In a fast-moving market, it’s difficult to find stocks that aren’t yet recognised by the majority. There are great companies that go dark for a while and seem to fade out of popularity, but it may only be a matter of time until that popularity comes back.
So what stocks am I looking at?
Netflix (NASDAQ:NFLX) and Etsy (NASDAQ:ETSY) are prime examples of great stocks that I will cover, both have had big surges in share prices. However, I believe that there’s more long-term growth to come for each company because of the current fundamentals and prospects they hold.
The streaming giant, which currently has over 209 million paid members on its platform, consistently maintains strong revenue growth, and a share price that has gained over 100% in just two years looks to be priming itself for more growth over the long-term future.
In Netflix’s second quarter of this year, revenue increased 19% to $7.3 billion on a year-over-year basis. The surprising thing was that this news didn’t positively affect the stock. I mean, seriously that growth is phenomenal if you also account for the massive demand in 2020 from restricted travel and stay-at-home recommendations.
So I believe many investors are missing out on Netflix stock for the wrong reasons. In fact, Netflix beat their own internal paid membership growth forecast of 1 million users and instead acquired over 1.5 million users. It seems to me that Wall Street values Netflix wrong and as a result, the share price stays stagnant because they don’t meet expectations.
This misconception however creates a great opportunity to acquire shares at discounted prices, which is the great thing about being a retail investor like myself.
What investors should be paying attention to is the internal growth and outlook from Netflix. After all, who better knows the company than the company itself?
Niche e-commerce and the global marketplace company Etsy have been on a rocket in the past two years, with the share price blasting off over 500%, yet Etsy is still in the early stages of development.
With a market cap of over 25 billion, I can’t help but wonder about the growth left in Etsy. If revenue growth is any indicator, be prepared. Etsy grew revenues by over 110% while also being profitable. You don’t hear that level of growth matched with profitability that often, and if you do the profits are usually small. In Etsy’s case, their net profit margin last year was just over 20% which is astonishing.
Quarterly results are right around the corner, this should give more insights into what Etsy has to offer. It’s a very exciting time for Etsy investors to see if the growth will continue throughout the next few years.
Considering Etsy is down over 25% since its all-time high, it’s also a major benefit for new investors looking to acquire some shares at discounted prices. I can never complain about a sale, especially for great stocks.
Overall, if you’re looking for a stock that has phenomenal fundamentals underlying the business, exposure to e-commerce, and wide margins of profitability, Etsy may be a great candidate for your portfolio.
Not Investment Advice
Note: Views expressed are those of the writer. The author does not own any stocks mentioned. The article is information, not advice. Share prices can rise and fall. Past returns are not a guide to the future. Please do your own research.