Although there is always some risk associated with investing in small-cap stocks, their potential to grow can help investors generate large returns. One of the better ways to find small-cap stocks, is to consider an industry which is thriving amid the pandemic, such as internet stocks. Another factor to consider is if the market has overlooked the stock.
The Internet industry has been gaining momentum as the world is adjusting to the “new normal” of working and learning remotely. This is clearly evident from the SPDR S&P Internet ETF’s (XWEB) year-to-date gain of 54.7% compared to the SPDR S&P 500’s (SPY) return of 10.1% over the same period. In fact, while the SPY has gained 50% since hitting its year-to-date low in March, XWEB has returned close to 130% over the same time period.
Overstock.com, Inc. (OSTK)
This $3.91-billion online retail and technology company reported strong second-quarter results. OSTK’s gross retail sales doubled and the number of new customers tripled compared to the year-ago quarter. Total net revenue for the quarter increased by 109% and net income attributable to stockholders increased by $61 million on a year-over-year basis. In addition, the company improved its YTD free cash flow by $237 million year-over-year.
tZero group, a majority-owned subsidiary of OSTK, which focuses on the development of Fintech based on Blockchain technologies, accounts for approximately 95% of security token trade volume and 80% of the total token dollar value. As stated in OSTK’s quarterly report, the total number of tZERO Crypto app users increased 42% from March 31, 2020 and 100% year-to-date. tZero ATS started trading the St.Regis Aspen Digital Security which makes it the first time a Tezos-based digital security is traded on a regulated platform.
OSTK’s consensus revenue estimate of $512.18 million for the quarter ending September 2020 indicates a year-over-year increase of 47.6%. Also, the market expects the company to report a loss per share of $0.25 for the quarter, which represents a significant improvement over the year-ago loss per share of $0.87. The stock has grown by more than 2470% since its March lows. OSTK’s POWR Ratings reflect this promising outlook. It has an overall rating of Buy with a grade of A for Trade Grade and Industry Rank. Among the 57 stocks in the Internet industry, it’s ranked #21.
1-800 FLOWERS.COM, Inc. (FLWS)
FLWS is a $1.96-billion Internet company that operates in three main segments — Consumer Floral, Gourmet Food, and Gift Baskets, and BloomNet Wire Service. The stock has returned more than 170% since its March lows. FLWS’s first three quarters of fiscal 2020, which were before the pandemic, exhibited…
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