While the pandemic caused immense losses for many businesses, certain stocks continued to soar. These businesses were able to capitalize on changes in the economy.
Mega-cap technology stocks were the biggest beneficiary as their operations and products were unaffected by social distancing or shutdowns. Additionally, interest rates plunged following the crash and Fed’s actions which placed a greater premium on stocks that could continue growing during the economy’s rough patch.
Amazon, Inc. (AMZN – Get Rating), Tesla, Inc. (TSLA – Get Rating), Paypal Holdings, Inc. (PYPL – Get Rating), and Netflix, Inc. (NFLX – Get Rating) are some of the best performing mega-cap stocks year-to-date.
Amazon, Inc. (AMZN)
As one of the biggest e-commerce platforms in the world, with a market capitalization of $1.582 trillion, AMZN has gained considerable traction during the pandemic due to its efficient and timely doorstep delivery of a variety of goods and services.
Though the pandemic has severely affected small businesses, AMZN supported 2 million independent sellers in the trailing twelve months ending May 31st, 2020. The SMB sector sold more than 3.4 billion products through AMZN during this time.
AMZN gained more than 90% since hitting its 52-week low of $1626.03 on March 16th and returned more than 70% year to date.
AMZN recently launched its Amazon Interactive Service (Amazon IVS) for live and interactive video streams. As we are gradually getting accustomed to this virtual world, Amazon IVS expects to garner millions of users due to its low latency and easy configuration features.
Amazon Web Services (AWS) partnered with Global payments Inc. to devise a cloud-based issuer processing platform, which will allow financial institutions around the world to operate the entire lifecycle of card issuance and management.
AMZN’s net sales increased 40% year over year to $88.90 billion in the second quarter. Its net income increased 100% from its year-ago number to $5.2 billion. AMZN generated a free cash flow of $31.90 billion in the trailing 12 months ended June 30th, 2020 indicating a 27.6% rise year-over-year, while operating cash flow increased 42% over the same period.
The consensus EPS estimate of $7.22 for the third quarter indicates a 70.6% growth. Moreover, the consensus revenue estimate of $92.34 billion indicates a year over year growth of 32%.
How does AMZN stack up for POWR Ratings?
A for Trade grade
A for Buy & Hold Grade
B for Peer Grade
A for Industry Rank
A for Overall POWR Rating.
You can’t ask for better. It is also ranked #1 out of 54 stocks in the Internet group.
Tesla, Inc. (TSLA)
With a market cap of $274.441 billion and a 245% YTD gain, TSLA is one of the most sought-after stocks. Its gross profits increased 38% year over year in the second quarter, and its liquidity position improved significantly in this quarter, as cash and cash equivalents balance were $8615 million, indicating a year-over-year rise of 74%.
Despite the barriers imposed by the lockdown, TSLA managed to produce and deliver 82,000 and 90,650 vehicles, respectively.
TSLA has opened a new factory in China, which primarily manufactures Tesla Model 3 cars. It is also constructing another factory in Germany (expected completion date- July 2021) catering to the demand in the European markets. There are ongoing talks regarding another plant in southeast Asia.
With such expansion projects lined up, along with booming demand for electric cars, TSLA expects to grow substantially in the automotive segment.
As the global economy is adjusting to life in the “new normal” with the gradual reopening of businesses, TSLA is expected to generate significant profits in the last two quarters of 2020. The consensus EPS estimate of $2.67 for the third quarter indicates a 43.5% rise year over year. Moreover, TSLA has surpassed the street estimates in each of the trailing four quarters, which is impressive. Consensus revenue estimate indicates a 28% year-over-year increase in the upcoming quarter.
TSLA gained more than 40% to hit its 52-week high of $1794.99 on July 13th after hitting its year-to-date low of $350.51 in March.
Though TSLA is a “Neutral” under our POWR Ratings system, it has a “B” in Trade Grade. It is currently ranked #13 out of 27 stocks in the Auto & Vehicle Manufacturers Industry.
Paypal Holdings, Inc. (PYPL)
PYPL is one of the biggest financial services and digital payments companies used by merchants worldwide for transactions in…
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