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BA   217.04 (-0.18%)
AMC   40.74 (+1.67%)

7 Stocks to Buy For the Gig Economy

Posted on Tuesday, December 22nd, 2020 by MarketBeat Staff
7 Stocks to Buy For the Gig EconomyBefore the global pandemic, it was referred to as a side hustle—a way for some individuals to make a little extra money. However, as the pandemic has changed the nature of how we work, and as consumers how we spend, the gig economy has become an essential way of life for many workers.

There is much that’s not known about the long-term effects of the pandemic. But if there’s one lesson we learn from history, it’s that there will be ripple effects. We believe that society will get back to something resembling normal. However, what that normal looks like may be different.

Americans were becoming less social since before the pandemic. Now consumers have begun to realize there truly is no reason to leave their house to shop for anything. And while many crave physical connection during these times, there will be many that have changed their purchasing habits for good.

Other elements of the gig economy, such as ride-hailing and home rentals, were devastated due to the pandemic. Those businesses are likely to come back.

And that’s why companies that have created the gig economy aren’t going away anytime soon. In this special report, we’ll highlight several stocks that investors should consider as the gig economy moves forward.

#1 - Airbnb (NASDAQ:ABNB)

Airbnb logo

Airbnb (NASDAQ:ABNB) recently went public in one of the year’s most highly-awaited initial public offerings (IPOs). The online vacation rental marketplace was not spared the effects of the global pandemic. However, many investors felt that any disruption would be temporary. And as two vaccine candidates are now in the initial distribution phases, there is increasing hope that a return to travel is actually on the horizon.

When that happens, Airbnb will have an opportunity to put its first-mover advantage to work. The company has identifiable branding and strong gross margins. All it should need is customers to help launch the stock higher.

With all that said, investors should be very careful with ABNB stock as it is currently trading at over $160 per share. While betting against market bulls can be a fool’s errand, this may be a case of a stock soaring too high, too fast. ABNB stock is definitely worth keeping on your watch list and buying when the stock falls to a more appealing level.

About Airbnb
Airbnb, Inc, together with its subsidiaries, operates a platform for stays and experiences to guests worldwide. The company's marketplace model connects hosts and guests online or through mobile devices to book spaces and experiences. It primarily offers private rooms and luxury villas. The company was formerly known as AirBed & Breakfast, Inc and changed its name to Airbnb, Inc in November 2010.Read More 

Current Price: $169.18
Consensus Rating: Hold
Ratings Breakdown: 18 Buy Ratings, 17 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $172.97 (2.2% Upside)


#2 - Uber (NYSE:UBER)

Uber Technologies logo

Another industry that got destroyed in the pandemic was ride-hailing companies. Uber (NYSE:UBER) was able to find a bit of a lifeline with increased demand for its Uber Eats service. However, UBER stock pushed past its previous 52-week high in November and hasn’t looked back.

The easy answer is that investors anticipate a return to normal. But that’s too simplistic. The real catalyst was the passage of California Proposition 22, which allows Uber and other gig platforms to continue classifying their drivers as independent contractors rather than employees. Drivers will have some limited new benefits, including a pay floor and contributions to health care and accident insurance. However, if the law had passed, it would have fundamentally changed the company’s business model.

Like Airbnb, investors may want to wait for a pullback before jumping on UBER stock. The valuation is starting to look a little stretched, and the consensus of analysts is that the stock is priced just about right at its present level. And remember, Uber is not profitable yet, although earlier this year, the company forecast profitability on an adjusted basis by the end of 2021. 

About Uber Technologies
Uber Technologies, Inc operates as a technology platform for people and things mobility. The firm offers multi-modal people transportation, restaurant food delivery, and connecting freight carriers and shippers. It operates through the following segments: Rides, Eats, Freight, Other Bets and ATG and Other Technology Programs.Read More 

Current Price: $48.36
Consensus Rating: Buy
Ratings Breakdown: 26 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $68.88 (42.4% Upside)


#3 - GrubHub (NYSE:GRUB)

Just Eat Takeaway.com logo

Another service that has surged during the pandemic is food delivery. Grubhub (NYSE:GRUB) was already trading publicly before the onset of the lockdown measures that have closed many restaurants. And the second wave of mitigation efforts that are ongoing in many of the United States is renewing interest in food delivery.

Food delivery was already popular among the millennial and Generation Z consumers that make up a large part of Grubhub’s target market. And it will continue to prosper. Events such as a global pandemic tend to make us more of what we already were.

Investors' question is whether Grubhub’s first mover advantage as a publicly-traded company makes it a better buy to DoorDash (NYSE:DASH), which just went public in December. This is a low-margin business where companies have no distinct moat, which makes me suspect the current valuation of DASH stock.

I’ll give the nod to Grubhub. The company’s stock is trading at a similar price-to-sales ratio during the summer when demand fell as many consumers could eat outdoors at their favorite restaurants.

About Just Eat Takeaway.com
Just Eat Takeaway.com N.V. operates an online food delivery marketplace. The company focuses on connecting consumers and restaurants through its platforms. It serves in the United Kingdom, Germany, Canada, the Netherlands, Australia, Austria, Belgium, Bulgaria, Denmark, France, Ireland, Israel, Italy, Luxembourg, New Zealand, Norway, Poland, Portugal, Romania, Spain, and Switzerland, as well as through partnerships in Colombia and Brazil.Read More 

Current Price: $16.06
Consensus Rating: Hold
Ratings Breakdown: 5 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $69.50 (332.8% Upside)


#4 - Fiverr (NYSE:FVRR)

Fiverr International logo

Anytime a stock is up over 800% in a single year, I suppose some caution is warranted. But when I compare Fiverr (NYSE:FVRR) with a competitive offering Upwork (NASDAQ:UPWK), I have to admit. I like Fiverr’s growth to continue for some time.

Millions of Americans have been affected by the pandemic. For individuals with marketable skills in specific areas like computer programming, web development, and software development, a company like Fiverr offers a platform to bid on and get paid to do contract work for many companies who pay a fee to Fiverr to list their jobs.

Yes, the market for this work boomed as many Americans were looking for a source of secondary income (or even primary income) during the pandemic. However, the infrastructure has been in place for some time. One of the fascinating questions that have yet to be answered will be what the future of work will look like. Will working remotely (full or part-time) be a deal-breaker? And your thoughts and analysis on that topic should guide your decision to buy a stock like FVRR.

About Fiverr International
Fiverr International Ltd. develops an e-commerce platform that allows the people to buy and sell digital services. It operates through the following geographical segments: U.S., Europe, Asia Pacific, Rest of the World, and Israel. The firm offers digital marketing, graphics and design, video and animation, writing and translation, and music and audio.Read More 

Current Price: $191.41
Consensus Rating: Buy
Ratings Breakdown: 5 Buy Ratings, 1 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $231.33 (20.9% Upside)


#5 - Wix.com (NASDAQ:WIX)

Wix.com logo

Wix.com (NASDAQ:WIX) is a play on the infrastructure that gig workers need. After all, once you decide to shift to remote or freelance work, you have to let people know you’re open for business. For many professionals, getting the word out means having a professional-looking website. That’s where Wix.com comes in.

Even if you’re not a multi-million dollar company, Wix helps you build a site that looks like you do. WIX stock has been trading in a narrow range since surging to its 52-week high in the pandemic aftermath. And the company disappointed investors on the bottom line in its most recent earnings report.

Nevertheless, if you believe in the future of remote work, it’s only a matter of time before WIX stock will power forward. That’s because Wix generates a good portion of its revenue from premium subscribers, and that is a trend that is trending in the right direction.

About Wix.com
Wix.com Ltd. operates a cloud-based website design and development platform. It offers web templates, web editor, web builder, search engine optimization tools, logo maker, web hosting, and electronic mail marketing services. The company was founded by Avishai Abrahami, Nadav Abrahami, and Giora Kaplan on October 5, 2006 and is headquartered in Tel Aviv, Israel.

Current Price: $189.25
Consensus Rating: Buy
Ratings Breakdown: 16 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $287.32 (51.8% Upside)


#6 - Etsy (NASDAQ:ETSY)

Etsy logo

Etsy (NASDAQ:ETSY) is one of the purest of pure plays in the gig economy. If you’ve ever created something and been told, “you could sell that,” then Etsy might be for you. And, it appears, that’s exactly what many people started to realize during the pandemic.

Etsy’s been around for about 15 years. But what was a company showing slow, steady growth has seen revenue nearly double during the pandemic. That has helped shoot ETSY stock up over 330% for the year. And quite frankly, it’s looking overvalued at the moment. But that’s OK. The long-term narrative on Etsy is still sound. It’s just a little overheated right now.

As more Americans go back to something resembling a normal routine, it will sift out those on Etsy because of spare time and those trying to build a business. Wait until then and look for a pullback to buy shares of this stock. 

About Etsy
Etsy, Inc engages in the operation of online marketplace. It offers handmade products such as shoes, clothing, bags, and accessories. It operates through the following geographical segments: United States, United Kingdom, and Other International. The company was founded by Haim Schoppik, Robert Kalin, Jared Tarbell, and Christopher Maguires in 2005 and is headquartered in New York, NY.

Current Price: $221.09
Consensus Rating: Buy
Ratings Breakdown: 16 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $227.65 (3.0% Upside)


#7 - Target (NYSE:TGT)

Target logo

The last stock on our list may confuse you initially, but allow me to explain. Target (NYSE:TGT) is the parent company of Shipt, a membership-based grocery marketplace, enabling delivery of fresh foods and household essentials in 270 cities throughout the United States. Target acquired Shipt in 2017.

Although Shipt does facilitate same-day deliveries for Target customers, it has allowed Shipt to continue operating as an independent subsidiary. As a result, Shipt has acquired many customers since becoming part of Target. This has spread its national reach.

Grocery delivery was considered to be one of the last obstacles for the wide-spread adoption of e-commerce. However, when many Americans were ordered to stay at home as much as possible, Shipt workers became an essential bridge for consumers to get the items they needed in a timely fashion.

Shipt works on a subscription model, meaning customers have to pay a fee to become a Shipt customer. They can either pay a monthly membership of $14 per month or an annual fee of $99 per year. Members get free delivery on any order of $35 or more.  Shipt workers are freelancers and can get paid between $16-$22 per hour, plus tips.

About Target
Target Corp. engages in the operation and ownership of general merchandise stores. It offers food assortments including perishables, dry grocery, dairy, and frozen items. The company was founded by George Draper Dayton in 1902 and is headquartered in Minneapolis, MN.

Current Price: $245.71
Consensus Rating: Buy
Ratings Breakdown: 16 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $251.42 (2.3% Upside)

 

Investing in the gig economy is not without risk. Many of these companies are not profitable. And many of them may be years away from profitability if they arrive there at all.

However, major changes frequently happen while investors are looking somewhere else. Many workers have been talking about work-life balance for quite some time. The has given them a chance to prove that this can be a reality. And many employers see the benefits as well.

The world of cubicle farms and corner offices isn’t going away. But for many workers, 2020 has created a new normal that makes it unlikely they will return to anything approaching what used to be considered business as usual.

And that’s why these gig stocks should be part of your new normal as you consider how to position your portfolio for future growth. To be sure, these stocks are speculative and should only merit a small position in your portfolio. But with valuations stretched for many stocks, you could do worse than invest in the gig economy.

Top Ten Brokerages You Can Trust

There are more than 500 brokerages and research houses that hire analysts to issue ratings and recommendations. Collectively, these brokerages and their analysts publish approximately 250,000 ratings each year. Every trading day, there are nearly 700 reports and recommendations that are released to the public. To say that it's difficult to separate the signal from the noise when interpreting this data would be an understatement.

MarketBeat has developed a system to track each brokerage and research house's stock recommendations and score them based on their past performance. If Goldman Sachs predicted that Apple's stock price would hit $150.00 on a specific date, how accurate were they? If Bank of America issued a "strong-buy" rating on a stock, how did that stock perform compared to the broader market over the following twelve months? This tracking system has been applied to the 1,000,000+ ratings that MarketBeat has tracked during the last ten years to identify which brokerages you can really trust (and which you can safely ignore).

This slide show lists the 10 brokerages who have issued the most accurate analyst recommendations over the past several years, as measured by the performance of their "buy" ratings and the accuracy of their price targets.

View the "Top Ten Brokerages You Can Trust" Here.





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