Investors looking for tech stocks that can rise faster than the rebounding group of FAANGs may consider three smaller e-commerce players that are already leading the market and are poised to outperform longterm, according to some market watchers. Stitch Fix Inc. (SFIX) has soared about 82% this year, Wayfair Inc. (W) has gained nearly 84% and Etsy Inc. (ETSY) is up almost 46%, compared to a 13% rise for FAANG rival Amazon.com Inc. (AMZN).
These lesser-known e-commerce companies, which are successfully growing in Amazon's shadow, have also posted better returns than the other four FAANGS this year. Despite their recent outperformance, the stocks still have room to rebound as they all are trading sharply below their highs. These 3 stocks are likely to surge higher if the companies continue to expand. Their gains were detailed in a CNBC story.
3 Small Techs Vs. FAANGs
(YTD Stock Performance)
- Stitch Fix Inc (SFIX); 81.9%
- Wayfair Inc. (W); 83.9%
- Etsy Inc. (ETSY); 45.9%
- Amazon.com Inc. (AMZN); 13%
- Facebook Inc. (FB); 30.3%
- Apple Inc. (AAPL); 16.4%
- Alphabet Inc. (GOOGL); 14.8%
- Netflix Inc. (NFLX); 34.9%
Earlier this week, Stitch Fix skyrocketed 40% on better-than expected earnings, sales and active customers for the recent quarter. The company also gave strong full-year guidance. While the stock has risen nearly 82% in 2019, it still remains 40% below its 2018 highs.
RBC Capital analyst Mark Mahaney lifted his forecasts for Stitch Fix based on those results, per Barron's. “We now see a near-term outlook for stable or even accelerating active clients. More important, we are increasingly impressed by the consistency of Stitch Fix’s financial results,” said Mahaney. He now expects to stock to jump almost 67% over 12 months to reach $52, up from his previous price forecast.
S&P Global’s Erin Gibbs and Newton Advisors’ Mark Newton regard Etsy as one of the premier picks among online retailers. “I like Etsy quite a bit. … [It] has just broken out a couple of weeks ago and has really been consolidating of late,” said Newton, per CNBC. And Gibbs says Etsy's stable earnings growth is a strong point. "Etsy is the one that really is growing steadily and actually has expanding profits," she said.
While these smaller stocks are flying high now, disruptions in the broader market or their industry niches could cause them to pull back more quickly than the FAANGs. A pullback and even an economic recession would test the mettle of these young techs, and would determine whether they have the ability to grow their earnings, sales and share prices longterm.