Please ensure Javascript is enabled for purposes of website accessibility

These 2 Old-School Nasdaq Stocks Flew High on Friday

By Dan Caplinger - Feb 26, 2021 at 2:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Success isn't all about electric vehicles and renewable energy.

The Nasdaq Composite (^IXIC 0.00%) got some much-needed relief on Friday, with the market benchmark finally regaining a little bit of ground after a brutal sell-off that lasted much of the week. As of 2:30 p.m. EST, the Nasdaq was still up about half a percent, although that was well below where it had been at its highs.

Many investors think of the Nasdaq as being synonymous with technology stocks, and it's definitely true that many of the companies with the most weight and influence in the Nasdaq do indeed have ties to tech. However, on Friday, it was a couple of companies specializing in traditional products like coffee and arts and crafts that delivered some of the best returns among Nasdaq stocks. Below, we'll take a closer look at what Starbucks (SBUX 0.12%) and Etsy (ETSY 1.03%) did to get into the limelight.

Brewing up a big stock move

Shares of Starbucks climbed almost 5% Friday afternoon. The coffeehouse giant stood out for its position as a provider of one of the most sought-after consumer products, and investors liked the stability and security inherent in making an investment in the stock.

Steaming cup on a wood table.

Image source: Getty Images.

Broadly speaking, investors have been increasingly optimistic about the prospects for consumer services companies overall. Throughout much of 2020, pandemic-related restrictions on brick-and-mortar restaurant locations weighed heavily on companies in the sector. Starbucks has made the best of tough situations by leveraging technology and emphasizing alternatives like delivery, drive-thru, and remote ordering. Nevertheless, the prospects for Starbucks and its industry peers look much better in light of possible full reopenings as more people get immunized through coronavirus vaccines.

In addition, even though many people are undergoing economic struggles, the overall state of the American consumer is fairly strong. That prompted analysts at Wells Fargo to upgrade the entire consumer services sector earlier this week, highlighting Starbucks as an overweight pick. Meanwhile, analysts at BMO Capital upgraded Starbucks from market perform to outperform, boosting its price target by $18 to $120 per share. In addition to stronger fundamentals in the U.S., Starbucks also stands to gain from a better environment in China.

Starbucks stock lost its upward momentum toward the end of 2020. However, with the stock at all-time highs once again, it's possible the coffee giant can keep getting a lift this year.

Making it great

Elsewhere, Etsy shares climbed 11%. It might be a mistake to refer to an online marketplace as being old-fashioned, but most of the arts, crafts, and other unique creative materials sold on Etsy's platform definitely qualify as having little to do with cloud computing or data analytics.

Etsy closed 2020 with a bang, as fourth-quarter gross merchandise sales on the platform soared 118%. That led to a 129% rise in revenue for Etsy, and net income was up nearly fivefold. For the full year, GMS exceeding $10 billion was more than double 2019's total, and similar gains in revenue delivered net income growth of 264%.

Etsy got more popular as well. Total active sellers grew to 4.37 million, up more than 60% from 12 months ago. Buyers on the site totaled 81.9 million, higher by 77%.

Defying skeptics who've argued that Etsy's success stemmed from pandemic issues, Etsy gave favorable guidance for high growth rates to continue in the first quarter of 2021. What many might find is that having used Etsy during the pandemic, they like what they've seen and won't give it up, even when conditions in retail return to normal. That in turn could lead to share price gains that look anything but old-fashioned.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Starbucks Corporation Stock Quote
Starbucks Corporation
$76.43 (0.12%) $0.09
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,181.54 (0.00%) $0.00
Etsy, Inc. Stock Quote
Etsy, Inc.
$74.80 (1.03%) $0.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.