The stock market started with a bang in 2021, but early gains evaporated in February. If Fools like it when stocks fall because it gives us the chance to buy our favorite businesses at discounted prices.
Which stocks do we think are the best opportunities today? We asked five Motley Fool contributors to weigh in, and they called SL Green Realty (NYSE: SLG), Carparts.com (NASDAQ: PRTS), Etsy (NASDAQ: ETSY), Etsy (NASDAQ: ETSY), Uber (NYSE: UBER), en Airbnb (NASDAQ: ABNB).
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A hidden winner of e-commerce
Jeremy Bowman (Carparts.com): 2020 was a great year for e-commerce stocks thanks to the pandemic, and Carparts.com was one of the big winners, with a share of almost 500%. However, even with the onset of the economic reopening, 2021 still looks like a strong year for the auto parts dealer.
First, the event is more than just an e-commerce play. The company is in the midst of a turnaround that began in 2019 when new management took over. Under CEO Lev Peker, Carparts.com examined underperforming brands and consolidated the company’s operations, which previously included banners such as JC Whitney and Auto Parts Warehouse, under the Carparts.com brand, making marketing and brand building much more efficient. made. It also changed the brand name of US Auto Parts to Carparts.com. The turnaround initiatives, which also include the opening of new distribution centers and the upgrading of its technological infrastructure, are yielding results. The gross margin has now increased for six consecutive quarters, enabling the company to reinvest a larger percentage of revenue in the business, and e-commerce sales increased by 105% in the third quarter.
A number of macro factors also support the company. Auto parts sales are traditionally strong from recessions as consumers delay the purchase of new cars, and the increase in used car sales during the pandemic should benefit auto parts sales, as well as the increase in mileage once the economy reopens.
Carparts.com will report fourth-quarter returns on March 8th. At the moment, Wall Street sees that the company’s revenue is growing by only 12% this year, which seems like a low estimate. If so, the stock should be very upside down from here on out.
About to get a big chance in the arm
Matt DiLallo (SL Green Realty): Last year was a tough year for Manhattan’s largest office landlord, SL Green Realty. The pandemic greatly affected the city of New York and kept the tenants of their office out of their Manhattan clouds.
However, office buildings are on the verge of getting a shot in the arm as vaccines roll out so people can start occupying again. While companies work remotely quickly, most cannot wait to return to their offices because it is essential for productivity, mentoring and creating culture. Therefore, SL Green was able to collect 97.9% of the office rent it charged last year and sign more than 1.2 million square meters of new and renewed office leases, although most offices remain unoccupied.
Due to the eventual yield, the value of high quality office buildings held up relatively well. This has enabled SL Green to take advantage of the market to sell several properties at excellent value over the past year. The sale gave him the cash to sharpen his balance sheet, pay out a special dividend and buy back his hacked share, which has tumbled more than 25% since the start of 2020. The REIT was also able to increase its monthly dividend. for the 10th consecutive year, bringing the yield above 5%.
Shares of SL Green could rise like a skyscraper in Manhattan this year, as companies get the “everything clear” to return to their offices. Add to that its generous revenue stream, and this REIT looks like a winner.
An Amazon Winner Proving Ecommerce
Brian Feroldi (Etsy): As for e-commerce, Amazon.com (NASDAQ: AMZN) tends to suck all the air out of the room. However, the shift from sales to online sales is so great that many companies are ready to win.
Etsy has clearly established itself as one of the e-commerce winners. The company’s platform connects buyers and sellers of homemade goods, which is a growing niche that isolates it from the other e-commerce competition.
Etsy’s 2020 figures show that demand for the platform is glide. The company ended the year with 4.4 million active sellers (62% higher) and 81.9 million active buyers (77% higher). Total spending on the site has more than doubled to $ 10.3 billion.
Etsy took full advantage of the rising demand. Revenue grew 111% to $ 1.7 billion. The top growth was so strong that Ety’s net revenue grew by 265% to $ 349 million, although it significantly increased its spending on marketing, product development and leasing.
Management does not think the hypergrowth will end anytime soon. Revenue is expected to grow by at least 125% in the first quarter of 2020, and the margin is expected to remain strong in the foreseeable future.
All of this goodness has pushed Etsy’s inventory to a well-deserved all-time high. As stocks trade about 100 times in 2021’s income estimates, investors will have to shell out to buy the stock. However, large companies usually trade at a premium, and the results of Etsy prove that it is an excellent company. I think the outing is here to stay.
Take a ride on this stock
Adam Levy (Uber): Uber is well positioned to take advantage of the return to travel and the reopening of the economy. The company has the unique ability to leverage its two-way network managers and customers in new (and old) opportunities in its range of services. Other “gig economy” companies that focus on their own do not have this capability.
Uber’s most valuable assets are its local networks of managers and customers. Over the past few years, management has taken steps to leave markets where the network was not large enough to offer a competitive advantage. It also sold several non-core assets. As a result, Uber 2021 is entering a more focused business with a stronger network advantage.
This benefit will come in handy when people return to travel. The delivery business should especially serve as a headwind for the more lucrative mobility business, as Uber makes it easier for customers and managers to switch between services. The company has already seen the benefits, as management says the businesses that drive fast have come back faster than other forms of transportation.
Despite the massive slump in mobility revenue last year, the segment remained profitable on an adjusted EBITDA basis. The reopening will slow down growth in Eats, but improving rates and leveraging should bring it to positive EBITDA. As a result, management expects the company as a whole to deliver positive EBITDA by 2021, as the delivery industry sees improved profitability and mobility decline.
Open the door to this travel stock
Chris Neiger (Airbnb): Some investors may not like the idea of investing in the home business while we are still in the midst of a pandemic, but there are two reasons that will soon not matter. First, the pandemic will end and travel shall return. Second, Airbnb is perfectly positioned to benefit from it.
Travel has definitely taken a hit in the past year and Airbnb’s revenue has fallen with it. The company’s sales fell 22% in the fourth quarter. But you have to put the drop in context. Consider that the company’s revenue of $ 859 million in the fourth quarter exceeded the $ 748 million consensus estimate. And for the full year 2020, revenue was only 30% lower than in 2019 – at a time when the whole world was not traveling.
As many parts of the U.S. reopen and coronavirus vaccines are distributed, Airbnb is optimistic that there will be a “significant travel rebound” this year.
And then there’s Airbnb’s position in the travel space. Airbnb is already a clear leader in the home sharing market and if people feel comfortable traveling again, there is no reason why bookings will not rise for the company. Airbnb offers unique experiences and rentals that are nowhere to be found, and you can bet that people who have been caged at home for the past year are itching for both.
Maybe I’m biased towards Airbnb because I used the service to undertake a four-month trip with my family in 2019, but I’m not the only one impressed with the venture. Investors have boosted the company’s share by more than 40% since it became known in December.
The investors focus on Airbnb’s total $ 3.4 billion accountable market opportunity and understand that the company offers rentals and experiences that its competitors cannot meet. For investors looking for a unique company that is likely to see huge growth if the trip bounces back, Airbnb seems like an excellent choice.
This article represents the opinion of the author, who may not be in agreement with the ‘official’ recommendation position of a Motley Fool premium advisory service. We are furry! When we question an investment thesis – even one of our own – it helps us all to think critically about investing and to make decisions that help us become smarter, happier and richer.