stocks that offer huge addressable market opportunities, it’s wise to expect significant volatility over short periods of time with these two companies. I have no idea what Boston Omaha or Airbnb stocks will do over the next few weeks or months, and neither does anyone else. However, they are two well-managed companies that have already demonstrated their capital allocation abilities, but have great opportunities that could take decades to materialize. And if their management teams can execute on their respective visions, they could be home runs for patient investors.

Matthew Frankel, CFP® has positions at Berkshire Hathaway, Boston Omaha, Dream Finders Homes and Sky Harbor Group. The Motley Fool holds positions and recommends Airbnb, Berkshire Hathaway, Boston Omaha and Dream Finders Homes. The Motley Fool recommends the following options: January 2023 long calls on Berkshire Hathaway $200, January 2023 short calls on Berkshire Hathaway $200 and January 2023 short calls on Berkshire Hathaway $265. The Motley Fool has a disclosure policy.

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