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ainteasy
2021-03-15
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Is GM Stock A Buy? General Motors Makes Bullish Move As Tesla Struggles
ainteasy
2021-03-15
Getting some chewy
Time To Buy These 2 Top Niche E-Commerce Stocks
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21:14","market":"us","language":"en","title":"Is GM Stock A Buy? General Motors Makes Bullish Move As Tesla Struggles","url":"https://stock-news.laohu8.com/highlight/detail?id=1192178550","media":"Investors","summary":"GM stock is powering higher strong, even as red-hot EV pure plays like Tesla have come under some pr","content":"<p>GM stock is powering higher strong, even as red-hot EV pure plays like Tesla have come under some pressure in recent weeks. While hopes for blowout 2021<b>General Motors</b>' (GM) earnings and resumption of a dividend have been set back by the global chip shortage, GM continues to accelerate investment in electric and autonomous vehicles.</p>\n<p>Meanwhile, GM's corporate reinvention should continue apace, with a number of expected milestones and potential for the unexpected that could serve as catalysts for GM stock.</p>\n<p>GM is preparing to launch three new passenger EVs by fall. That includes the buzzworthy Hummer EV, as well as an updated Chevy Bolt and SUV version of the Bolt. By late 2021, GM will deliver its first of 500 EV600 commercial van to FedEx.</p>\n<p>More van orders, more corporate partnerships like Honda's use of the Ultium EV battery, and more revelations about the broad fleet of EVs slated for launch could provide fuel for GM stock. On April 3, during the NCAA basketball tournament, GM is set to reveal its Hummer SUV — a version of the supertruck with an enclosed cargo bed — and begin taking reservations. So is now a good time to buy GM stock?</p>\n<p><b>GM Stock Priced Like An Underdog</b></p>\n<p>GM says it's headed for the front of the EV pack, yet it still appears priced like an underdog.</p>\n<p>As of March 9, GM stock had a market cap of $85billion compared to $666 billion for<b>Tesla</b>(TSLA), despite having roughly 3.5 times Tesla's sales in the fourth quarter.</p>\n<p>Yet the bulk of those GM sales are for internal-combustion-engine (ICE) vehicles. That business could be headed for the scrap heap by 2035, GM announced on Jan. 18.</p>\n<p>That blockbuster news prompted Morgan Stanley analyst Adam Jonas to cut his discounted value for GM's ICE business to zero. Yet Wall Street analysts continue to gain confidence in its EV, self-driving and fuel-cell future, and that's the key to driving shareholder value. Jonas simultaneously hiked his price target for GM stock to 80 from 57 based on the increasing value of General Motors' other parts.</p>\n<p>GM's transition isn't without risk. As GM funds itself mainly through ICE profits, pure-play EV automakers, including Tesla and a host of Chinese rivals havebuilt up huge EV war chests by issuing stock. Meanwhile,<b>Toyota</b>(TM) and EV battery startup<b>QuantumScape</b>(QS) have highlighted their separate progress toward a solid-state EV battery that has potential to offer faster charging, longer distance and greater safety.</p>\n<p><b>Apple</b>(AAPL), with far greater resources, also is working toward its own EV battery breakthrough and could reportedly produce an electric, autonomous vehicle in 2024.</p>\n<p>It's hard to know where GM stands in the EV hierarchy, because such big technology breakthroughs may not be ready for the production line until mid-decade or later. Meanwhile, GM also has made some head-turning claims about itsnext-generation lithium-metal EV battery.</p>\n<p><b>EV Transition</b></p>\n<p>On Nov. 19, GM mapped out its road to launching 30 EV models globally by 2025, while topping its prior goal of 1 million EV sales and achieving big EV battery cost-reductions and efficiency gains.</p>\n<p>GM's accelerated transformation will see it invest $7 billion in electric and autonomous vehicles this year and $27 billion by 2025. That could include asecond EV battery factorybuilt with partner LG Chem, which may be announced in coming months.</p>\n<p>Barra said GM will realize $2 billion in cost efficiencies from shared engineering, manufacturing, marketing and corporate cost by maintaining an integrated strategy. That quieted Wall Street analysts who had been pushing for GM to spin off its EV business to better compete with Tesla.</p>\n<p>Barra also said that GM's flexible Ultium EV architecture has helped cut vehicle development time by nearly 50%. She said the launch of the Cadillac Lyriq SUV had been moved up about nine months from the date initially announced.GM will speed up the launch timing of 12 EV models, some by as much as 40 months.</p>\n<p>\"We're committed to fighting for EV market share until we are number one in North America, achieving margins similar to or higher than our ICE business and exceeding our previous target of selling 1 million vehicles globally by mid-decade,\" Barra said.</p>\n<p><b>GM Stock Chart Technical Analysis</b></p>\n<p>GM stock soared in October and November on the Hummer EV launch and stepped-up EV factory and production plans.</p>\n<p>Shares subsequently pulled back on its dramatically scaled-back deal with Nikola. Yet GM stock twice found support at its 10-week and 50-day line. IBDSwingTradertook advantage of an early entry point, establishing a position as GM stock cleared its Dec. 23 intraday high that came on the first bounce above its 50-day line.</p>\n<p>On Jan. 12, as GM surprised Wall Street by revealing the existence of Brightdrop, its EV commercial delivery vehicle and logistics startup, GM stock broke through a more traditional 46.81buy point, 10 cents above its Nov. 24 high. General Motors stock jumped 6.2% to close at 47.81, breaking above the October 2017 all-time high of 46.76.</p>\n<p>Meanwhile, momentum continued amid news on Jan. 19 that<b>Microsoft</b>(MSFT) had joined a new investment round in GM's Cruise autonomous vehicle unit.</p>\n<p>GM stock subsequently hit a new high of 57.05 on Feb. 8, overcoming its first report that a chip shortage would sideline some production.</p>\n<p>While GM stock pulled back on earnings and amid broader stock market volatility, it found support at its 50-day moving average.</p>\n<p>On March 12, GM stock surged to 59.25, clearing 57.15 buy point, 10 cents above the Feb. 8 high. Although the base is on the short side, GM stock has been consolidating since it touched an interim high of 56.97 on Jan. 21.</p>\n<p>However, GM stock is 13% above its 10-week line, so it looks a little extended from that perspective. That makes it more likely that shares could test their buy point.</p>\n<p>As of March 12, GM stock sported an 86Relative Strength Rating, meaning it has outperformed 86% of all stocks over the past 12 months.</p>\n<p>Therelative strength line, which shows how GM stock performs vs. the S&P 500 index, is back to a two-plus year high.</p>\n<p><img src=\"https://static.tigerbbs.com/06cb85c04a0f9a37a5b1d34c02be7448\" tg-width=\"809\" tg-height=\"411\"><b>General Motors Earnings And Sales Trends</b></p>\n<p>After a bumpy few years, thanks to a UAW strike, soft sales in China and Covid-19, General Motors earnings appeared to turn the corner in the second half of 2020, helped by sales strength and cost reductions.</p>\n<p>Then, in Q4, General Motors earnings per share cruised past estimates, surging to $1.93 vs. just 5 cents per share a year ago, helped by the launch of its full-size SUV. The year-ago period was marred by the UAW strike. GM's Q4 EPS would have been even better if not for a 59-cent hit due to a Takata airbag-inflator recall.</p>\n<p>Sales remained on a roll in Q4. GM deliveries in the U.S. rose to 771,323, up 5% from a year ago. General Motors said it gained market share as the average transaction price rose to a record $41,886.</p>\n<p>Meanwhile, GM sales in China remained on the upswing for the second straight quarter, after a weak couple of years. General Motors and its Chinese joint-venture partners saw deliveries rise 14% to 954,325.</p>\n<p>GM said it expects to earn $4.50-$5.25 per share in 2021 vs. $4.90 in 2020. The chip shortage could cut operating profit by $2 billion in 2021.</p>\n<p><b>Brightdrop</b></p>\n<p>Brightdrop's first 500 EV600 delivery vehicles, which go 250 miles per charge, will go to<b>FedEx</b>(FDX). The global delivery giant also has tested Brightdrop's EP1 pallet electric pallet, designed to move up to 200 pounds in goods over short distances. FedEx said its drivers were able to handle 25% more packages per day in the first pilot.</p>\n<p>GM said it will invest $800 million to equip one of its factories in Canada for production of the EV600 by late 2021.</p>\n<p>GM said it sees a massive $850 billion market opportunity for parcel, food delivery and reverse logistics in the U.S. by 2025.</p>\n<p>The timing of its commercial EV rollout looks even better followingPresident Joe Biden's executive order to replace the government's fleetof 645,000 vehicles with electric vehicles.</p>\n<p>Subsequently, Merchants Fleet announced an order for 12,600 EV600 vans.</p>\n<p><b>Ford</b>(F) will also have an electric version of its popular Transit van out in late 2021.<b>Workhorse Group</b>(WKHS) and Rivian are EV delivery van plays too.</p>\n<p><b>GM's 'Stable Of Unicorns'</b></p>\n<p>Even before the Brightdrop news, Morgan Stanley's Jonas had referred to GM as having a \"stable of unicorns.\"</p>\n<p>In a Jan. 19 report, Jonas said that GM's EV business is worth $52 per share of GM stock, while its controlling stake in Cruise is worth $10.</p>\n<p>GM's Ultium EV battery also has become something of a business in its own right. In April, GM reached a deal with<b>Honda Motor</b>(HMC) to jointly develop two Honda EVs using GM's Ultium battery. Jonas figures the Ultium battery platform is worth $10 per share.</p>\n<p>GM's OnStar communications and security system, which has announced a move into the insurance business, and its Super Cruise driver assistance technology, offer opportunities to grow a monthly recurring revenue stream. Jonas valued GM's connected services at $16 per share.</p>\n<p>He also attached per-share valuations to GM's China joint ventures ($5), the Corvette brand ($5) and GM Financial ($7).</p>\n<p>He derived the 80 price target for GM stock by subtracting net debt, pension liability and a 20% sum-of-the-parts discount.</p>\n<p>Jonas didn't specify any valuation for other ventures, including GM's Hydrotec fuel-cell business. The week after his report, GM announced a deal with<b>Navistar</b>(NAV) to supply fuel cells for long-haul trucks. Trucking firm<b>J.B. Hunt</b>(JBHT) will be Navistar's first customer in a pilot program, with tests set to begin by end of 2022.</p>\n<p>That followed GM's scaled-back deal to supply fuel cells to<b>Nikola</b>(NKLA). However, prospects remain clouded by Nikola's reputational hit as its founder left the company amid allegations of being a huckster and worse.</p>\n<p>In June, GM Defense unit won a $214-million contract — its first win — to build Infantry Squad Vehicles for the U.S. Army based on the Chevrolet Colorado ZR2 midsize truck architecture.</p>\n<p><b>Hummer EV Buzz</b></p>\n<p>GM unveiled the Hummer EV truck during the World Series, touting \"maneuverability and traction unlike anything GM has ever offered.\" The Hummer's CrabWalk mode, allowing it to move diagonally to get through tight off-road spots, quickly went viral.</p>\n<p>The Hummer EV, which will take on the Tesla Cybertruck, is due out this fall. GM says the Hummer EV can reach 450 miles on a full charge and 60 miles per hour in three seconds. The Hummer also will take on upcoming electric trucks from<b>Ford</b>(F) and<b>Amazon</b>(AMZN)-backed Rivian.</p>\n<p>The Rivian RT1 is expected to be released before the GM Hummer, but theTesla Cybertruck will likely not be out until 2022.</p>\n<p>Prices for the initial Hummer EV version start at $112,595. General Motors said all available reservations for the Hummer EV sold out within 10 minutes. GM reportedly received 10,000 preorders and is considering boosting production plans.</p>\n<p>GM plans cheaper Hummer EV versions in future years. AutoNews reported that GM may start production of the Hummer SUV in early 2023 with targeted annual output of 50,000 vehicles per year.</p>\n<p><b>General Motors' Ultium Battery Future</b></p>\n<p>GM had a puzzle to solve: How could it compete broadly in the still relatively small EV market, en route to an all-electric future, without frittering away its financial strength? The answer came with the March 4 unveiling of its Ultium battery and flexible platform.</p>\n<p>The Ultium stands apart for its ability to be stacked either vertically or horizontally in the battery pack, to optimize the layout of each vehicle. The biggest stack is said to have the power to reach 450 miles on a full charge. The platform can accommodate a wide range of trucks, SUVs and cars.</p>\n<p>The first generation of GM's coming EV lineup \"will be profitable,\" the company said. Since then, GM has detailed a much more complete vision of its EV future.</p>\n<p>In September, GM unveiled its strategy to produce electric drive systems that are designed in-house to deliver cost and performance benefits. The five drive units and three motors will offer the power and versatility to work with the full range of some 20 different EVs it plans to produce by 2023.</p>\n<p>Ultium Drive systems will be more responsive than current models, using \"precision torque control\" for smooth performance, GM said. The Honda deal created a partnership model that GM hopes will entice other rivals. Barra said that supplying GM technology to rival automakers would build \"scale to lower battery and fuel cell costs and increase profitability.\"</p>\n<p>Now GM is highlighting progress in testing its next-generation Ultium battery chemistry. \"We believe we are on the battery-cost frontier today and we intend to set the pace for the future,\" said GM product development chief Doug Parks.</p>\n<p><b>GM Cruise Vs. Tesla And Alphabet Waymo</b></p>\n<p>On Jan. 19, GM announced a partnership with Microsoft to accelerate the commercialization of self-driving vehicles. Microsoft joined in a $2-billion funding round for Cruise, along with GM, Honda and institutional investors.</p>\n<p>The investment gave Cruise an implied $30 billion valuation, up from $19 billion in May 2019. GM's stake is now worth $19 billion, up from $11.9 billion, JP Morgan analyst Ryan Brinkman figures.</p>\n<p>In November, Cruise began testing five driverless cars in parts of San Francisco. Initial results appear positive. On Feb. 9, Cruise President Kyle Vogt tweeted that Cruise covered 200,000 miles in California in Q4 without a safety driver once disengaging self-driving features.</p>\n<p>Cruise's commercial launch is \"not years away,\" Barra assured on the Q4 earnings call.</p>\n<p>On Nov. 10,<b>Walmart</b>(WMT) announced a pilot test with Cruise in Scottsdale, Ariz., allowing contactless customer deliveries.</p>\n<p>In January 2020, GM unveiled its six-passenger Cruise Origin EV with no steering wheel.</p>\n<p>Apple,<b>Alphabet</b>(GOOGL)-unit Waymo, <b>Uber</b>(UBER),<b>Ford</b>(F) and Tesla are among a large field of well-funded competitors in the autonomous-vehicle market.</p>\n<p>GM bought Cruise Automation for $1.1 billion in 2016. In 2018, Honda agreed to put up $2 billion more over 12 years.</p>\n<p>Tesla, meanwhile, has released a new Full Self Driving beta version to select drivers. But despite the name, Tesla FSD is still a Level 2, hands-on system, while Cruise and Waymo are Level 4.</p>\n<p><b>Is GM Stock A Buy?</b></p>\n<p>The technical picture for GM stock has improved dramatically. Its 89IBD Composite Ratingisn't far behind Tesla's 94 rating. IBD research shows that all-time stock winners often have a Composite Rating of at least 95 near the start of big runs.</p>\n<p>Still, fundamental metrics don't tell the full story. The Covid hit to earnings, a restructuring and strike are all in the rearview mirror. The chip shortage curtailing production should clear up later in 2021, but GM's traditional business faces a long-term decline. The biggest unknown is how well GM will be able to keep pace with Tesla, which aims to drive down the price of its EVs to $25,000 in three years, and others on the cutting edge of EV battery development — including Apple.</p>\n<p>Investors should be aware that GM stock is a hybrid play, depending on profits from gas-burning SUVs today to pave the way to an EV future. Undoubtedly, there is lots of execution risk and uncertainty, but GM appears to be executing quite well, and Wall Street sees plenty of promise developing. If analysts see GM as a \"stable of unicorns\" with high-growth potential, they could begin to use a more flattering lens for valuing future earnings.</p>\n<p><b>Bottom line:</b>GM stock is in a buy zone, though it is also significantly above its 10-week line. Strong technical action, improving fundamentals and a brighter EV future all suggest General Motors stock is worth considering.</p>","source":"lsy1610449120050","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is GM Stock A Buy? General Motors Makes Bullish Move As Tesla Struggles</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs GM Stock A Buy? General Motors Makes Bullish Move As Tesla Struggles\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-15 21:14 GMT+8 <a href=https://www.investors.com/research/gm-stock-buy-now/><strong>Investors</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>GM stock is powering higher strong, even as red-hot EV pure plays like Tesla have come under some pressure in recent weeks. While hopes for blowout 2021General Motors' (GM) earnings and resumption of ...</p>\n\n<a href=\"https://www.investors.com/research/gm-stock-buy-now/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GM":"通用汽车"},"source_url":"https://www.investors.com/research/gm-stock-buy-now/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1192178550","content_text":"GM stock is powering higher strong, even as red-hot EV pure plays like Tesla have come under some pressure in recent weeks. While hopes for blowout 2021General Motors' (GM) earnings and resumption of a dividend have been set back by the global chip shortage, GM continues to accelerate investment in electric and autonomous vehicles.\nMeanwhile, GM's corporate reinvention should continue apace, with a number of expected milestones and potential for the unexpected that could serve as catalysts for GM stock.\nGM is preparing to launch three new passenger EVs by fall. That includes the buzzworthy Hummer EV, as well as an updated Chevy Bolt and SUV version of the Bolt. By late 2021, GM will deliver its first of 500 EV600 commercial van to FedEx.\nMore van orders, more corporate partnerships like Honda's use of the Ultium EV battery, and more revelations about the broad fleet of EVs slated for launch could provide fuel for GM stock. On April 3, during the NCAA basketball tournament, GM is set to reveal its Hummer SUV — a version of the supertruck with an enclosed cargo bed — and begin taking reservations. So is now a good time to buy GM stock?\nGM Stock Priced Like An Underdog\nGM says it's headed for the front of the EV pack, yet it still appears priced like an underdog.\nAs of March 9, GM stock had a market cap of $85billion compared to $666 billion forTesla(TSLA), despite having roughly 3.5 times Tesla's sales in the fourth quarter.\nYet the bulk of those GM sales are for internal-combustion-engine (ICE) vehicles. That business could be headed for the scrap heap by 2035, GM announced on Jan. 18.\nThat blockbuster news prompted Morgan Stanley analyst Adam Jonas to cut his discounted value for GM's ICE business to zero. Yet Wall Street analysts continue to gain confidence in its EV, self-driving and fuel-cell future, and that's the key to driving shareholder value. Jonas simultaneously hiked his price target for GM stock to 80 from 57 based on the increasing value of General Motors' other parts.\nGM's transition isn't without risk. As GM funds itself mainly through ICE profits, pure-play EV automakers, including Tesla and a host of Chinese rivals havebuilt up huge EV war chests by issuing stock. Meanwhile,Toyota(TM) and EV battery startupQuantumScape(QS) have highlighted their separate progress toward a solid-state EV battery that has potential to offer faster charging, longer distance and greater safety.\nApple(AAPL), with far greater resources, also is working toward its own EV battery breakthrough and could reportedly produce an electric, autonomous vehicle in 2024.\nIt's hard to know where GM stands in the EV hierarchy, because such big technology breakthroughs may not be ready for the production line until mid-decade or later. Meanwhile, GM also has made some head-turning claims about itsnext-generation lithium-metal EV battery.\nEV Transition\nOn Nov. 19, GM mapped out its road to launching 30 EV models globally by 2025, while topping its prior goal of 1 million EV sales and achieving big EV battery cost-reductions and efficiency gains.\nGM's accelerated transformation will see it invest $7 billion in electric and autonomous vehicles this year and $27 billion by 2025. That could include asecond EV battery factorybuilt with partner LG Chem, which may be announced in coming months.\nBarra said GM will realize $2 billion in cost efficiencies from shared engineering, manufacturing, marketing and corporate cost by maintaining an integrated strategy. That quieted Wall Street analysts who had been pushing for GM to spin off its EV business to better compete with Tesla.\nBarra also said that GM's flexible Ultium EV architecture has helped cut vehicle development time by nearly 50%. She said the launch of the Cadillac Lyriq SUV had been moved up about nine months from the date initially announced.GM will speed up the launch timing of 12 EV models, some by as much as 40 months.\n\"We're committed to fighting for EV market share until we are number one in North America, achieving margins similar to or higher than our ICE business and exceeding our previous target of selling 1 million vehicles globally by mid-decade,\" Barra said.\nGM Stock Chart Technical Analysis\nGM stock soared in October and November on the Hummer EV launch and stepped-up EV factory and production plans.\nShares subsequently pulled back on its dramatically scaled-back deal with Nikola. Yet GM stock twice found support at its 10-week and 50-day line. IBDSwingTradertook advantage of an early entry point, establishing a position as GM stock cleared its Dec. 23 intraday high that came on the first bounce above its 50-day line.\nOn Jan. 12, as GM surprised Wall Street by revealing the existence of Brightdrop, its EV commercial delivery vehicle and logistics startup, GM stock broke through a more traditional 46.81buy point, 10 cents above its Nov. 24 high. General Motors stock jumped 6.2% to close at 47.81, breaking above the October 2017 all-time high of 46.76.\nMeanwhile, momentum continued amid news on Jan. 19 thatMicrosoft(MSFT) had joined a new investment round in GM's Cruise autonomous vehicle unit.\nGM stock subsequently hit a new high of 57.05 on Feb. 8, overcoming its first report that a chip shortage would sideline some production.\nWhile GM stock pulled back on earnings and amid broader stock market volatility, it found support at its 50-day moving average.\nOn March 12, GM stock surged to 59.25, clearing 57.15 buy point, 10 cents above the Feb. 8 high. Although the base is on the short side, GM stock has been consolidating since it touched an interim high of 56.97 on Jan. 21.\nHowever, GM stock is 13% above its 10-week line, so it looks a little extended from that perspective. That makes it more likely that shares could test their buy point.\nAs of March 12, GM stock sported an 86Relative Strength Rating, meaning it has outperformed 86% of all stocks over the past 12 months.\nTherelative strength line, which shows how GM stock performs vs. the S&P 500 index, is back to a two-plus year high.\nGeneral Motors Earnings And Sales Trends\nAfter a bumpy few years, thanks to a UAW strike, soft sales in China and Covid-19, General Motors earnings appeared to turn the corner in the second half of 2020, helped by sales strength and cost reductions.\nThen, in Q4, General Motors earnings per share cruised past estimates, surging to $1.93 vs. just 5 cents per share a year ago, helped by the launch of its full-size SUV. The year-ago period was marred by the UAW strike. GM's Q4 EPS would have been even better if not for a 59-cent hit due to a Takata airbag-inflator recall.\nSales remained on a roll in Q4. GM deliveries in the U.S. rose to 771,323, up 5% from a year ago. General Motors said it gained market share as the average transaction price rose to a record $41,886.\nMeanwhile, GM sales in China remained on the upswing for the second straight quarter, after a weak couple of years. General Motors and its Chinese joint-venture partners saw deliveries rise 14% to 954,325.\nGM said it expects to earn $4.50-$5.25 per share in 2021 vs. $4.90 in 2020. The chip shortage could cut operating profit by $2 billion in 2021.\nBrightdrop\nBrightdrop's first 500 EV600 delivery vehicles, which go 250 miles per charge, will go toFedEx(FDX). The global delivery giant also has tested Brightdrop's EP1 pallet electric pallet, designed to move up to 200 pounds in goods over short distances. FedEx said its drivers were able to handle 25% more packages per day in the first pilot.\nGM said it will invest $800 million to equip one of its factories in Canada for production of the EV600 by late 2021.\nGM said it sees a massive $850 billion market opportunity for parcel, food delivery and reverse logistics in the U.S. by 2025.\nThe timing of its commercial EV rollout looks even better followingPresident Joe Biden's executive order to replace the government's fleetof 645,000 vehicles with electric vehicles.\nSubsequently, Merchants Fleet announced an order for 12,600 EV600 vans.\nFord(F) will also have an electric version of its popular Transit van out in late 2021.Workhorse Group(WKHS) and Rivian are EV delivery van plays too.\nGM's 'Stable Of Unicorns'\nEven before the Brightdrop news, Morgan Stanley's Jonas had referred to GM as having a \"stable of unicorns.\"\nIn a Jan. 19 report, Jonas said that GM's EV business is worth $52 per share of GM stock, while its controlling stake in Cruise is worth $10.\nGM's Ultium EV battery also has become something of a business in its own right. In April, GM reached a deal withHonda Motor(HMC) to jointly develop two Honda EVs using GM's Ultium battery. Jonas figures the Ultium battery platform is worth $10 per share.\nGM's OnStar communications and security system, which has announced a move into the insurance business, and its Super Cruise driver assistance technology, offer opportunities to grow a monthly recurring revenue stream. Jonas valued GM's connected services at $16 per share.\nHe also attached per-share valuations to GM's China joint ventures ($5), the Corvette brand ($5) and GM Financial ($7).\nHe derived the 80 price target for GM stock by subtracting net debt, pension liability and a 20% sum-of-the-parts discount.\nJonas didn't specify any valuation for other ventures, including GM's Hydrotec fuel-cell business. The week after his report, GM announced a deal withNavistar(NAV) to supply fuel cells for long-haul trucks. Trucking firmJ.B. Hunt(JBHT) will be Navistar's first customer in a pilot program, with tests set to begin by end of 2022.\nThat followed GM's scaled-back deal to supply fuel cells toNikola(NKLA). However, prospects remain clouded by Nikola's reputational hit as its founder left the company amid allegations of being a huckster and worse.\nIn June, GM Defense unit won a $214-million contract — its first win — to build Infantry Squad Vehicles for the U.S. Army based on the Chevrolet Colorado ZR2 midsize truck architecture.\nHummer EV Buzz\nGM unveiled the Hummer EV truck during the World Series, touting \"maneuverability and traction unlike anything GM has ever offered.\" The Hummer's CrabWalk mode, allowing it to move diagonally to get through tight off-road spots, quickly went viral.\nThe Hummer EV, which will take on the Tesla Cybertruck, is due out this fall. GM says the Hummer EV can reach 450 miles on a full charge and 60 miles per hour in three seconds. The Hummer also will take on upcoming electric trucks fromFord(F) andAmazon(AMZN)-backed Rivian.\nThe Rivian RT1 is expected to be released before the GM Hummer, but theTesla Cybertruck will likely not be out until 2022.\nPrices for the initial Hummer EV version start at $112,595. General Motors said all available reservations for the Hummer EV sold out within 10 minutes. GM reportedly received 10,000 preorders and is considering boosting production plans.\nGM plans cheaper Hummer EV versions in future years. AutoNews reported that GM may start production of the Hummer SUV in early 2023 with targeted annual output of 50,000 vehicles per year.\nGeneral Motors' Ultium Battery Future\nGM had a puzzle to solve: How could it compete broadly in the still relatively small EV market, en route to an all-electric future, without frittering away its financial strength? The answer came with the March 4 unveiling of its Ultium battery and flexible platform.\nThe Ultium stands apart for its ability to be stacked either vertically or horizontally in the battery pack, to optimize the layout of each vehicle. The biggest stack is said to have the power to reach 450 miles on a full charge. The platform can accommodate a wide range of trucks, SUVs and cars.\nThe first generation of GM's coming EV lineup \"will be profitable,\" the company said. Since then, GM has detailed a much more complete vision of its EV future.\nIn September, GM unveiled its strategy to produce electric drive systems that are designed in-house to deliver cost and performance benefits. The five drive units and three motors will offer the power and versatility to work with the full range of some 20 different EVs it plans to produce by 2023.\nUltium Drive systems will be more responsive than current models, using \"precision torque control\" for smooth performance, GM said. The Honda deal created a partnership model that GM hopes will entice other rivals. Barra said that supplying GM technology to rival automakers would build \"scale to lower battery and fuel cell costs and increase profitability.\"\nNow GM is highlighting progress in testing its next-generation Ultium battery chemistry. \"We believe we are on the battery-cost frontier today and we intend to set the pace for the future,\" said GM product development chief Doug Parks.\nGM Cruise Vs. Tesla And Alphabet Waymo\nOn Jan. 19, GM announced a partnership with Microsoft to accelerate the commercialization of self-driving vehicles. Microsoft joined in a $2-billion funding round for Cruise, along with GM, Honda and institutional investors.\nThe investment gave Cruise an implied $30 billion valuation, up from $19 billion in May 2019. GM's stake is now worth $19 billion, up from $11.9 billion, JP Morgan analyst Ryan Brinkman figures.\nIn November, Cruise began testing five driverless cars in parts of San Francisco. Initial results appear positive. On Feb. 9, Cruise President Kyle Vogt tweeted that Cruise covered 200,000 miles in California in Q4 without a safety driver once disengaging self-driving features.\nCruise's commercial launch is \"not years away,\" Barra assured on the Q4 earnings call.\nOn Nov. 10,Walmart(WMT) announced a pilot test with Cruise in Scottsdale, Ariz., allowing contactless customer deliveries.\nIn January 2020, GM unveiled its six-passenger Cruise Origin EV with no steering wheel.\nApple,Alphabet(GOOGL)-unit Waymo, Uber(UBER),Ford(F) and Tesla are among a large field of well-funded competitors in the autonomous-vehicle market.\nGM bought Cruise Automation for $1.1 billion in 2016. In 2018, Honda agreed to put up $2 billion more over 12 years.\nTesla, meanwhile, has released a new Full Self Driving beta version to select drivers. But despite the name, Tesla FSD is still a Level 2, hands-on system, while Cruise and Waymo are Level 4.\nIs GM Stock A Buy?\nThe technical picture for GM stock has improved dramatically. Its 89IBD Composite Ratingisn't far behind Tesla's 94 rating. IBD research shows that all-time stock winners often have a Composite Rating of at least 95 near the start of big runs.\nStill, fundamental metrics don't tell the full story. The Covid hit to earnings, a restructuring and strike are all in the rearview mirror. The chip shortage curtailing production should clear up later in 2021, but GM's traditional business faces a long-term decline. The biggest unknown is how well GM will be able to keep pace with Tesla, which aims to drive down the price of its EVs to $25,000 in three years, and others on the cutting edge of EV battery development — including Apple.\nInvestors should be aware that GM stock is a hybrid play, depending on profits from gas-burning SUVs today to pave the way to an EV future. Undoubtedly, there is lots of execution risk and uncertainty, but GM appears to be executing quite well, and Wall Street sees plenty of promise developing. If analysts see GM as a \"stable of unicorns\" with high-growth potential, they could begin to use a more flattering lens for valuing future earnings.\nBottom line:GM stock is in a buy zone, though it is also significantly above its 10-week line. Strong technical action, improving fundamentals and a brighter EV future all suggest General Motors stock is worth considering.","news_type":1},"isVote":1,"tweetType":1,"viewCount":255,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":322508506,"gmtCreate":1615815088205,"gmtModify":1704786925439,"author":{"id":"3557274000355171","authorId":"3557274000355171","name":"ainteasy","avatar":"https://static.tigerbbs.com/8100bb2479de560ec4f349fc5fc56838","crmLevel":5,"crmLevelSwitch":1,"followedFlag":false,"idStr":"3557274000355171","authorIdStr":"3557274000355171"},"themes":[],"htmlText":"Getting some chewy","listText":"Getting some chewy","text":"Getting some chewy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/322508506","repostId":"1199587015","repostType":4,"repost":{"id":"1199587015","kind":"news","pubTimestamp":1615800246,"share":"https://ttm.financial/m/news/1199587015?lang=&edition=fundamental","pubTime":"2021-03-15 17:24","market":"us","language":"en","title":"Time To Buy These 2 Top Niche E-Commerce Stocks","url":"https://stock-news.laohu8.com/highlight/detail?id=1199587015","media":"seekingalpha","summary":"SummaryE-commerce sales are expected to grow to ~$6.5 trillion by 2024, or about an 11% CAGR from 20","content":"<p><b>Summary</b></p><ul><li>E-commerce sales are expected to grow to ~$6.5 trillion by 2024, or about an 11% CAGR from 2020's $4.3 trillion.</li><li>Many e-commerce stocks surged during 2020 as pandemic tailwinds grew, and valuation resets in tech amid surging rates could provide some attractive entries.</li><li>Aside from global and regional e-commerce leaders, two niche e-commerce leaders provide strong forward growth outlooks: PDD and CHWY.</li></ul><p>As a result of the pandemic, e-commerce essentially shifted to a 'go-to' shopping method, witnessing a huge acceleration of growth across the globe. However, the industry remains highly fragmented, with global and regional leaders in the e-commerce focused space facing increased presence from brick-and-mortar establishments building out omni-channel capabilities to capture a piece of the growth from this shift in consumer spending. While there's no denying that Amazon (AMZN) arguably holds the reigns on the industry, other leaders have already cemented that status in their respective regions, like Alibaba (BABA) and JD.com (JD) in China, Coupang (CPNG) in Korea, MercadoLibre (MELI) in Latin America, and Shopee (SE) in Southeast Asia. While some of these names still provide solid potential, filling a niche in e-commerce and growing into a leader in that particular niche could provide a longer-term runway for growth: here, the two names that stand out are Pinduoduo (PDD) and Chewy (CHWY).</p><p><b>Broader E-commerce Trends</b></p><p>There's no doubt that the pandemic has provided a significant tailwind to e-commerce operations, but the segment still has some high expected growth over the next few years.</p><p>Global e-commerce sales were estimated at ~$4.28 trillion for2020, +27.6% on the year, with regions like Latin America seeing some outstanding growth. For 2021, e-commerce sales growth rate is expected to decline sequentially due to brick-and-mortar reopening and the pandemic pull-forward, to about 15% growth to $4.9 trillion for 2021.</p><p><img src=\"https://static.tigerbbs.com/09cb0da38ddca8be7397cce06b4ea9a8\" tg-width=\"640\" tg-height=\"340\" referrerpolicy=\"no-referrer\"></p><p>Graphic fromActivate</p><p>On a longer-term trend, e-commerce sales are expected to grow to ~$6.5 trillion by2024, or about an 11% CAGR from 2020's $4.3 trillion. At that projection, e-commerce would hold about 23% of total retail sales, up from ~18%. Categories with the highest (>50%) penetration - clothing/accessories, grocery, household products and beauty/personal care - are categories that have sustainable online growth and repetitive purchase rates, aided with higher adoption of new methods like buy-online, pick-up in store.</p><p>E-commerce growth looks set to continue at a quick pace even after a massive surge during 2020, leaving a lot of room for leaders and niche players alike to grow into; Pinduoduo and Chewy both sold off heavily over the past month and a half, and provide more attractive valuations to capture strong forward growth.</p><p><b>Pinduoduo and an Agricultural Niche</b></p><p>Although it remains focused on its agricultural niche, Pinduoduo is very much a leading e-commerce platform. The company generates about4% of global GMVacross all categories, making it the fifth largest marketplace per GMV, behind Alibaba's Taobao and Tmall.com, Amazon, and JD.com.</p><p>So how has Pinduoduo already established itself as a leading global player in just 5 years? The company took a traditional marketplace with offerings across nearly all categories, and revamped it through a social,team-buying model, originally targeting lower tier cities to attract price conscientious consumers. Instead of a search-based experience, it provides a catered, 'virtual bazaar' feed personalized to each user (a \"'you don’t know what you want but happy to discover'\" style).</p><p>Because of this unique model, Pinduoduo has an immense user base, with nearly 650 million MAU and over 730 million AAU, just shy of Alibaba but far ahead of JD.com on anAAU basis.</p><p><b>What makes Pinduoduo an interesting purchase, with shares down ~20%?</b></p><p>Aside from sharing a traditional marketplace with the unique team-buying model, Pinduoduo's leverage of its huge user base and connection with local farmers and grocers could be difficult to replicate at scale and at cost by JD.com, Alibaba, and Meituan, leaving the agri-commerce and produce niche mainly to Pinduoduo. China accounts for about one-third of theworld's e-commerce buyers, and over half of total e-commerce sales, leaving a huge market to capture.</p><p>Pinduoduo continues to find high engagement within its large community, with average annual spend per active buyer (on a TTM basis) up 27% to nearly RMB2,000 (US$294).Agricultural GMVdoubled for 2020, hitting over RMB270 billion (US$42 billion), ahead of an original RMB250 billion forecast from management. Translating growth in GMV to revenues and earnings shows bright potential for Pinduoduo, as it sees that \"digitalagricultureincreases the efficiency of the food supply chain and safeguards food security at the same time,\" solidifying its belief in the potential in the revolution of agriculture.</p><p>To expand its presence in connecting farmers to consumers, Pinduoduo launchedDuo Duo Maicaito provide next-day grocery delivery and fresh produce, competing with Meituan (HK:3690) in the space. The shift away from traditional wet markets has allowed grocery services like Maicai to fill this space, since customers can purchase as late as 11 PM and receive orders by 4 PM the next day. Through the app, customers have a large selection of fresh and local produce, and also can take advantage of the low-cost buying model.</p><p>Pinduoduo is on track to quadruple revenues to US$8 billion in just two years, from FY18 to FY20, and securing this niche while still offering the traditional marketplace should see revenues grow at a 40% CAGR through FY23 to US$22 billion, quite an impressive runway. By then, Pinduoduo could generate EPS of $2.50, giving it a forward PE of ~64x - while this does look quite high, it's worth noting that Pinduoduo still hasn't even reach out-and-out profitability, and should see a shift to ~$0.30 in EPS for FY21, thus giving EPS triple digit growth each year through FY23.</p><p>What further separates Pinduoduo from Alibaba and JD.com is its margin profile, albeit one that could face some impacts moving forward. Pinduoduo has tremendously strong gross margins, fluctuating between 72% (Q1 '20, where the pandemic heavily impacted operations) and 85.7% (Q2 '18). For comparison, Alibaba's gross margin is ~44%, while JD's is ~8.7%. With margins above 70%, Pinduoduo could see Q2 '21 (or possibly Q1) show gross profit exceed operating expenses, leading to the inflection to out-and-out profitability.</p><p>However, earnings could come under pressure from a recent initiative to further develop logistics infrastructure to be more suitable for perishable handling (increased costs to develop compared to leveraging third-parties), as well as continual increased expenditures in marketing/advertising and headcount/R&D in regards to AI research focused onimproving crop productivity.</p><p><b>Some risks do exist</b> even amid the selloff, as Pinduoduo still trades at a premium to Alibaba and JD.com: ~8.7x FY23 sales, compared to 3.6x and 0.7x respectively, and currently still unprofitable. However, rapid revenue growth and strong earnings leverage combined with the agri-commerce moat serve as a safety net to this valuation to a degree. Pinduoduo is on a strong upward trajectory aided by the pandemic, and could have a lot ahead in AI agricultural innovation.</p><p>Unlike JD.com and Alibaba, and other larger e-commerce platforms, Pinduoduo's niche does not offer seamless transitions to cross-border transactions, and could serve as a barrier to that, keeping Pinduoduo confined to China. This could ultimately cap outright user growth, leaving Pinduoduo reliant on more transactions or more spend per buyer in a long-term forecast (>5 years). However, Pinduoduo is likely safe from potential antitrust proceedings that are hitting Tencent (OTCPK:TCEHY), Baidu (BIDU), and 10 others - it doesn't have a fintech arm and doesn't have the same amount of presence/sway as those involved.</p><p>Margins also provide a risk to Pinduoduo's profitable inflection likely ahead this fiscal year. Although it does have a superior margin profile, dedication to constantly spend more on marketing/advertising and offering more promotions/discounts all can cut into earnings, and if expenses grow more than 18-20% each quarter, the profitability picture could be cut nearly 30% lower to $1.80 by FY23.</p><p><b>Chewy and a Pet Niche</b></p><p>Similar to Pinduoduo, Chewy is currently geographically limited to the US, and while it does seem to be an unconventional, heavily-pandemic aided e-commerce name, it has established itself as a leading player in pet-related products and is expanding product offerings into telehealth and eventually D2V (direct-to-vet) pharma.</p><p>The pet-care and pet-related product industry has not traditionally utilized e-commerce as a sales channel, instead of relying on brick-and-mortar stores to drive sales.E-commerce penetrationof pet food/treats/related products likely hovers at around one-quarter of the market, putting it at about $14 billion in sales through the channel. As such, Chewy could still command about half of the market, with Amazon close behind at nearly 40% share. However, this is still a more speculative (riskier) play.</p><p><b>So what makes Chewy an interesting buy as shares are down ~26%?</b></p><p>Pole position atop its segment is a large positive, as other pet product related brick-and-mortar stores don't have the same depth of online presence or leverage of such a strong customer base - while Amazon does present a growing threat, Chewy still has the giant beat, with strong growth in customers and retention through Autoship, as well as a brand moat with over 2,000 brands offering 60,000 products.</p><p>Chewy saw some impressive growth rates in revenues as \"traffic, conversion, orders, and customer retention all strengthened from September into October as customers shifted their shopping behavior this year.\" Revenues rose 45% for Q3 to $1.78 billion and 46% for the 9M period to $5.1 billion, with the company on track for $7 billion this fiscal year.</p><p>Customer growth remains strong, with Chewy seeing active customers grow 40% to 17.8 million from 12.7 million last year. Customer retention, assessed through Autoship sales, still hovers at about 69%, dipping slightly lower during Q3 (although that is likely due to the large influx of customers, as $ of Autoship sales per active customer rose slightly). Dollar spend per active customer rose just over 4% to ~$100 per active customer, up from $96.</p><p>From a long-term perspective, Chewy should be able to grow revenues by ~$2 billion annually through FY23, reaching approximately $11 billion in sales, putting it at ~3x revenues at the current valuation. Consistent growth in revenues at this rate (~20% YoY per quarter on average) will be derived from customer retention remaining at around 67-70%, or through >20% YoY growth in new customers each quarter through FQ4 '23.</p><p>One sign for maintenance of that retention rate is percentage ofconsumablesper total sales, which sits at just about 70%. Consumables are likely the key driver for Autoship and continual purchases, as these items (foods/treats/etc.) are much more constant needs than toys/beds/etc.</p><p>Chewy is also seeing net losses shrink, with a net loss of just $7.7 million, adjusted for share-based compensation. EBITDA has grown to $33 million, very small, but pointing to signs of profitability by late FY22. Because gross margin is small, just 25.5%, Chewy is unlikely to see rapid EPS leverage, with just $0.35 in EPS possible by FY23. Thus, Chewy trades at quite a high forward PE, but given its position atop the pet-care e-channel, could sustain this premium with relatively little competition.</p><p>The pet food/treat/care products market doesn't exhibit a rapid forward growth runway, placed in the high-single digits; working with the prior $14 billion figure, 2023 sales through e-commerce could reach just under $18 billion in a rudimentary estimate. Therefore, leveraging other channels, like D2V pharma, and free telehealth visits for Autoship customers, could be vital in driving engagement and spend per customer higher, which are necessary for revenue growth projections.</p><p>Although Chewy does have good potential as the leader in pet-focused e-commerce, it has<b>some major risks.</b>Chewy'sbalance sheetis underwhelmingly weak, as the company had been technically insolvent through Q3, with $56 million less in assets than liabilities (this could be subject to change during Q4, with revenues near $2 billion likely allowing some more cash to be added which would resolve this issue). But with just over $500 million in cash, raising capital is most likely already booked in the future, either through debt or dilution.</p><p>Margins also present a risk, as revenue growth isn't extremely rapid, and inflection to profitability with high EPS leverage also isn't likely. As such, margins will need to be maintained above in the mid-20% range to ensure consistent profitability in the long-run, as utilization of free telehealth visits could crimp margins with some excess incurred costs relative to increased revenue generation.</p><p>Even though Chewy is a segment leader, the pet-care industry hasn't been a wide adopter of e-commerce, and such a pull-forward from the pandemic could fizzle out, and disappointing growth in customers moving forward would shift revenue projections down by ~10% to around $10 billion, as that would likely be met with lower-than-expected Autoship sales.</p><p><b>Overall</b></p><p>E-commerce growth is undeniable, and global, regional, and niche leaders alike have positive runways ahead with increased e-commerce penetration relative to total retail and large dollar gains in sales. While it's hard to argue against outright leaders, niche players Pinduoduo and Chewy offer good potential for forward growth due to occupancy of the pole position within their respective niches of agri-commerce and pet products. Both are still quite pricey, but have sold off pretty heavily with the tech-selloff, thus providing more attractive entry points after valuation resets. Pinduoduo has some rapid room for revenue growth amid surging GMV and could see strong EPS leverage amid a shift to out-and-out profitability in the near future. Chewy's segment doesn't boast the highest growth rates, but large market share combined with good retention bode well for future revenue growth consistency. As such, both of these niche leaders could be attractive purchases after the recent routs.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Time To Buy These 2 Top Niche E-Commerce Stocks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTime To Buy These 2 Top Niche E-Commerce Stocks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-15 17:24 GMT+8 <a href=https://seekingalpha.com/article/4413752-time-to-buy-2-top-niche-e-commerce-stocks-pdd-chwy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryE-commerce sales are expected to grow to ~$6.5 trillion by 2024, or about an 11% CAGR from 2020's $4.3 trillion.Many e-commerce stocks surged during 2020 as pandemic tailwinds grew, and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4413752-time-to-buy-2-top-niche-e-commerce-stocks-pdd-chwy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PDD":"拼多多","CHWY":"Chewy, Inc."},"source_url":"https://seekingalpha.com/article/4413752-time-to-buy-2-top-niche-e-commerce-stocks-pdd-chwy","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1199587015","content_text":"SummaryE-commerce sales are expected to grow to ~$6.5 trillion by 2024, or about an 11% CAGR from 2020's $4.3 trillion.Many e-commerce stocks surged during 2020 as pandemic tailwinds grew, and valuation resets in tech amid surging rates could provide some attractive entries.Aside from global and regional e-commerce leaders, two niche e-commerce leaders provide strong forward growth outlooks: PDD and CHWY.As a result of the pandemic, e-commerce essentially shifted to a 'go-to' shopping method, witnessing a huge acceleration of growth across the globe. However, the industry remains highly fragmented, with global and regional leaders in the e-commerce focused space facing increased presence from brick-and-mortar establishments building out omni-channel capabilities to capture a piece of the growth from this shift in consumer spending. While there's no denying that Amazon (AMZN) arguably holds the reigns on the industry, other leaders have already cemented that status in their respective regions, like Alibaba (BABA) and JD.com (JD) in China, Coupang (CPNG) in Korea, MercadoLibre (MELI) in Latin America, and Shopee (SE) in Southeast Asia. While some of these names still provide solid potential, filling a niche in e-commerce and growing into a leader in that particular niche could provide a longer-term runway for growth: here, the two names that stand out are Pinduoduo (PDD) and Chewy (CHWY).Broader E-commerce TrendsThere's no doubt that the pandemic has provided a significant tailwind to e-commerce operations, but the segment still has some high expected growth over the next few years.Global e-commerce sales were estimated at ~$4.28 trillion for2020, +27.6% on the year, with regions like Latin America seeing some outstanding growth. For 2021, e-commerce sales growth rate is expected to decline sequentially due to brick-and-mortar reopening and the pandemic pull-forward, to about 15% growth to $4.9 trillion for 2021.Graphic fromActivateOn a longer-term trend, e-commerce sales are expected to grow to ~$6.5 trillion by2024, or about an 11% CAGR from 2020's $4.3 trillion. At that projection, e-commerce would hold about 23% of total retail sales, up from ~18%. Categories with the highest (>50%) penetration - clothing/accessories, grocery, household products and beauty/personal care - are categories that have sustainable online growth and repetitive purchase rates, aided with higher adoption of new methods like buy-online, pick-up in store.E-commerce growth looks set to continue at a quick pace even after a massive surge during 2020, leaving a lot of room for leaders and niche players alike to grow into; Pinduoduo and Chewy both sold off heavily over the past month and a half, and provide more attractive valuations to capture strong forward growth.Pinduoduo and an Agricultural NicheAlthough it remains focused on its agricultural niche, Pinduoduo is very much a leading e-commerce platform. The company generates about4% of global GMVacross all categories, making it the fifth largest marketplace per GMV, behind Alibaba's Taobao and Tmall.com, Amazon, and JD.com.So how has Pinduoduo already established itself as a leading global player in just 5 years? The company took a traditional marketplace with offerings across nearly all categories, and revamped it through a social,team-buying model, originally targeting lower tier cities to attract price conscientious consumers. Instead of a search-based experience, it provides a catered, 'virtual bazaar' feed personalized to each user (a \"'you don’t know what you want but happy to discover'\" style).Because of this unique model, Pinduoduo has an immense user base, with nearly 650 million MAU and over 730 million AAU, just shy of Alibaba but far ahead of JD.com on anAAU basis.What makes Pinduoduo an interesting purchase, with shares down ~20%?Aside from sharing a traditional marketplace with the unique team-buying model, Pinduoduo's leverage of its huge user base and connection with local farmers and grocers could be difficult to replicate at scale and at cost by JD.com, Alibaba, and Meituan, leaving the agri-commerce and produce niche mainly to Pinduoduo. China accounts for about one-third of theworld's e-commerce buyers, and over half of total e-commerce sales, leaving a huge market to capture.Pinduoduo continues to find high engagement within its large community, with average annual spend per active buyer (on a TTM basis) up 27% to nearly RMB2,000 (US$294).Agricultural GMVdoubled for 2020, hitting over RMB270 billion (US$42 billion), ahead of an original RMB250 billion forecast from management. Translating growth in GMV to revenues and earnings shows bright potential for Pinduoduo, as it sees that \"digitalagricultureincreases the efficiency of the food supply chain and safeguards food security at the same time,\" solidifying its belief in the potential in the revolution of agriculture.To expand its presence in connecting farmers to consumers, Pinduoduo launchedDuo Duo Maicaito provide next-day grocery delivery and fresh produce, competing with Meituan (HK:3690) in the space. The shift away from traditional wet markets has allowed grocery services like Maicai to fill this space, since customers can purchase as late as 11 PM and receive orders by 4 PM the next day. Through the app, customers have a large selection of fresh and local produce, and also can take advantage of the low-cost buying model.Pinduoduo is on track to quadruple revenues to US$8 billion in just two years, from FY18 to FY20, and securing this niche while still offering the traditional marketplace should see revenues grow at a 40% CAGR through FY23 to US$22 billion, quite an impressive runway. By then, Pinduoduo could generate EPS of $2.50, giving it a forward PE of ~64x - while this does look quite high, it's worth noting that Pinduoduo still hasn't even reach out-and-out profitability, and should see a shift to ~$0.30 in EPS for FY21, thus giving EPS triple digit growth each year through FY23.What further separates Pinduoduo from Alibaba and JD.com is its margin profile, albeit one that could face some impacts moving forward. Pinduoduo has tremendously strong gross margins, fluctuating between 72% (Q1 '20, where the pandemic heavily impacted operations) and 85.7% (Q2 '18). For comparison, Alibaba's gross margin is ~44%, while JD's is ~8.7%. With margins above 70%, Pinduoduo could see Q2 '21 (or possibly Q1) show gross profit exceed operating expenses, leading to the inflection to out-and-out profitability.However, earnings could come under pressure from a recent initiative to further develop logistics infrastructure to be more suitable for perishable handling (increased costs to develop compared to leveraging third-parties), as well as continual increased expenditures in marketing/advertising and headcount/R&D in regards to AI research focused onimproving crop productivity.Some risks do exist even amid the selloff, as Pinduoduo still trades at a premium to Alibaba and JD.com: ~8.7x FY23 sales, compared to 3.6x and 0.7x respectively, and currently still unprofitable. However, rapid revenue growth and strong earnings leverage combined with the agri-commerce moat serve as a safety net to this valuation to a degree. Pinduoduo is on a strong upward trajectory aided by the pandemic, and could have a lot ahead in AI agricultural innovation.Unlike JD.com and Alibaba, and other larger e-commerce platforms, Pinduoduo's niche does not offer seamless transitions to cross-border transactions, and could serve as a barrier to that, keeping Pinduoduo confined to China. This could ultimately cap outright user growth, leaving Pinduoduo reliant on more transactions or more spend per buyer in a long-term forecast (>5 years). However, Pinduoduo is likely safe from potential antitrust proceedings that are hitting Tencent (OTCPK:TCEHY), Baidu (BIDU), and 10 others - it doesn't have a fintech arm and doesn't have the same amount of presence/sway as those involved.Margins also provide a risk to Pinduoduo's profitable inflection likely ahead this fiscal year. Although it does have a superior margin profile, dedication to constantly spend more on marketing/advertising and offering more promotions/discounts all can cut into earnings, and if expenses grow more than 18-20% each quarter, the profitability picture could be cut nearly 30% lower to $1.80 by FY23.Chewy and a Pet NicheSimilar to Pinduoduo, Chewy is currently geographically limited to the US, and while it does seem to be an unconventional, heavily-pandemic aided e-commerce name, it has established itself as a leading player in pet-related products and is expanding product offerings into telehealth and eventually D2V (direct-to-vet) pharma.The pet-care and pet-related product industry has not traditionally utilized e-commerce as a sales channel, instead of relying on brick-and-mortar stores to drive sales.E-commerce penetrationof pet food/treats/related products likely hovers at around one-quarter of the market, putting it at about $14 billion in sales through the channel. As such, Chewy could still command about half of the market, with Amazon close behind at nearly 40% share. However, this is still a more speculative (riskier) play.So what makes Chewy an interesting buy as shares are down ~26%?Pole position atop its segment is a large positive, as other pet product related brick-and-mortar stores don't have the same depth of online presence or leverage of such a strong customer base - while Amazon does present a growing threat, Chewy still has the giant beat, with strong growth in customers and retention through Autoship, as well as a brand moat with over 2,000 brands offering 60,000 products.Chewy saw some impressive growth rates in revenues as \"traffic, conversion, orders, and customer retention all strengthened from September into October as customers shifted their shopping behavior this year.\" Revenues rose 45% for Q3 to $1.78 billion and 46% for the 9M period to $5.1 billion, with the company on track for $7 billion this fiscal year.Customer growth remains strong, with Chewy seeing active customers grow 40% to 17.8 million from 12.7 million last year. Customer retention, assessed through Autoship sales, still hovers at about 69%, dipping slightly lower during Q3 (although that is likely due to the large influx of customers, as $ of Autoship sales per active customer rose slightly). Dollar spend per active customer rose just over 4% to ~$100 per active customer, up from $96.From a long-term perspective, Chewy should be able to grow revenues by ~$2 billion annually through FY23, reaching approximately $11 billion in sales, putting it at ~3x revenues at the current valuation. Consistent growth in revenues at this rate (~20% YoY per quarter on average) will be derived from customer retention remaining at around 67-70%, or through >20% YoY growth in new customers each quarter through FQ4 '23.One sign for maintenance of that retention rate is percentage ofconsumablesper total sales, which sits at just about 70%. Consumables are likely the key driver for Autoship and continual purchases, as these items (foods/treats/etc.) are much more constant needs than toys/beds/etc.Chewy is also seeing net losses shrink, with a net loss of just $7.7 million, adjusted for share-based compensation. EBITDA has grown to $33 million, very small, but pointing to signs of profitability by late FY22. Because gross margin is small, just 25.5%, Chewy is unlikely to see rapid EPS leverage, with just $0.35 in EPS possible by FY23. Thus, Chewy trades at quite a high forward PE, but given its position atop the pet-care e-channel, could sustain this premium with relatively little competition.The pet food/treat/care products market doesn't exhibit a rapid forward growth runway, placed in the high-single digits; working with the prior $14 billion figure, 2023 sales through e-commerce could reach just under $18 billion in a rudimentary estimate. Therefore, leveraging other channels, like D2V pharma, and free telehealth visits for Autoship customers, could be vital in driving engagement and spend per customer higher, which are necessary for revenue growth projections.Although Chewy does have good potential as the leader in pet-focused e-commerce, it hassome major risks.Chewy'sbalance sheetis underwhelmingly weak, as the company had been technically insolvent through Q3, with $56 million less in assets than liabilities (this could be subject to change during Q4, with revenues near $2 billion likely allowing some more cash to be added which would resolve this issue). But with just over $500 million in cash, raising capital is most likely already booked in the future, either through debt or dilution.Margins also present a risk, as revenue growth isn't extremely rapid, and inflection to profitability with high EPS leverage also isn't likely. As such, margins will need to be maintained above in the mid-20% range to ensure consistent profitability in the long-run, as utilization of free telehealth visits could crimp margins with some excess incurred costs relative to increased revenue generation.Even though Chewy is a segment leader, the pet-care industry hasn't been a wide adopter of e-commerce, and such a pull-forward from the pandemic could fizzle out, and disappointing growth in customers moving forward would shift revenue projections down by ~10% to around $10 billion, as that would likely be met with lower-than-expected Autoship sales.OverallE-commerce growth is undeniable, and global, regional, and niche leaders alike have positive runways ahead with increased e-commerce penetration relative to total retail and large dollar gains in sales. While it's hard to argue against outright leaders, niche players Pinduoduo and Chewy offer good potential for forward growth due to occupancy of the pole position within their respective niches of agri-commerce and pet products. Both are still quite pricey, but have sold off pretty heavily with the tech-selloff, thus providing more attractive entry points after valuation resets. Pinduoduo has some rapid room for revenue growth amid surging GMV and could see strong EPS leverage amid a shift to out-and-out profitability in the near future. Chewy's segment doesn't boast the highest growth rates, but large market share combined with good retention bode well for future revenue growth consistency. As such, both of these niche leaders could be attractive purchases after the recent routs.","news_type":1},"isVote":1,"tweetType":1,"viewCount":112,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":322590370,"gmtCreate":1615815294090,"gmtModify":1704786934502,"author":{"id":"3557274000355171","authorId":"3557274000355171","name":"ainteasy","avatar":"https://static.tigerbbs.com/8100bb2479de560ec4f349fc5fc56838","crmLevel":5,"crmLevelSwitch":1,"followedFlag":false,"idStr":"3557274000355171","authorIdStr":"3557274000355171"},"themes":[],"htmlText":"Buy","listText":"Buy","text":"Buy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/322590370","repostId":"1192178550","repostType":4,"isVote":1,"tweetType":1,"viewCount":255,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":322508506,"gmtCreate":1615815088205,"gmtModify":1704786925439,"author":{"id":"3557274000355171","authorId":"3557274000355171","name":"ainteasy","avatar":"https://static.tigerbbs.com/8100bb2479de560ec4f349fc5fc56838","crmLevel":5,"crmLevelSwitch":1,"followedFlag":false,"idStr":"3557274000355171","authorIdStr":"3557274000355171"},"themes":[],"htmlText":"Getting some chewy","listText":"Getting some chewy","text":"Getting some chewy","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/322508506","repostId":"1199587015","repostType":4,"repost":{"id":"1199587015","kind":"news","pubTimestamp":1615800246,"share":"https://ttm.financial/m/news/1199587015?lang=&edition=fundamental","pubTime":"2021-03-15 17:24","market":"us","language":"en","title":"Time To Buy These 2 Top Niche E-Commerce Stocks","url":"https://stock-news.laohu8.com/highlight/detail?id=1199587015","media":"seekingalpha","summary":"SummaryE-commerce sales are expected to grow to ~$6.5 trillion by 2024, or about an 11% CAGR from 20","content":"<p><b>Summary</b></p><ul><li>E-commerce sales are expected to grow to ~$6.5 trillion by 2024, or about an 11% CAGR from 2020's $4.3 trillion.</li><li>Many e-commerce stocks surged during 2020 as pandemic tailwinds grew, and valuation resets in tech amid surging rates could provide some attractive entries.</li><li>Aside from global and regional e-commerce leaders, two niche e-commerce leaders provide strong forward growth outlooks: PDD and CHWY.</li></ul><p>As a result of the pandemic, e-commerce essentially shifted to a 'go-to' shopping method, witnessing a huge acceleration of growth across the globe. However, the industry remains highly fragmented, with global and regional leaders in the e-commerce focused space facing increased presence from brick-and-mortar establishments building out omni-channel capabilities to capture a piece of the growth from this shift in consumer spending. While there's no denying that Amazon (AMZN) arguably holds the reigns on the industry, other leaders have already cemented that status in their respective regions, like Alibaba (BABA) and JD.com (JD) in China, Coupang (CPNG) in Korea, MercadoLibre (MELI) in Latin America, and Shopee (SE) in Southeast Asia. While some of these names still provide solid potential, filling a niche in e-commerce and growing into a leader in that particular niche could provide a longer-term runway for growth: here, the two names that stand out are Pinduoduo (PDD) and Chewy (CHWY).</p><p><b>Broader E-commerce Trends</b></p><p>There's no doubt that the pandemic has provided a significant tailwind to e-commerce operations, but the segment still has some high expected growth over the next few years.</p><p>Global e-commerce sales were estimated at ~$4.28 trillion for2020, +27.6% on the year, with regions like Latin America seeing some outstanding growth. For 2021, e-commerce sales growth rate is expected to decline sequentially due to brick-and-mortar reopening and the pandemic pull-forward, to about 15% growth to $4.9 trillion for 2021.</p><p><img src=\"https://static.tigerbbs.com/09cb0da38ddca8be7397cce06b4ea9a8\" tg-width=\"640\" tg-height=\"340\" referrerpolicy=\"no-referrer\"></p><p>Graphic fromActivate</p><p>On a longer-term trend, e-commerce sales are expected to grow to ~$6.5 trillion by2024, or about an 11% CAGR from 2020's $4.3 trillion. At that projection, e-commerce would hold about 23% of total retail sales, up from ~18%. Categories with the highest (>50%) penetration - clothing/accessories, grocery, household products and beauty/personal care - are categories that have sustainable online growth and repetitive purchase rates, aided with higher adoption of new methods like buy-online, pick-up in store.</p><p>E-commerce growth looks set to continue at a quick pace even after a massive surge during 2020, leaving a lot of room for leaders and niche players alike to grow into; Pinduoduo and Chewy both sold off heavily over the past month and a half, and provide more attractive valuations to capture strong forward growth.</p><p><b>Pinduoduo and an Agricultural Niche</b></p><p>Although it remains focused on its agricultural niche, Pinduoduo is very much a leading e-commerce platform. The company generates about4% of global GMVacross all categories, making it the fifth largest marketplace per GMV, behind Alibaba's Taobao and Tmall.com, Amazon, and JD.com.</p><p>So how has Pinduoduo already established itself as a leading global player in just 5 years? The company took a traditional marketplace with offerings across nearly all categories, and revamped it through a social,team-buying model, originally targeting lower tier cities to attract price conscientious consumers. Instead of a search-based experience, it provides a catered, 'virtual bazaar' feed personalized to each user (a \"'you don’t know what you want but happy to discover'\" style).</p><p>Because of this unique model, Pinduoduo has an immense user base, with nearly 650 million MAU and over 730 million AAU, just shy of Alibaba but far ahead of JD.com on anAAU basis.</p><p><b>What makes Pinduoduo an interesting purchase, with shares down ~20%?</b></p><p>Aside from sharing a traditional marketplace with the unique team-buying model, Pinduoduo's leverage of its huge user base and connection with local farmers and grocers could be difficult to replicate at scale and at cost by JD.com, Alibaba, and Meituan, leaving the agri-commerce and produce niche mainly to Pinduoduo. China accounts for about one-third of theworld's e-commerce buyers, and over half of total e-commerce sales, leaving a huge market to capture.</p><p>Pinduoduo continues to find high engagement within its large community, with average annual spend per active buyer (on a TTM basis) up 27% to nearly RMB2,000 (US$294).Agricultural GMVdoubled for 2020, hitting over RMB270 billion (US$42 billion), ahead of an original RMB250 billion forecast from management. Translating growth in GMV to revenues and earnings shows bright potential for Pinduoduo, as it sees that \"digitalagricultureincreases the efficiency of the food supply chain and safeguards food security at the same time,\" solidifying its belief in the potential in the revolution of agriculture.</p><p>To expand its presence in connecting farmers to consumers, Pinduoduo launchedDuo Duo Maicaito provide next-day grocery delivery and fresh produce, competing with Meituan (HK:3690) in the space. The shift away from traditional wet markets has allowed grocery services like Maicai to fill this space, since customers can purchase as late as 11 PM and receive orders by 4 PM the next day. Through the app, customers have a large selection of fresh and local produce, and also can take advantage of the low-cost buying model.</p><p>Pinduoduo is on track to quadruple revenues to US$8 billion in just two years, from FY18 to FY20, and securing this niche while still offering the traditional marketplace should see revenues grow at a 40% CAGR through FY23 to US$22 billion, quite an impressive runway. By then, Pinduoduo could generate EPS of $2.50, giving it a forward PE of ~64x - while this does look quite high, it's worth noting that Pinduoduo still hasn't even reach out-and-out profitability, and should see a shift to ~$0.30 in EPS for FY21, thus giving EPS triple digit growth each year through FY23.</p><p>What further separates Pinduoduo from Alibaba and JD.com is its margin profile, albeit one that could face some impacts moving forward. Pinduoduo has tremendously strong gross margins, fluctuating between 72% (Q1 '20, where the pandemic heavily impacted operations) and 85.7% (Q2 '18). For comparison, Alibaba's gross margin is ~44%, while JD's is ~8.7%. With margins above 70%, Pinduoduo could see Q2 '21 (or possibly Q1) show gross profit exceed operating expenses, leading to the inflection to out-and-out profitability.</p><p>However, earnings could come under pressure from a recent initiative to further develop logistics infrastructure to be more suitable for perishable handling (increased costs to develop compared to leveraging third-parties), as well as continual increased expenditures in marketing/advertising and headcount/R&D in regards to AI research focused onimproving crop productivity.</p><p><b>Some risks do exist</b> even amid the selloff, as Pinduoduo still trades at a premium to Alibaba and JD.com: ~8.7x FY23 sales, compared to 3.6x and 0.7x respectively, and currently still unprofitable. However, rapid revenue growth and strong earnings leverage combined with the agri-commerce moat serve as a safety net to this valuation to a degree. Pinduoduo is on a strong upward trajectory aided by the pandemic, and could have a lot ahead in AI agricultural innovation.</p><p>Unlike JD.com and Alibaba, and other larger e-commerce platforms, Pinduoduo's niche does not offer seamless transitions to cross-border transactions, and could serve as a barrier to that, keeping Pinduoduo confined to China. This could ultimately cap outright user growth, leaving Pinduoduo reliant on more transactions or more spend per buyer in a long-term forecast (>5 years). However, Pinduoduo is likely safe from potential antitrust proceedings that are hitting Tencent (OTCPK:TCEHY), Baidu (BIDU), and 10 others - it doesn't have a fintech arm and doesn't have the same amount of presence/sway as those involved.</p><p>Margins also provide a risk to Pinduoduo's profitable inflection likely ahead this fiscal year. Although it does have a superior margin profile, dedication to constantly spend more on marketing/advertising and offering more promotions/discounts all can cut into earnings, and if expenses grow more than 18-20% each quarter, the profitability picture could be cut nearly 30% lower to $1.80 by FY23.</p><p><b>Chewy and a Pet Niche</b></p><p>Similar to Pinduoduo, Chewy is currently geographically limited to the US, and while it does seem to be an unconventional, heavily-pandemic aided e-commerce name, it has established itself as a leading player in pet-related products and is expanding product offerings into telehealth and eventually D2V (direct-to-vet) pharma.</p><p>The pet-care and pet-related product industry has not traditionally utilized e-commerce as a sales channel, instead of relying on brick-and-mortar stores to drive sales.E-commerce penetrationof pet food/treats/related products likely hovers at around one-quarter of the market, putting it at about $14 billion in sales through the channel. As such, Chewy could still command about half of the market, with Amazon close behind at nearly 40% share. However, this is still a more speculative (riskier) play.</p><p><b>So what makes Chewy an interesting buy as shares are down ~26%?</b></p><p>Pole position atop its segment is a large positive, as other pet product related brick-and-mortar stores don't have the same depth of online presence or leverage of such a strong customer base - while Amazon does present a growing threat, Chewy still has the giant beat, with strong growth in customers and retention through Autoship, as well as a brand moat with over 2,000 brands offering 60,000 products.</p><p>Chewy saw some impressive growth rates in revenues as \"traffic, conversion, orders, and customer retention all strengthened from September into October as customers shifted their shopping behavior this year.\" Revenues rose 45% for Q3 to $1.78 billion and 46% for the 9M period to $5.1 billion, with the company on track for $7 billion this fiscal year.</p><p>Customer growth remains strong, with Chewy seeing active customers grow 40% to 17.8 million from 12.7 million last year. Customer retention, assessed through Autoship sales, still hovers at about 69%, dipping slightly lower during Q3 (although that is likely due to the large influx of customers, as $ of Autoship sales per active customer rose slightly). Dollar spend per active customer rose just over 4% to ~$100 per active customer, up from $96.</p><p>From a long-term perspective, Chewy should be able to grow revenues by ~$2 billion annually through FY23, reaching approximately $11 billion in sales, putting it at ~3x revenues at the current valuation. Consistent growth in revenues at this rate (~20% YoY per quarter on average) will be derived from customer retention remaining at around 67-70%, or through >20% YoY growth in new customers each quarter through FQ4 '23.</p><p>One sign for maintenance of that retention rate is percentage ofconsumablesper total sales, which sits at just about 70%. Consumables are likely the key driver for Autoship and continual purchases, as these items (foods/treats/etc.) are much more constant needs than toys/beds/etc.</p><p>Chewy is also seeing net losses shrink, with a net loss of just $7.7 million, adjusted for share-based compensation. EBITDA has grown to $33 million, very small, but pointing to signs of profitability by late FY22. Because gross margin is small, just 25.5%, Chewy is unlikely to see rapid EPS leverage, with just $0.35 in EPS possible by FY23. Thus, Chewy trades at quite a high forward PE, but given its position atop the pet-care e-channel, could sustain this premium with relatively little competition.</p><p>The pet food/treat/care products market doesn't exhibit a rapid forward growth runway, placed in the high-single digits; working with the prior $14 billion figure, 2023 sales through e-commerce could reach just under $18 billion in a rudimentary estimate. Therefore, leveraging other channels, like D2V pharma, and free telehealth visits for Autoship customers, could be vital in driving engagement and spend per customer higher, which are necessary for revenue growth projections.</p><p>Although Chewy does have good potential as the leader in pet-focused e-commerce, it has<b>some major risks.</b>Chewy'sbalance sheetis underwhelmingly weak, as the company had been technically insolvent through Q3, with $56 million less in assets than liabilities (this could be subject to change during Q4, with revenues near $2 billion likely allowing some more cash to be added which would resolve this issue). But with just over $500 million in cash, raising capital is most likely already booked in the future, either through debt or dilution.</p><p>Margins also present a risk, as revenue growth isn't extremely rapid, and inflection to profitability with high EPS leverage also isn't likely. As such, margins will need to be maintained above in the mid-20% range to ensure consistent profitability in the long-run, as utilization of free telehealth visits could crimp margins with some excess incurred costs relative to increased revenue generation.</p><p>Even though Chewy is a segment leader, the pet-care industry hasn't been a wide adopter of e-commerce, and such a pull-forward from the pandemic could fizzle out, and disappointing growth in customers moving forward would shift revenue projections down by ~10% to around $10 billion, as that would likely be met with lower-than-expected Autoship sales.</p><p><b>Overall</b></p><p>E-commerce growth is undeniable, and global, regional, and niche leaders alike have positive runways ahead with increased e-commerce penetration relative to total retail and large dollar gains in sales. While it's hard to argue against outright leaders, niche players Pinduoduo and Chewy offer good potential for forward growth due to occupancy of the pole position within their respective niches of agri-commerce and pet products. Both are still quite pricey, but have sold off pretty heavily with the tech-selloff, thus providing more attractive entry points after valuation resets. Pinduoduo has some rapid room for revenue growth amid surging GMV and could see strong EPS leverage amid a shift to out-and-out profitability in the near future. Chewy's segment doesn't boast the highest growth rates, but large market share combined with good retention bode well for future revenue growth consistency. As such, both of these niche leaders could be attractive purchases after the recent routs.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Time To Buy These 2 Top Niche E-Commerce Stocks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTime To Buy These 2 Top Niche E-Commerce Stocks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-15 17:24 GMT+8 <a href=https://seekingalpha.com/article/4413752-time-to-buy-2-top-niche-e-commerce-stocks-pdd-chwy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryE-commerce sales are expected to grow to ~$6.5 trillion by 2024, or about an 11% CAGR from 2020's $4.3 trillion.Many e-commerce stocks surged during 2020 as pandemic tailwinds grew, and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4413752-time-to-buy-2-top-niche-e-commerce-stocks-pdd-chwy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PDD":"拼多多","CHWY":"Chewy, Inc."},"source_url":"https://seekingalpha.com/article/4413752-time-to-buy-2-top-niche-e-commerce-stocks-pdd-chwy","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1199587015","content_text":"SummaryE-commerce sales are expected to grow to ~$6.5 trillion by 2024, or about an 11% CAGR from 2020's $4.3 trillion.Many e-commerce stocks surged during 2020 as pandemic tailwinds grew, and valuation resets in tech amid surging rates could provide some attractive entries.Aside from global and regional e-commerce leaders, two niche e-commerce leaders provide strong forward growth outlooks: PDD and CHWY.As a result of the pandemic, e-commerce essentially shifted to a 'go-to' shopping method, witnessing a huge acceleration of growth across the globe. However, the industry remains highly fragmented, with global and regional leaders in the e-commerce focused space facing increased presence from brick-and-mortar establishments building out omni-channel capabilities to capture a piece of the growth from this shift in consumer spending. While there's no denying that Amazon (AMZN) arguably holds the reigns on the industry, other leaders have already cemented that status in their respective regions, like Alibaba (BABA) and JD.com (JD) in China, Coupang (CPNG) in Korea, MercadoLibre (MELI) in Latin America, and Shopee (SE) in Southeast Asia. While some of these names still provide solid potential, filling a niche in e-commerce and growing into a leader in that particular niche could provide a longer-term runway for growth: here, the two names that stand out are Pinduoduo (PDD) and Chewy (CHWY).Broader E-commerce TrendsThere's no doubt that the pandemic has provided a significant tailwind to e-commerce operations, but the segment still has some high expected growth over the next few years.Global e-commerce sales were estimated at ~$4.28 trillion for2020, +27.6% on the year, with regions like Latin America seeing some outstanding growth. For 2021, e-commerce sales growth rate is expected to decline sequentially due to brick-and-mortar reopening and the pandemic pull-forward, to about 15% growth to $4.9 trillion for 2021.Graphic fromActivateOn a longer-term trend, e-commerce sales are expected to grow to ~$6.5 trillion by2024, or about an 11% CAGR from 2020's $4.3 trillion. At that projection, e-commerce would hold about 23% of total retail sales, up from ~18%. Categories with the highest (>50%) penetration - clothing/accessories, grocery, household products and beauty/personal care - are categories that have sustainable online growth and repetitive purchase rates, aided with higher adoption of new methods like buy-online, pick-up in store.E-commerce growth looks set to continue at a quick pace even after a massive surge during 2020, leaving a lot of room for leaders and niche players alike to grow into; Pinduoduo and Chewy both sold off heavily over the past month and a half, and provide more attractive valuations to capture strong forward growth.Pinduoduo and an Agricultural NicheAlthough it remains focused on its agricultural niche, Pinduoduo is very much a leading e-commerce platform. The company generates about4% of global GMVacross all categories, making it the fifth largest marketplace per GMV, behind Alibaba's Taobao and Tmall.com, Amazon, and JD.com.So how has Pinduoduo already established itself as a leading global player in just 5 years? The company took a traditional marketplace with offerings across nearly all categories, and revamped it through a social,team-buying model, originally targeting lower tier cities to attract price conscientious consumers. Instead of a search-based experience, it provides a catered, 'virtual bazaar' feed personalized to each user (a \"'you don’t know what you want but happy to discover'\" style).Because of this unique model, Pinduoduo has an immense user base, with nearly 650 million MAU and over 730 million AAU, just shy of Alibaba but far ahead of JD.com on anAAU basis.What makes Pinduoduo an interesting purchase, with shares down ~20%?Aside from sharing a traditional marketplace with the unique team-buying model, Pinduoduo's leverage of its huge user base and connection with local farmers and grocers could be difficult to replicate at scale and at cost by JD.com, Alibaba, and Meituan, leaving the agri-commerce and produce niche mainly to Pinduoduo. China accounts for about one-third of theworld's e-commerce buyers, and over half of total e-commerce sales, leaving a huge market to capture.Pinduoduo continues to find high engagement within its large community, with average annual spend per active buyer (on a TTM basis) up 27% to nearly RMB2,000 (US$294).Agricultural GMVdoubled for 2020, hitting over RMB270 billion (US$42 billion), ahead of an original RMB250 billion forecast from management. Translating growth in GMV to revenues and earnings shows bright potential for Pinduoduo, as it sees that \"digitalagricultureincreases the efficiency of the food supply chain and safeguards food security at the same time,\" solidifying its belief in the potential in the revolution of agriculture.To expand its presence in connecting farmers to consumers, Pinduoduo launchedDuo Duo Maicaito provide next-day grocery delivery and fresh produce, competing with Meituan (HK:3690) in the space. The shift away from traditional wet markets has allowed grocery services like Maicai to fill this space, since customers can purchase as late as 11 PM and receive orders by 4 PM the next day. Through the app, customers have a large selection of fresh and local produce, and also can take advantage of the low-cost buying model.Pinduoduo is on track to quadruple revenues to US$8 billion in just two years, from FY18 to FY20, and securing this niche while still offering the traditional marketplace should see revenues grow at a 40% CAGR through FY23 to US$22 billion, quite an impressive runway. By then, Pinduoduo could generate EPS of $2.50, giving it a forward PE of ~64x - while this does look quite high, it's worth noting that Pinduoduo still hasn't even reach out-and-out profitability, and should see a shift to ~$0.30 in EPS for FY21, thus giving EPS triple digit growth each year through FY23.What further separates Pinduoduo from Alibaba and JD.com is its margin profile, albeit one that could face some impacts moving forward. Pinduoduo has tremendously strong gross margins, fluctuating between 72% (Q1 '20, where the pandemic heavily impacted operations) and 85.7% (Q2 '18). For comparison, Alibaba's gross margin is ~44%, while JD's is ~8.7%. With margins above 70%, Pinduoduo could see Q2 '21 (or possibly Q1) show gross profit exceed operating expenses, leading to the inflection to out-and-out profitability.However, earnings could come under pressure from a recent initiative to further develop logistics infrastructure to be more suitable for perishable handling (increased costs to develop compared to leveraging third-parties), as well as continual increased expenditures in marketing/advertising and headcount/R&D in regards to AI research focused onimproving crop productivity.Some risks do exist even amid the selloff, as Pinduoduo still trades at a premium to Alibaba and JD.com: ~8.7x FY23 sales, compared to 3.6x and 0.7x respectively, and currently still unprofitable. However, rapid revenue growth and strong earnings leverage combined with the agri-commerce moat serve as a safety net to this valuation to a degree. Pinduoduo is on a strong upward trajectory aided by the pandemic, and could have a lot ahead in AI agricultural innovation.Unlike JD.com and Alibaba, and other larger e-commerce platforms, Pinduoduo's niche does not offer seamless transitions to cross-border transactions, and could serve as a barrier to that, keeping Pinduoduo confined to China. This could ultimately cap outright user growth, leaving Pinduoduo reliant on more transactions or more spend per buyer in a long-term forecast (>5 years). However, Pinduoduo is likely safe from potential antitrust proceedings that are hitting Tencent (OTCPK:TCEHY), Baidu (BIDU), and 10 others - it doesn't have a fintech arm and doesn't have the same amount of presence/sway as those involved.Margins also provide a risk to Pinduoduo's profitable inflection likely ahead this fiscal year. Although it does have a superior margin profile, dedication to constantly spend more on marketing/advertising and offering more promotions/discounts all can cut into earnings, and if expenses grow more than 18-20% each quarter, the profitability picture could be cut nearly 30% lower to $1.80 by FY23.Chewy and a Pet NicheSimilar to Pinduoduo, Chewy is currently geographically limited to the US, and while it does seem to be an unconventional, heavily-pandemic aided e-commerce name, it has established itself as a leading player in pet-related products and is expanding product offerings into telehealth and eventually D2V (direct-to-vet) pharma.The pet-care and pet-related product industry has not traditionally utilized e-commerce as a sales channel, instead of relying on brick-and-mortar stores to drive sales.E-commerce penetrationof pet food/treats/related products likely hovers at around one-quarter of the market, putting it at about $14 billion in sales through the channel. As such, Chewy could still command about half of the market, with Amazon close behind at nearly 40% share. However, this is still a more speculative (riskier) play.So what makes Chewy an interesting buy as shares are down ~26%?Pole position atop its segment is a large positive, as other pet product related brick-and-mortar stores don't have the same depth of online presence or leverage of such a strong customer base - while Amazon does present a growing threat, Chewy still has the giant beat, with strong growth in customers and retention through Autoship, as well as a brand moat with over 2,000 brands offering 60,000 products.Chewy saw some impressive growth rates in revenues as \"traffic, conversion, orders, and customer retention all strengthened from September into October as customers shifted their shopping behavior this year.\" Revenues rose 45% for Q3 to $1.78 billion and 46% for the 9M period to $5.1 billion, with the company on track for $7 billion this fiscal year.Customer growth remains strong, with Chewy seeing active customers grow 40% to 17.8 million from 12.7 million last year. Customer retention, assessed through Autoship sales, still hovers at about 69%, dipping slightly lower during Q3 (although that is likely due to the large influx of customers, as $ of Autoship sales per active customer rose slightly). Dollar spend per active customer rose just over 4% to ~$100 per active customer, up from $96.From a long-term perspective, Chewy should be able to grow revenues by ~$2 billion annually through FY23, reaching approximately $11 billion in sales, putting it at ~3x revenues at the current valuation. Consistent growth in revenues at this rate (~20% YoY per quarter on average) will be derived from customer retention remaining at around 67-70%, or through >20% YoY growth in new customers each quarter through FQ4 '23.One sign for maintenance of that retention rate is percentage ofconsumablesper total sales, which sits at just about 70%. Consumables are likely the key driver for Autoship and continual purchases, as these items (foods/treats/etc.) are much more constant needs than toys/beds/etc.Chewy is also seeing net losses shrink, with a net loss of just $7.7 million, adjusted for share-based compensation. EBITDA has grown to $33 million, very small, but pointing to signs of profitability by late FY22. Because gross margin is small, just 25.5%, Chewy is unlikely to see rapid EPS leverage, with just $0.35 in EPS possible by FY23. Thus, Chewy trades at quite a high forward PE, but given its position atop the pet-care e-channel, could sustain this premium with relatively little competition.The pet food/treat/care products market doesn't exhibit a rapid forward growth runway, placed in the high-single digits; working with the prior $14 billion figure, 2023 sales through e-commerce could reach just under $18 billion in a rudimentary estimate. Therefore, leveraging other channels, like D2V pharma, and free telehealth visits for Autoship customers, could be vital in driving engagement and spend per customer higher, which are necessary for revenue growth projections.Although Chewy does have good potential as the leader in pet-focused e-commerce, it hassome major risks.Chewy'sbalance sheetis underwhelmingly weak, as the company had been technically insolvent through Q3, with $56 million less in assets than liabilities (this could be subject to change during Q4, with revenues near $2 billion likely allowing some more cash to be added which would resolve this issue). But with just over $500 million in cash, raising capital is most likely already booked in the future, either through debt or dilution.Margins also present a risk, as revenue growth isn't extremely rapid, and inflection to profitability with high EPS leverage also isn't likely. As such, margins will need to be maintained above in the mid-20% range to ensure consistent profitability in the long-run, as utilization of free telehealth visits could crimp margins with some excess incurred costs relative to increased revenue generation.Even though Chewy is a segment leader, the pet-care industry hasn't been a wide adopter of e-commerce, and such a pull-forward from the pandemic could fizzle out, and disappointing growth in customers moving forward would shift revenue projections down by ~10% to around $10 billion, as that would likely be met with lower-than-expected Autoship sales.OverallE-commerce growth is undeniable, and global, regional, and niche leaders alike have positive runways ahead with increased e-commerce penetration relative to total retail and large dollar gains in sales. While it's hard to argue against outright leaders, niche players Pinduoduo and Chewy offer good potential for forward growth due to occupancy of the pole position within their respective niches of agri-commerce and pet products. Both are still quite pricey, but have sold off pretty heavily with the tech-selloff, thus providing more attractive entry points after valuation resets. Pinduoduo has some rapid room for revenue growth amid surging GMV and could see strong EPS leverage amid a shift to out-and-out profitability in the near future. Chewy's segment doesn't boast the highest growth rates, but large market share combined with good retention bode well for future revenue growth consistency. As such, both of these niche leaders could be attractive purchases after the recent routs.","news_type":1},"isVote":1,"tweetType":1,"viewCount":112,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
