Up 48% YTD: This is the hottest sector on the stock market in 2015

The S&P 500 is down more than 5 percent this year. Don’t bother telling that to the Internet and Catalog Retail sector. This small sub-sector of stocks is up a scorching 48 percent this year. That beats every other industry sub-sector on Wall Street. Here’s a look at the Top 10 stocks in the sector and their performance year-to-date:

Company Ticker YTD Return
Netflix NFLX 117.0%
Wayfair W 80.6%
Amazon AMZN 67.8%
Expedia EXPE 40.5%
CTRIP International CTRP 37.5%
Nutrisystem NTRI 36.9%
JD.com JD 14.5%
1-800-FLOWERS FLWS 11.8%
Petmed Express PETS 11.6%
Priceline PCLN 9.3%

Do any of the stocks above have more upside? Let’s take a look at their current share prices and compare them to the average analyst’s price targets for the stocks:

Ticker Current Price Avg. Target Potential Upside
NFLX $106.11 $119.30 +12.4%
W $36.18 $51.44 +42.2%
AMZN $532.54 $650 +22.1%
EXPE $122.62 $128.96 +5.2%
CTRP $66.77 $88.72 +32.9%
NTRI $26.10 $31.15 +19.3%
JD $28.91 $37.99 +31.4%
FLWS $9.80 $14.25 +45.0%
PETS $16.32 $13.67 -16.2%
PCLN $1,265.68 $1,480.65 +17.0%

Wayfair and 1-800-FLOWERS both pop out. What has analysts so excited about these stocks?

The bullish case for Wayfair

Wayfair runs several online ecommerce sites geared toward home decor. Specifically, they operate Wayfair.com, Joss & Main, AllModern, DwellStudio and Birch Lane. The company blew away analyst expectations in Q2. Quarterly revenue surged 66 percent year-over-year to $491.8. That bested analyst estimates by more than $50 million. On top of that, the company lost less money than analysts expected (woo-hoo!). They reported a $0.15 loss. Analysts were expected a non-GAAP loss of $0.29. Wayfair is at least growing its customer base. The number of active customers on their properties rose 53 percent year-over-year to 4 million. I’m on the fence here. The stock’s gone up so quickly, I’m wary momentum could snap the other way. I’d play it safe and buy shares in a company that’s actually profitable.

The bullish case for 1-800-FLOWERS

The online flower-delivery company, 1-800-FLOWERS also crushed earnings estimates for Q2. It beat estimates by posting a smaller loss than expected ($0.13 per share instead of $0.19 per share). That loss isn’t all bad. The company’s very seasonal and so is its latest acquisition, Harry & David’s. If it weren’t for Harry & David, the company would have posted adjusted earnings of $0.01 per share. That’s not enough to get me overly excited.

Of course, not every stock in the sector has fared so well. Here are the bottom five stocks in the Internet and Catalog Retail sector:

Company Ticker YTD Return
CNOVA CNV -61.8%
EVINE LIVE EVLV -61.7%
Groupon GRPN -60.6%
Light In the Box LITB -58.0%
Land’s End LE -50.2%

The overall market is down, but there are stocks out there that are out-performing. With a little homework, you can find them.

Photo Credit: Tanel Viksi

Five reasons to invest in the 360Buy.com IPO

We don’t have a 360Buy.com IPO date yet, but when we do, the offering will probably generate a lot of media. Here are five reasons to consider investing in the 360Buy.com IPO.

-Posted by Alejandro Guillú Mendoza

We don’t have a 360Buy.com IPO date yet, but when we do, the offering will probably generate a lot of media. Here are five reasons to consider investing in the 360Buy.com IPO:

1) Mr. Liu Qiandong.

Liu Qiandong is currently No. 93 in the list of the Top 400 Richest Chinese with a net worth of over a billion dollars at just 37. He started his own business in 1998 with just $12,000 CNY and six years later he started jd.com. After only 6 years, the company grew to 10 billion yuan in sales. He’s No. 25 on the list of Asia’s Hottest People in Business compiled by Fortune. If somebody from ICBC and the China Construction Bank is reading this, then please LEND THIS MAN TEN BILLION DOLLARS. It is unlikely that you will lose your money with him.

2) Alibaba sells over $170 billion.

I don’t need to explain this one.

3) They want to compete with DHL.

Most people see Jingdong as the next Amazon, but I prefer to see them as the next DHL.

Only 4 companies in the whole world remain in the Air Courier industry: Deutsche Post (Frankfurt: DPW), Federal Express (FDX), United Parcel Service (UPS) and Expeditors International (EXPD).

Together they turn a massive profit of at least $5.1 billion each year. The United States of America dominates this industry with 75% of the companies. At the end of the day, China must pay these companies to move their products from the factories to the stores.

They are very busy building half a dozen distribution centers in China. It is only a matter of time before they expand to the 14 countries that share borders with China.

4) Digital Sky Technologies believes in them.

This Russian company invests only in the Internet, and they had the vision to invest $100 million in Facebook (FB) when the company was valued at just $10 billion in 2009. That same year they also invested in Zynga (ZNGA).

In 2010 they invested $135 million in Groupon (GRPN), when the company was valued at just $1.35 billion. In 2011, they invested in Airbnb, which is now valued at $2 billion.

As you can see, they have a very strong track record of picking the right companies at the right time. If they are investing $1.5 billion in this company, then that means they believe this company will have a market value of $15 billion in 2016.

5) Rakuten is the fourth leading Internet & Catalog Retail Company in the world.

Rakuten of Japan is only behind eBay (EBAY), Liberty Interactive (LINTA, LINTB) and Amazon (AMZN) according to Forbes. This company currently has a market value of over $13 billion and annual sales of $5.6 billion. This company was founded in 1997 and it is now one of the largest companies in the world. They have grown to 10,000 employees. I think they already proven to the world their business model works and 360Buy is doing the same thing in China.

Conclusion

I don’t think this company will file for an IPO anytime soon. If they run out of cash, they can always give a call to Al Waleed Bin Talal and very nicely ask him for another couple of billions.

Groupon stock forecasts for 2012: Deal or no deal?

Shares in Groupon (NASDAQ:GRPN) are looking more and more like an “easy double.” And I want to be there when that double happens.

One of the best ways to make money off “hot” tech IPOs is by ignoring them for a year or so. By then, the market will have devoured all those overly-hyped novices who eagerly bought shares during the first week of trading, then sold them when they saw the value of their holdings crumble. That’s what appears to be happening to Groupon Inc. (NASDAQ:GRPN) right now.

And it’s a pattern that gets repeated a lot. I like to use one of the stocks I lost a lot of money on as an example: E-Commerce China Dangdang Inc. (NYSE:DANG) – the so-called “Amazon of China” (even though Amazon operates in China, too). The stock had its IPO on Dec. 10, 2010. It debuted around $32 an ounce. A year later, shares were bloodied. They plunged more than 80 percent to less than $5 a share.

If you would have bought at the start of 2011, though, you’d be quite happy with your returns. Since then, DangDang has shot up nearly 70 percent from $4.40 to $7.45. I think we’re on the verge of something similar happening with Groupon.

Shares in the daily deals site are in the long, painful process of shaking out the weak hands. The question is, when will the real institutional buyers start moving in? I would argue that the tipping point could be coming soon – particularly as a number of investment firms have started moving to upgrade the stock. Here are just a handful of the Groupon stock forecasts for 2012 that we’ve seen over the past month or so:

B. Riley & Co.: Upgrade from sell to neutral. Price target of $10.60 (per Barrons).

Evercore Partners: Upgrade from to equal weight to overweight. Price target of $15 (per Forbes).

FactSet Research: Seven buy ratings and 12 hold ratings. An aggregate price target of $21.44 (per the Wall Street Journal).

Reuters: The average price target of 25 analysts covering Groupon stands at $22.53 (per Seeking Alpha).

Even after an accounting error forced Groupon to revise revenue down $14 million last quarter, it’s hard to ignore the company’s growth profile – and the stock’s subsequently low valuation.

Indeed, Groupon’s valued at “roughly half the multiple that was reportedly offered by Google in which time Groupon tripled its quarterly revenue,” writes Ken Sena, an analyst with Evercore Partners, wrote in a recent research report. It doesn’t make sense then that the company’s more than twice the size it was at the time of offer but somehow worth just half the price.

That’s got me looking for the right time to start accumulating Groupon shares. In the words of hedge fund manager James Altucher, Groupon’s an “easy double” (per Seeking Alpha). I’d like to be there when that double happens.

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