With the COVID-19 vaccine program in the U.S. having facilitated an easing of pandemic related restrictions, some investors are doubting whether e-commerce stocks can keep performing well in the coming months. However, predictions about the industry’s solid growth prospects have held many investors’ interest in this sector over the past several months, as evidenced by the Global X E-commerce ETF’s (EBIZ) 12.9% returns over the past six months.
The e-commerce space was on the rise even before the pandemic and it is expected to keep growing in the post-pandemic world. According to Grand View Research, the global B2C e-commerce market is expected to grow at a 9.7% CAGR between 2021 – 2028.
The recent tech sell-off on fears of rising inflation caused the stocks of fundamentally sound e-commerce companies CarGurus, Inc. (CARG) and Overstock.com, Inc. (OSTK) to decline in price. So, we think it could be wise to bet on them now because they are well-positioned to capitalize on the industry’s continued growth.
CarGurus, Inc. (CARG)
CARG operates as an online automotive marketplace that connects buyers and sellers of new and used cars in the United States. The company operates under the CarGurus brand in Canada and the United Kingdom, and under Autolist and PistonHeads independent brands in the United States and the United Kingdom. Its products include Consumer Marketplace, Dealer Marketplace, and Dealer Dashboard.
On April 22, CARG announced early access for dealerships to preview CarGurus Convert, its latest digital retail product that is designed to help dealers provide their consumers with the ability to conduct most of their car purchasing transaction online. This is expected to increase the company’s consumer base because many consumers prefer conducting their purchases online.
The company’s revenue increased 9% year-over-year to $171.40 million for the first quarter, ended March 31. Its non-GAAP operating income grew 93.2% year-over-year to $48.50 million, while its non-GAAP net income increased 76% year-over-year to $38.90 million. The company’s non-GAAP EPS increased 73.7% year-over-year to $0.33.
For the quarter ending June 30, 2021, analysts expect CARG’s EPS and revenue to increase 26.3% and 97.2%, respectively, year-over-year to $0.24 and $186.79 million. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has soared 28% over the past six months to close yesterday’s trading session at $28.38. It is currently trading 22.3% below its $36.54, 52-week high, which it hit on February 12, 2021.
CARG’s POWR Ratings reflect this promising outlook. The company has a B overall rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has an A grade for Growth and Quality, and a B grade for Value. Within the Internet industry, CARG is ranked #8 of 71 stocks. To see the additional POWR Ratings for CARG (Momentum, Sentiment and Stability), click here.
Overstock.com, Inc. (OSTK)
Online retailer and technology company OSTK offers a range of products through its e-commerce websites, such as furniture, home decor, bedding and bath, home improvement and other related products. It provides its products and services through its internet websites, which include overstock.com, o.co, overstock.ca, and overstockgovernment.com.
Last month, OSTK closed its blockchain fund transaction with Pelion Venture Partners to oversee Medici Ventures, which has been converted into a limited partnership. Jonathan Johnson, the company’s CEO said, “I’m pleased we closed this transaction ahead of schedule. Overstock can now focus on our core e-commerce business, which continues to realize tremendous revenue, profit, and market share growth.”
The company’s net revenue increased 94% year-over-year to $660 million for the first quarter ended March 31. Its operating income came in at $26.59 million compared to an operating loss of $13.60 million in the prior-year period. Its net income came in at $15.89 million compared to a net loss of $19.56 million in the year-ago period. The company’s EPS was $0.33 compared to a loss per share of $0.40 in the prior-year period.
Analysts expect OSTK’s EPS to increase 50.8% year-over-year to $1.87 in its fiscal year 2021. It surpassed consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to be $765.34 million for the quarter ending June 30, which represents a 28.1% year-over-year rise. The stock has soared 406.9% over the past year to close yesterday’s trading session at $76.97. It is currently trading 40.1% below its$128.50, 52-week high.
OSTK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has a B grade for Quality, Sentiment and Value.
We have also graded OSTK for Growth, Stability and Momentum. Click here to access all OSTK’s ratings. OSTK is ranked #10 in the same industry.
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CARG shares were trading at $27.89 per share on Wednesday afternoon, down $0.49 (-1.73%). Year-to-date, CARG has declined -12.10%, versus a 9.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...
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