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After Rallying More Than 500% in 2020, Are These 3 E-Commerce Still Buys?

: Because e-commerce is expected to dominate the shopping landscape even in a post COVID-19 pandemic world, companies in the online retail sector are witnessing unprecedented growth. So, while some e-commerce stocks have skyrocketed thanks to the pandemic-led “new normal,” there is no reason to assume that they don’t have further upside. Fiverr International (FVRR), Overstock.com, (OSTK), and CarParts.com (PRTS), which cater to various online market segments, have rallied more than 500% amid the pandemic, and we think their stocks are likely to enjoy an extended bull-run.

The coronavirus pandemic has taught people a new way to live and communicate and has brought digital buying and selling into prominence. This has been a blessing to the e-commerce sector in an otherwise generally grim year. Online marketplaces have become the order of the day and they are not limited to physical goods. The pandemic has also spurred momentum in the gig economy, allowing participants to be more engaged than ever before in the buying and selling of freelance services. COVID-19 has given an immense boost to these companies as well.

Most e-commerce stocks have skyrocketed since a market correction in March, and current trends suggest more room for their growth. However, investors must exercise caution before buying these stocks for the very reason that COVID-19 has been one of the biggest factors fueling their performance. Hence, further developments on the vaccine front may cause these stocks to lose some appeal. It is advisable, then, that these stocks be chosen based on sufficient fundamentals and innate strength to continue their upward trajectory in a post-pandemic environment.

Fiverr International Ltd (FVRR), Overstock.com, Inc. (OSTK), and CarParts.com Inc. (PRTS) are three offbeat e-commerce companies that serve different market segments. FVRR is reaping the benefits of the continued growth in the gig economy. OSTK, meanwhile, is seeing its business flourish on account of a renewed focus on home décor as people choose to stay indoors. As for PRTS, because people generally want to avoid crowded public transport they are relying more on personal transport, especially for the holiday season. This has driven increased demand for proper maintenance and repair of their vehicles.

The stocks of these companies have been on fire in 2020 and gained more than 500%. The good news is we think that based on their fundamentals and the expected dominance of e-commerce platforms even after the pandemic, these stocks could maintain their momentum.

Fiverr International Ltd (FVRR)

FVRR is an online marketplace that connects buyers and sellers of selected business services. The company offers more than 300 categories across eight verticals, which include graphic design, video and animation content, writing and translation, digital marketing, as well as music and audio programming. The company has two more portals under its umbrella--And.Co, a platform that offers online back office services to assist freelancers, and ClearVoice, a subscription-based content marketing platform catering to medium to large enterprises.

In November, FVRR announced its expansion into the Latin American markets with the launch of operations in Brazil and Mexico.  The company recorded a 137% increase in new freelance registrations from Brazil, while 109% year-over-year growth in freelancer registrations from Mexico was seen during the third quarter. To drive more efficient buyer acquisition and conversion, FVRR is providing users the option of using local payment solutions and native languages in their dealings.

During the third quarter ended September 30, 2020, FVRR’s revenue surged 88% year-over-year to $52.3 million. Its net loss per share narrowed to $0.01 compared to $0.26 during the same period last year. At the end of third quarter, active buyers grew to 3.1 million, representing a 37% year-over-year increase, while spend per buyer climbed to $195 during the quarter that closed September 30, 020.

Analysts expect revenue for the fourth quarter ending December 31, 2020 to be $54 Million, representing an 82.9% increase year-over-year. Meanwhile, EPS is likely to grow at the rate of 77.1% per annum over the next five years.

On a year-to-date basis, FVRR has surged 779.1% to close yesterday’s trading session at $205.85, which is quite close to its 52-week high at $210.75. Over the past six months, the stock has climbed 243.9%.

How does FVRR stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

B for Peer Grade

B for Industry Rank

A for Overall POWR Rating

Overstock.com, Inc. (OSTK)

OSTK is an online retailer that sells furniture and home decor that includes rugs, bath linen, bedding, home improvement, kitchenware, and other related products. Worldstock Fair Trade is another store operated by the company. It deals in handcrafted products. The portals through which OSTK sells its products are overstock.com, o.co, and o.biz. Additionally, OSTK is involved in the development and commercialization of financial applications related to blockchain technologies.

In September, OSTK opened a new fulfillment center in Fontana, California, in association with UPS Supply Chain Services. This new fulfillment center will be instrumental in improving OSTK’s logistics, which includes shipping speed, providing accurate delivery estimates and a quicker port-to-warehouse process.

OSTK’s revenue for the third quarter ended September 30, 2020 climbed 110.8% year-over-year to $731.7 million. EPS for the quarter was $0.50 compared to a loss per share of $0.89 posted in the prior year period.

The consensus revenue estimate for the fourth quarter ending December 31, 2020 is $648.6 million, signaling a 74.9% surge year-over-year. Its EPS is likely to climb at the rate of 113.1% per annum over the next five years.

OSTK has rallied 692.2% on a year-to-date basis to close at $61.67 yesterday. The stock has soared 182.8% over the past six months. Besides increased demand for furnishings and home décor, OSTK’s bull-run is also a result of its presence in the cryptocurrency space. As Bitcoin rises to record levels, this segment could be a major growth area for the company.

CarParts.com Inc. (PRTS)

PRTS is an online seller of aftermarket auto parts and accessories such as body parts, mirror products, engine and chassis components, as well as mechanical and electrical parts mainly in the United States and the Philippines.  autopartswarehouse.com, carparts.com, and jcwhitney.com are PRTS’ flagship websites.

In November, PRTS announced the release of its new and first-ever live shot national advertising campaign to showcase its new brand image. The ad campaign is designed to show how the company’s mobile shopping experience delivers savings of up to 50%, making it the best option for consumer’s vehicle’s repair and maintenance needs.

PRTS’ revenue during the third quarter ended September 30, 2020 climbed 69% year-over-year to $117.4 million. EPS for the quarter was $0.03.  PRTS’s Adjusted EBITDA for the quarter surged 292.3% year-over-year to $5.1 million. According to Lev Peker, PRTS CEO, “As we look to the fourth quarter and our trajectory into 2021, we will work to further optimize both our back-end and our customer-facing operations.”

The Street expects revenue for the fourth quarter ending December 31, 2020 to grow 51.2% year-over-year to $94.8 million. Meanwhile, its EPS is likely to grow at a rate of 15% per annum for the next five years.

PRTS ended yesterday’s trading session at $12.61, rallying 475.7% on a year-to-date basis. Over the past six months, the stock climbed 51.9%.

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FVRR shares were trading at $200.00 per share on Wednesday afternoon, down $5.85 (-2.84%). Year-to-date, FVRR has gained 751.06%, versus a 16.77% rise in the benchmark S&P 500 index during the same period.



About the Author: Namrata Sen Chanda

Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.

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