The United States has registered a whopping 200,000 new coronavirus cases per day over the past week as it awaits Pfizer, Inc.’s (PFE) and Moderna, Inc.’s (MRNA) deployment of their COVID-19 vaccines. As more states enforce new restrictions on businesses and social gatherings going forward to combat rising cases of infection, demand for online services is expected to surge owing to increased adoption of remote activities.

Social distancing norms and lockdowns measures have undoubtedly shifted the focus of consumers, companies, and the public toward virtual entertainment. From working and learning from home to live interactive workouts and virtual gaming, companies catering to these activities will likely witness a significant increase in their user volume and revenue over at least the next few months.

With a second wave of COVID-19 infections now hitting major economies around the globe, stocks such as Peloton Interactive, Inc. (PTON), Nintendo Co., Ltd. (NTDOY), Netflix, Inc. (NFLX) and eBay Inc. (EBAY) are expected to see a noticeable upswing in demand.

Peloton Interactive, Inc. (PTON)

PTON is a leading producer of interactive fitness products in North America and internationally. It operates in three segments – Connected Fitness Product, Subscription Products and Other. Its connected fitness products include Peloton Bike and Peloton Tread, while its subscription segment comprises on-demand live classes and customized instructor-led boutique streaming exercise routines, accessible through Peloton Digital App.

On December 9^th, the company announced plans to add 103,750 square feet of space to its Peloton Plano Campus. This additional space will allow PTON to expand its current business presence.

PTON has increased its product portfolio by introducing Bike+ and New tread across the United States, United Kingdom, Canada, and Germany. Available for commercial sale by 2021, these products are marketed at a lower price point with several financing options to make them more affordable to a broader market. This should increase the company’s net sales revenue in coming years.

For PTON’s fiscal first quarter 2021 (ended September 2020) revenues increased 232% year-over-year to $757.90 million. Its gross profit rose 213% from the prior-year quarter to $328.70 million. Cash, cash equivalents, and restricted cash flow increased 4% from the year-ago value to $1.43 million.

The consensus EPS estimate of $0.35 for the current year indicates a 209.4% increase year-over-year. Moreover, PTON has an impressive earnings surprise history; it beat the Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $3.94 billion for the current year indicates a 115.6% increase year-over-year. The stock has gained 290.1% year-to-date.

How does PTON stack up for the POWR Ratings?

B for Trade Grade

B for Industry Rank

B for Overall POWR Rating

The stock is also ranked #9 of 34 stocks in the Consumer – Goods industry.

Nintendo Co., Ltd. (NTDOY)

NTDOY is a consumer electronics and video game company that develops and distributes electronic entertainment products in Japan, the United States, Europe, and internationally. The company also offers home console hardware systems and related software.

Earlier this year, the company signed a license agreement with Lexibook for the launch of key products like Super Mario and Mario Kart. This will enrich NTDOY’s product portfolio and should allow it to boost its revenue substantially.

NTDOY’s net sales have increased 108.1% year-over-year to 358.11 million yen for the quarter ended June 2020. Operating profit grew 427.7% from the year-ago value to 144.74 million yen, while EPS rose 541.3% year-over-year to 893.88 yen.

NTDOY has an impressive earnings surprise history; it beat the Street EPS estimates in three out of the trailing four quarters. The consensus revenue estimate of $14.90 billion for the quarter ending March 2021 indicates a 47.1% increase year-over-year. The stock has gained 41.6% year-to-date.

It is no surprise that NTDOY is rated “Strong Buy” in our POWR Ratings system. It has an “A” for Trade Grade and Buy & Hold Grade, and a “B” for Peer Grade and Industry Rank. Among the 15 stocks in the Entertainment – Toys & Video Games industry, it is ranked #1.

Netflix, Inc. (NFLX)

NFLX, the world’s largest streaming entertainment platform with over 195 million paid memberships in over 190 countries, continues to witness massive growth spurred by government-imposed lockdowns that force people to quarantine indoors. A series of popular, original shows and movies have helped the company boost subscribers during this year.

Netflix recently partnered with Reliance Jio, India’s largest mobile operator, to bundle its content with Reliance Jio’s mobile and fiber broadband plans. NFLX also plans to integrate its content with two of Jio’s set top boxes as a part of the partnership. This investment in global streaming content will help NFLX accelerate its business growth.

NFLX’s revenue has increased 4.7% sequentially to $6.44 billion in the third quarter ended September 2020. Operating income grew 34.2% year-over-year to $1.32 billion, while EPS rose 17.8% from the prior-year quarter to $1.79. Net cash provided by operating activities increased 21.4% sequentially to $1.26 billion over this period.

The consensus EPS estimate of $1.38 for the current quarter ending December 2020 indicates a 6.2% improvement year-over-year. The consensus revenue estimate of $6.60 billion for the current quarter represents a 20.7% increase from the same period last year. The stock has gained 52.6% year-to-date.

NFLX’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” for Industry Rank, and a “B” for Trade Grade and Buy & Hold Grade. It is ranked #18 of 59 stocks in the Internet industry.

eBay Inc. (EBAY)

EBAY is a multinational e-commerce corporation that facilitates consumer-to-consumer and business-to-consumer sales through its website. The company’s platform enables users to buy, sell, and pay for items through various online, mobile, and offline channels that include retailers, distributors, search engines, shopping channels, and networks.

The company recently introduced an eBay standard envelope which will allow sellers in the U.S. to print labels and ship trading cards at an affordable price. This should enable EBAY to meet the needs of its sellers and stand out in the global e-commerce platform.

On November 19^th, EBAY announced an exclusive partnership with Optora to allow retailers to sell returned and excess inventory seamlessly on eBay. This will accelerate the pace of resale and provide improved liquidity to EBAY’s retail business.

EBAY’s revenue has increased 25.1% year-over-year to $2.61 billion in the third quarter ended September 2020. Gross profit rose 25.6% from the year-ago value to $1.95 billion, while net income increased 114.2% from the prior-year quarter to $664 million. EPS rose 156.8% year-over-year to $0.95 over this period.

The consensus EPS estimate of $0.86 for the quarter ending March 2021 represents a 24.6% improvement year-over-year. Moreover, EBAY has an impressive earnings surprise history; it beat the Street EPS estimates in each of the trailing four quarters. A consensus revenue estimate of $2.53 billion for the next quarter represents a 6.4% increase from the same period last year. The stock has gained 37.1% year-to-date.

EBAY’s promising outlook is reflected in its POWR Ratings. It is rated “Buy” with an “A” for Industry Rank, and a “B” for Trade Grade. It is ranked #20 out of 59 stocks in the Internet industry.

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PTON shares fell $0.24 (-0.20%) in after-hours trading Thursday. Year-to-date, PTON has gained 315.46%, versus a 15.58% rise in the benchmark S&P 500 index during the same period.

About the Author: Imon Ghosh

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...

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