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Online Holiday Sales Off to a Huge Start: 5 Companies That Could Benefit the Most
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December is here, and not only is the year coming to a close but incredibly so is the decade. Over the past 10 years, online holiday shopping has exploded. With online sales up 15% year over year on Thanksgiving and a stunning 20% on Black Friday, Cyber Monday sales are expected to hit a record $9.4 billion. Most on Wall Street feel that this reflects a very healthy consumer and an improving online shopping experience.
A new SunTrust research report notes that increasingly wider product selection, free and very fast shipping, and the ability of customers to order online and pick up in the store are all big reasons for the continued surge in growth.
The analysts feel that five companies in their coverage universe are poised to be big winners this year, and the stocks are rated Buy.
Alphabet
The search giant continues to expand and, while search is king, the cloud presence is growing fast. Alphabet Inc. (NASDAQ: GOOGL) is a global technology company focused on key areas, such as search, advertising, operating systems and platforms, enterprise and hardware products. It generates revenue primarily by delivering online advertising and by selling apps and contents on Google Play, as well as hardware products. The company provides its products and services in more than 100 languages and in 190 countries, regions and territories.
Alphabet offers performance and brand advertising services. It operates through Google and Other Bets segments. The Google segment includes principal internet products, such as Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome and Google Play, as well as technical infrastructure and newer efforts, such as virtual reality.
Google has outlined expanding capabilities to facilitate commerce, capitalizing on the “treasure trove” of data provided by seven different properties, each with at least a billion active users (Android, Search, Chrome, Maps, Play, YouTube and Gmail).
Advertising remains a huge growth area, and the analysts expect the company to be a huge holiday winner as vendors look to reach the biggest possible audience.
SunTrust has a $1,500 price target for the shares, while the Wall Street consensus target is $1,462.02. The stock closed Monday’s trading at $1,288.86 per share.
Amazon
This company is the absolute leader in online holiday shopping. Amazon.com Inc. (NASDAQ: AMZN) serves consumers through retail websites that primarily include merchandise and content purchased for resale from vendors and those offered by third-party sellers. It has one of the most valuable brands in the world.
The company serves developers and enterprises through Amazon Web Services, which provides computing, storage, database, analytics, applications and deployment services that enable virtually various businesses. AWS is also the undisputed leader in the cloud now, and many top analysts see the company expanding and moving up the enterprise information value chain and targeting a larger total addressable market.
The company reported less than stellar earnings for the third quarter, but SunTrust is very positive, saying this in its report:
We’re incrementally positive on Amazon going into what should be a robust holiday season, given the company’s out sized growth within US eCommerce, of which we estimate they will claim ~37% of total gross merchandise volume this holiday season vs. ~35% last year. This is driven by a broader selection; faster shipping (1-day free shipping on 10 million items) for Prime users and the secular shift online with record store closings.
The SunTrust target price is a whopping $2,350 and compares with the consensus target of $2,167.56 Shares closed most recently at $1,781.60.
The huge social media leader has been incredibly volatile, but it has been on fire since early October. Facebook Inc. (NASDAQ: FB) is the largest social network, with over 2.3 billion monthly active users and over 1.6 billion daily active users. The company generates revenue from advertising and from payments, with over 95% of revenue from advertising. It generates close to 50% of revenues in the United States and Canada and is expanding rapidly in international markets.
The company’s solutions also include Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends. Messenger, a messaging application for mobile and web on various platforms and devices, enables people to reach others instantly, as well as enable businesses to engage with customers. WhatsApp Messenger is a mobile messaging application.
The company’s incredible advertising reach is expected to be dominant once again this holiday season, and it remains a top pick at SunTrust, which has a $250 price target. The consensus target is $238.96, and shares were last seen at $199.70.
Trade Desk
This stock had a red-hot initial public offering (IPO) in 2016 and has been steadily moving higher over the past three years. But a recent sell-off is offering aggressive accounts an outstanding entry point. Trade Desk Inc. (NASDAQ: TTD) provides a self-service omnichannel software platform that enables clients to purchase and manage data-driven digital advertising campaigns in the United States and internationally.
The company’s platform allows clients to manage integrated advertising campaigns in various advertising channels and formats, including connected TV, mobile, video, audio, display, social and native on various devices, such as smart TVs, computers and mobile phones and tablets.
The company’s unique position in the industry is favored at SunTrust. The report said this:
As the largest independent platform for programmatic advertising, The Trade Desk is also set to benefit strongly this holiday season, in our view, given out sized marketers’ demand for programmatic advertising in general, and their strategic interest in diversifying their customer acquisition channels away from the walled gardens like Google and Facebook.
The $285 SunTrust price objective is well above the $255.39 consensus target. The stock was crushed Monday after the sales forecast for this year was lowered. Shares ended at $227.39, down a stunning 13.65%.
24/7 Wall St.Peloton Interactive
This cycling and exercise platform had a recent IPO that performed poorly initially, but the stock has taken off and could be poised for huge holiday season. Peloton Interactive Inc. (NASDAQ: PTON) is the largest global interactive fitness platform, with a community of over 1.4 million members.
The company offers workout bikes and treads that include a touchscreen that streams live and on-demand classes for indoor cycling, running, walking, boot camp, yoga, strength training and meditation. The company serves customers in the United States, Canada, United Kingdom and Germany.
Recent reports suggest that Peloton could introduce a lower-priced tread and a rowing machine in 2020. Data suggests the tread market could be larger than the bike, so a tread priced similar to the bike should see better adoption. With a focus on fitness during and especially after the holidays, this company could be a big winner.
SunTrust has set a $30 price target. The consensus target is $31.79, and shares closed above both levels Monday at $36.84, up almost 5% on the day.
The SunTrust analysts feel that these five top stocks could be big winners in what should be a very solid holiday shopping season and beyond. With a buoyant economy and good consumer confidence levels, the overall outlook going into the new year is extremely positive.
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