Costco (COST 2.05%) stock is underperforming the market lately, with shares down slightly even as the S&P 500 has jumped higher by double digits.
Below, we'll look at a few stocks that have delivered far more exciting returns for investors so far in 2017. Wayfair (W +4.43%), National Beverage (FIZZ +0.11%), and Shopify (SHOP 2.08%) have each more than doubled this year thanks to rising optimism on Wall Street.
Wayfair
Costco is taking a conservative approach to its e-commerce sales channel because management sees its warehouses -- and the treasure hunt shopping atmosphere they provide -- as their core competitive advantage. Investors who want more exposure to online retailing might consider Wayfair instead.
Image source: Wayfair.
The home furnishings specialist has given shareholders plenty to celebrate recently. Revenue was up 50% in 2016 as the company's active user base jumped to over 8 million. Wayfair kept that positive momentum going into the 2017 fiscal year, too. It gained nearly 3 million customers in the first quarter.
Sure, Wayfair is far from profitable right now as CEO Niraj Shah and his team prioritize market share gains over earnings. Yet investors are optimistic that the leadership position the retailer is building will deliver defensible profit growth once the operations reach scale. At that point, Wayfair should be able to scale back on its elevated advertising and tech development expenses and start cashing in on its popular online selling platform.
National Beverage
National Beverage is the company behind the Shasta and LaCroix soda and sparkling water brands. And while major soda giants have seen their sales volumes dip, this company's focus on non-traditional carbonate beverage types is powering an entirely different operating trend.
Sales popped 17% over the past 12 months thanks to a 43% spike in demand for its growth brand portfolio that includes LaCroix sparkling water and Rip It energy drinks. What has investors even more excited is its improving finances. Net income spiked higher by 75% thanks to rising prices in the past year. Operating margin just cracked 20% of sales -- up from less than 12% in fiscal 2015.
FIZZ Operating Margin (TTM) data by YCharts.
National Beverage is poised to keep growing its top and bottom lines as consumers shift away from diet sodas and toward sparkling and bottled waters. The sparkling water industry should reach $5.5 billion of sales by 2020, which gives this business, and its $827 million revenue base, plenty of room to expand from here.
Shopify
Shopify's Chief Financial Officer made a bold claim in early May. "It is clear we are becoming the de facto platform for sellers," the executive said in a press release announcing fiscal first-quarter results. There were plenty of impressive numbers to back up that statement, though.
Image source: Getty Images.
The company, which sells subscription-based services that allow retailers to build and maintain an online sales presence, posted a 75% spike in revenue in the first quarter. And just as Costco's business benefits from a steady stream of membership fees, Shopify has built predictability into its business, too. Recurring monthly revenue soared 63% last quarter to reach 16% of the sales base.
Shopify believes it can boost revenue to between $615 million and $630 million this year as its network of merchants expands even as existing sellers tack on added merchandise volume. The software specialist has its work cut out for it in maintaining the lead industry position despite rising competition and rapidly changing technology. Still, patient investors who are willing to put up with a volatile stock might enjoy market-thumping long-term returns with a Shopify purchase today.
