Online home goods retailer Overstock.com (NASDAQ:OSTK) is a frequently overlooked part of the e-commerce renaissance in 2020. But — because it tends to be ignored — OSTK stock is now trading at a reduced price in November, making a great opportunity for investors.
Source: Burdun Iliya / Shutterstock.com
During the era of the novel coronavirus, it’s tempting to get caught up in the bigger e-commerce names. And there’s nothing wrong with investing in those companies. However, some of the biggest winners in the world of trading come from the fringe. When we expand our horizons, we can catch on early.
So — for the traders who can see turnaround stories where most people aren’t looking — OSTK stock offers some great moneymaking potential. After examining Overstock.com’s fiscal data, you might agree that this company ought to be worth more than its $2.3 billion market capitalization.
OSTK Stock at a Glance
When the pandemic took hold of the stock market, OSTK stock declined steeply. The share price plunged from its short-term February peak of around $9 down to its 52-week low of $2.53 in mid-March.
It took a whole lot of courage and timing to scoop up shares at that price, but bold investors were rewarded. Soon, OSTK took off like a rocket. Believe it or not, the company managed to touch $128.50 per share in August.
However, it’s usually not a great idea to chase after stocks that have gone up so much so quickly. This has been a hard lesson learned for buyers with poor timing. At the time of this writing, Overstock.com has now fallen all the way down to around $54.
That said — though the angle of the price action is to the downside — this doesn’t mean the stock is destined for further decline. If anything, this is an opportunity for investors to own the shares at a more attractive price point.
A Notable Revenue Jump
If we take a look at Overstock.com’s recently reported fiscal stats, it becomes clear that OSTK stock shouldn’t be in a state of decline.
Let’s start with the company’s third-quarter earnings. In Q3, the company posted quarterly earnings of 50 cents per share, easily beating the analyst consensus of a 23-cent loss.
Plus, this result marked a significant improvement in the same quarter a year ago. Back then, Overstock.com reported a loss of 89 cents per share.
Now, let’s hone in on the company’s top line for the third quarter. During this time, revenues totaled nearly $732 million, a staggering 110.8% year-over-year (YOY) improvement. On top of that, those Q3 revenues also beat the average estimate by 8%.
And in case you needed more convincing, check out the company’s quarterly growth in new customers. On a YOY basis, this figure increased by over 141%. Additionally, the repeat-purchase rate for new customers increased by 19%.
Admittedly, Overstock.com didn’t impress everyone in 2019. The company mostly operated in the shadows of bigger, more competitive online retail platforms.
However, I just showed you how impressive its third quarter of 2020 was. And if we look back even further — specifically at the second and third quarters — it turns out that Overstock.com has developed a pattern of sustained growth.
According to InvestorPlace contributor Luke Lango, during both of those quarters, the company reported “100%-plus new customer growth, 100%-plus revenue growth, 300-plus basis points of gross margin expansion, ~500 basis points of positive operating leverage, and $50-plus million boosts in adjusted EBITDA dollars.”
What’s more, the difference between 2019 and 2020 has been qualitative, not just quantitative.
Overstock.com has been focused on improving search relevance for its platform, optimizing logistics and guaranteeing shorter delivery times. It’s also pursuing free shipping on everything — an absolute must in the modern world of e-commerce.
So — given the mismatch between OSTK stock’s price and the growth trajectory of the company — investors should take advantage.
This is a ripe opportunity in an e-commerce platform. Yes, Overstock.com is not necessarily the most famous name. But it can offer you the best bang for your investing buck.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system —with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
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