There are great stocks, and then there are stocks that could be better than great. We're talking disruptors, companies cut from a different cloth that shake up industries to thrive in the new normal. You can invest in a disruptor early or late in its cycle of upending a moribund industry, winning big either way.
Costco Wholesale (COST -0.24%), Airbnb (ABNB -3.18%), and fuboTV (FUBO -3.57%) are three stocks at different stages of disrupting industries that were ripe for blowing up. Let's see how they're shaking up their markets, and why they're smart buys this month.
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Costco
Costco has been a retail juggernaut for so long that you might not even view it as a disruptor. However, the warehouse club operator helped revolutionize the way we view membership-based access for discounted groceries and other essentials. Tackling a supermarket industry with historically thin net margins, Costco has been able to deliver even lower prices.
The key to Costco's cost structure is selling items in bulk in a low-cost setting with bare-bones warehouse decor that includes exposed beams. Collected membership fees sometimes account for the lion's share of the chain's profit. One thing Costco doesn't skimp on is payroll. It keeps its staff well paid and satisfied.
Costco was thriving before the pandemic, but it's one of the few retailers that have seen its stock nearly double over the past two years. The chain's business took a step up during the first year of the pandemic, and it's only built on that with an 18% surge in net sales in fiscal 2021. Same-club sales shot 16% higher for the year. It won't report financial results for its fiscal second quarter until March 2, but this month is a good time to get in ahead of what should be another blowout performance.
Airbnb
Hotel rooms can be stuffy, noisy, and cookie-cutter by design. There was no shortage of sites listing vacation property rentals before Airbnb came around, but Airbnb elevated the art form. Encouraging folks to rent out idle real estate -- even sometimes just a room, garage apartment, or detached guest room they aren't using -- gave the gig economy a new spin. The idea took off, and now more than 4 million hosts are willing to share their digs with the rest of the world.
We'll get new numbers on Airbnb when it reports fourth-quarter financials on Tuesday, but momentum is strong. The platform facilitated 79.7 million nights and experiences booked in the summertime-dominant third quarter, up 28% from the previous year. Gross bookings rose even faster, climbing 48% to $11.9 billion as folks were willing to pay more for Airbnb's unique offerings. The platform's average daily rate -- including its notoriously stiff cleaning fees -- is up to $149, comparable with many of the leading hotel chains. The cherry on top here is that revenue soared 67% for the quarter.
Airbnb was gaining market share in the lodging industry before the pandemic, but things kicked up a notch when folks didn't want to stay in hotels shared with dozens if not hundreds of other families. The boom of the hybrid workforce also made it easier to explore new cities. Some folks are using Airbnb as more than just a quick getaway, as 20% of the nights booked are part of stays that are 28 nights or longer. The good news is that the long stays make the one-time cleaning fee easier to stomach. It remains to be seen if business will shift to shorter stays at the other end of the COVID-19 crisis, but for now Airbnb has revolutionized the lodging industry. The disruption is just getting started.
fuboTV
Cord-cutting has been going on for years. Folks are dumping their costly cable and satellite television plans, but the need to have many of their favorite channels in a single digital offering finds folks flocking to live-TV streaming services. There are larger platforms in this niche, but none is growing faster than fuboTV. The service closed out 2021 with 1.1 million subscribers, raising its revenue and subscriber targets several times as the year played out.
The differentiator at fuboTV has historically been its "sports-first" programming mentality, offering more than three dozen sports channels along the more than 100 included networks. However, it's been taking things to the next level in recent months by taking the logical next step into gambling. It rolled out predictive games within its live broadcasts this past summer, letting subscribers win prizes for guessing outcomes. The sticky engagement should ultimately pay off with a full-blown sportsbook as fuboTV clears regulations that vary state by state.
The growth is impressive since fuboTV hit the market less than two years ago. Check the top-line gains:
- Third quarter 2020: 71% revenue growth.
- Fourth quarter 2020: 98% revenue growth.
- First quarter 2021: 135% revenue growth.
- Second quarter 2021: 196% revenue growth.
- Third quarter 2021: 156% revenue growth.
Preliminary results for its latest quarter call for 105% to 109% year-over-year growth. Profitability is a problem, and the ambitious gambling initiatives will weigh on near-term bottom-line results. No one said disruption was going to be cheap or easy for this speedster standing out among streaming service stocks.
