E-commerce analyst: buy these ‘niche’ stocks

For many investors, Amazon is the top pick for putting money in the eCommerce sector. Global investment strategist Simeon Hyman of ProShares Advisors, however, see niche players like Etsy Inc (NASDAQ: ETSY), Stitch Fix Inc (NASDAQ: SFIX), and Chewy Inc (NYSE: CHWY) as more suitable for investment at the moment.

Simeon Hyman’s remarks on CNBC’s “The Exchange”

On CNBC’s “The Exchange”, Hyman said:

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“There are some short-term logistical challenges for the niche players, but if you put a longer time frame on it, there are real opportunities for these companies. Take a legacy player like Walmart, for example. Its margins have declined in recent years as it became the number two retailer. So, in the long run, the legacy players are going to have much bigger troubles than the born online players.”

Compared to their 52-week highs, Etsy, Chewy, and Stitch Fix are currently about 30%, 35%, and 45% down, respectively, in the stock market. Hyman also picked Qurate Retail Inc as an interesting stock during his interview with CNBC. He said:

“Qurate’s omni-channel is synergising the old home shopping network. So, that opportunity is almost ahead of schedule. You’ve also got buybacks going on there, and it would be great if it started paying dividends in the future as well. It hasn’t happened yet, but I’ll take buybacks in the interim as an indication that they’re putting their money where their mouth is.”

At the time of writing, Qurate is exchanging hands at $13 per share (£9.33 per share) that translates to an about 25% growth on a year-to-date basis. The stock performed fairly upbeat amidst the pandemic last year, with an annual gain of roughly 35%.

Key advantage of niche players

According to Hyman, the core competency and the key advantage for Stitch Fix, which reported its quarterly results two weeks ago, is its subscription model that he dubbed ‘the holy grail of eCommerce’. For Chewy, he added, it’s the expansion into pet healthcare, which is free from Medicaid and offers a good opportunity to make money. On Etsy, he commented:

“Etsy showed what its key advantage was in the pandemic. You just can’t replicate that kind of agility in turning on a dime.”

Earlier this month, Etsy said it will buy Depop for $1.62 billion. Depop is a fashion resale app that focuses primarily on Gen Z.