The story is available on Company Insider Prime.
Join BI Prime and start reading today.
- Colin Sebastian is the most accurate analyst covering consumer discretionary stocks, according to analyst-ranking firm TipRanks.
- Sebastian covers online shopping, advertising, and video game companies, a lot of which have seen spectacular gains during the coronavirus pandemic.
- He told Business Insider about seven top stocks that can give investors broad exposure to this business and gain from its ongoing development.
- Click here to sign up for our weekly newsletter Investing Insider.
- Visit Business Insider’s homepage for more stories.
By FANG, to FAANG+ and FAANMG, Wall Street’s favorite acronym is becoming a little complicated.
Colin Sebastian, senior research analyst for Robert W. Baird & Co., is supplying a route that’s much easier to keep track of than the expanding FANG group, and what’s more, might give investors more bang for their buck. He calls it”WASP,” and it consists of Wayfair, Amazon, Shopify and PayPal.
Sebastian covers e-commerce, video games, and internet advertising, and TipRanks says he is the most accurate analyst operating in the consumer discretionary sector now . He advised Business Insider concerning the shift in how people are shopping.
“E-commerce talk has approximately doubled in the past couple of months,” he explained. “We’ve seen growth rates really accelerate upon the board for companies like Amazon, eBay, Wayfair, any company that has a meaningful e-commerce enterprise.”
He notes there’s signs that Baby Boomers and older people who never got into the habit of shopping online have made the change as part of an effort to avoid the coronavirus. That’s been a potent addition to the shift that is pre-pandemic. But he says when the pandemic fades from view, it is going to reverse.
“Our assumption is that about half of that incremental market share change is going to be retained,” he said,”What that signifies is that e-commerce penetration in just a matter of 3 months will increase by roughly 50%.”
Sebastian says his select set of four firms should stay ahead through a pullback and well into the future.
Sebastian claims that Amazon and Walmart may be just two of the three biggest online shopping platforms of the future. And the third isn’t a rival retailer.
“They supply e-commerce a tech and an e-commerce platform for each of the retailers, all of the businesses that aren’t large enough to build it themselves,” he said. “What they bring to the table is a kind of an enterprise-grade, very scalable, yet quite sophisticated e-commerce platform that’s accessible to retailers of any size”
Shopify inventory is upward 160percent in 2020, and Sebastian raised his price target to $1,100 a share on Monday, implying a gain of about another 10%.
“In this brave new world of e-commerce, we find further upside possibility to quotes as well as share costs, and remain opportunistic buyers,” he said.” eBay continues to increase too, which we have highlighted for more value-oriented investors”
He’s also enthusiastic about two online auto retailers. Sebastian is far from alone in his enthusiasm for used-car seller Carvana, that has rallied almost 50percent this past year.
“They’re one of the smaller companies I pay, but at an emerging category with massive growth potential,” he said. He is also enthusiastic about rival Vroom, which went public last month. He says the US used-car marketplace is worth $800 billion annually, which means there is more than enough space for both businesses.
“While Carvana was effective in legitimizing direct online sales of used cars, Vroom can now capitalize on the recent acceleration in e-commerce in a market still in the first stages of disturbance,” he wrote.
- GOLDMAN SACHS: Buy these 13 stocks that are poised to crush the marketplace within the next 2 months as earnings season gets underway
- Cathie Wood’s firm built 3 of the planet’s very best ETFs, which doubled in value over 3 years. She told her 3-part process before they explode, for seeing technologies.
- An environmentally conscious fund manager using a 5-year winning streak against the contest lays out how she’s uncovering surprising growth, and her best 3 strategies for the future