Investors are surrounded by doors this month, and opportunity is knocking on all of them. While the losses have been outweighing the gains in most portfolios lately, now would be an excellent time to start assessing which stocks have the best potential to bounce back.
Amazon (AMZN 1.49%), Roku (ROKU 2.94%), and Etsy (ETSY -0.46%) are three consumer-facing companies whose services became much more essential when the pandemic began, and they're even more relevant now. Their stocks are also attractively priced on a historical basis. The risks in today's market are naturally very real and all too present, but even so, these are three stocks that I think you may want to consider buying in March.
Image source: Getty Images.
Amazon
The leading online retailer isn't one of the market's biggest losers. It enters this new trading week just 23% below last year's all-time highs. However, it should be hitting new highs right now -- and for reasons that have nothing to do with last week's announcement that it's going to execute a 20-for-1 stock split. That's a zero-sum game in terms of fundamentals, even though there are legitimate psychological factors to retail investors appreciating the lower price points that a stock split brings. Shifting it away from a four-figure price also makes life easier for options traders.
Amazon has proven itself worthy as the ultimate all-weather stock. E-commerce thrives when it's not desirable to go out, and between the COVID-19 crisis that began two years ago and the recent surge in gas prices, there remain compelling reasons to buy more merchandise and even groceries from home. Amazon also has cost advantages over traditional brick-and-mortar chains, and its ability to pass some of those savings along to shoppers is a good look in any economic environment. It also has Amazon Web Services (AWS). At a time when more and more companies are turning to the cloud to make their services and systems accessible to everyone from any device, the value in being the leading cloud-based hosting provider is undeniable.
Net sales rose 22% last year, though that growth decelerated to 9% year over year in its latest reported quarter. That single-digit top-line growth may have been its weakest showing in more than two decades, but investors expect net sales will bounce back with 15% growth this year, and foresee it accelerating again in 2023.
Roku
Streaming TV grew up a lot over the past two years as we sheltered in place, and we're still spending a lot of time at home watching shows and movies on demand. With nearly double the market share of its nearest competitor, Roku is the country's leading streaming hub.
Roku draws a crowd. It had 60.1 million active accounts as of the end of 2021, 17% more than it was entertaining a year earlier. Some investors were concerned about the stock, thinking that people would reduce their streaming as we returned to spending more time outside of our homes. But the record 19.5 billion hours logged by Roku users in its latest quarter was 15% more than in the same period a year earlier. Advertisers also covet Roku's captive audience even more now: Average revenue per Roku user has skyrocketed 43% over the past year.
None of this lines up with a stock that has plummeted by nearly 80% from last summer's all-time high. The company faces some near-term challenges on the hardware front, and its growth has slowed. Roku's revenue climbed 33% in its latest quarter, and its guidance calls for a 25% year-over-year advance for the quarter that concludes at the end of this month. Roku's fundamentals are still more attractive than its stock chart.
Etsy
We wrap up this March shopping list with Etsy, another household name that has suffered from decelerating growth. It's the leading marketplace for creative and often customized arts and crafts, and its consolidated gross merchandise sales (GMS) of $4.2 billion over the holiday quarter was a record showing. It was also the third consecutive time that metric's year-over-year growth rate climbed in the teens.
Sales on the platform exploded a year earlier when folks turned to Etsy for stylish cloth face coverings, and against that comparison, any growth at all in 2021 would have been impressive. Etsy's namesake marketplace may have seen its sales growth slow to low double-digit percentages, but its two-year growth in GMS is a jaw-dropping 154% relative to Q4 2019.
Etsy stock peaked in November, and since then has plummeted by more than 60%. You have to like the marketplace operator here. The number of active buyers has risen by 18% over the past year to 96.3 million, and the number of active sellers has soared by 72% to 7.5 million. Etsy has come a long way, and with a more relevant base of crafty merchants and discerning shoppers, this will not turn out to be a company that peaked in 2021.
Amazon, Roku, and Etsy are quality growth stocks. They're on sale right now, but that only makes the stocks that much more compelling to buy in March.
