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%
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

Do China Dangdang shares look attractive? (NYSE:DANG)

Despite a drop of nearly 48 percent since its IPO, I’m still optimistic about Dangdang’s (DANG) future. Here are three reasons to consider buying stock in the so-called “Amazon of China.”

It’s been a rocky ride for shares in E-Commerce China Dangdang, Inc. (NYSE:DANG). Stock in the China-based online retailer debuted in December at $29.91 a share. Yesterday, those same shares closed at a new 52-week low of $15.56. That’s a drop of nearly 48 percent. Yet, I’m still optimistic about Dangdang’s future. Here are three reasons to consider buying into the so-called “Amazon of China” – even at today’s depressed prices:

1) Dangdang’s drubbing is temporary. One of the biggest reasons Dangdang’s shares have been falling comes down to simple supply and demand. Insiders who were previously locked out of selling their shares now have that right as the post-IPO lock-up expires. Just 19 million ADRs were trading last week. With the lock-up expiration, there are now more than 58 million ADRs on the market, per CNBC. Insiders who want to turn their paper holdings into currency now have that right, and it’s going to take the market a while to absorb that glut of supply.

2) Unrivaled sales growth. A recent report from SmarTrend named Dangdang the No. 1 Internet Retail stock in the world in terms of sales growth. Sales are expected to grow more than 113 percent from $375.9 million last year to $802.1 million in the next fiscal year. That puts DANG ahead of investor darlings like Netflix, Inc. (NASDAQ:NFLX), Priceline.com Inc. (NASDAQ:PCLN) and even Amazon.com, Inc. (NASDAQ:AMZN).

3) Setting the stage for even bigger growth. Dangdang’s aggressively expanding its product offerings, fulfillment facilities and accessibility as it faces fierce competition behind the Great Firewall. During an earnings call last month, Chairwoman Peggy Yu Yu made it clear the company’s not ready to start milking DANG for profits, but rather it’s fixating on setting the stage for future growth. We’ll “keep plowing whatever gross margin we make back into operations,” Yu Yu said.

Already, the scope of the site is expanding. Total orders surged 40.9 percent year-over-year last quarter, and the company’s total number of active customers grew by 42.3 percent. The site’s most impressive growth came from third-party merchants, with sales screaming up 242.9 percent. If those trends stay intact, Dangdang stands to make long-term investors a whole lot of yuan.



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Top 6 best online travel site stocks

The online travel site business is alive and growing. There’s lot of money at stake, too, with the industry expected to grow to $104.6 billion in 2011. Here are six travel stocks to consider adding to your portfolio.

Despite contractual rifts in the industry, the online travel site business is alive and growing. There’s lot of money at stake, too, with the industry expected to grow to $104.6 billion in 2011, per data from market research firm PhoCusWright Inc. Here’s a look at the top six biggest online travel site stocks by market cap:

1) Priceline.com Inc. (NASDAQ:PCLN), $22.4 billion. Priceline’s acquisition-happy strategy appears to be working. The company bought Booking.com in 2004 giving it a foothold in the European hotel market. In 2007, they acquired Asian booking site Agoda. Investors like the company’s momentum with shares in Priceline hitting 52-week highs. The stock’s up 120 percent over the past year. In Priceline’s upcoming earnings report, total gross travel bookings are expected to climb between 36 to 41 percent year-over-year with most of the growth coming internationally, according to All Things Digital. 9.8 million visitors per month in January. www.priceline.com

2) Ctrip.com International, Ltd. (NASDAQ:CTRP), $10.9 billion. Shares in China’s biggest online booking site have traded sideways, rising just 18 percent over the past year. The company also offered lower than expected guidance for Q1 2011, but don’t count them out. Analysts believe Ctrip controls 50 percent of the market in China. www.english.ctrip.com

3) Expedia, Inc. (NASDAQ:EXPE), $5.9 billion. One of my favorite online booking conglomerates, Expedia runs Hotels.com, Hotwire.com, TripAdvisor.com and Expedia.com among other sites. Shares plunged last week after management warned that the company’s profits would take a hit in upcoming quarters after heavy investments in technology and marketing, according to the Wall Street Journal. It could be a great buying opportunity for a company that’s trading at a P/E ratio of 14.8. 15.3 million visitors per month in January. www.expedia.com

4) MakeMyTrip Limited (NASDAQ:MMYT), $997 million. Founded in 2000, MakeMyTrip has grown to dominate India’s online travel industry. During the company’s most recent quarter, gross bookings for air ticketing and hotels surged to $210.6 million – growth of 70.7% year over year, according to TheStreet. Shares in MakeMyTrip are up 10 percent over the past year. www.makemytrip.com

5) Travelzoo Inc. (NASDAQ:TZOO), $723 million. Boasting more than 22 million subscribers from around the world, Travelzoo’s like the Groupon of the travel industry. Subscribers offer up their email addresses to get weekly lists of the Top 20 travel deals from more than 2,000 companies. During the company’s most recent quarter, revenue was up 20 percent year-over-year to $28.5 million and operating profits soared 90 percent year-over-year to $6.7 million. 3 million visitors per month in January www.travelzoo.com

6) Orbitz Worldwide, Inc. (NYSE:OWW), $425 million. Despite robust traffic (7.7 million unique visitors in January per Compete.com), Orbitz has struggled to turn that stream of visitors into profits. Shares are starting to look very attractive after investors have pushed them down 32 percent on the year. In addition to Orbitz.com, the company operates CheapTickets.com – an online ticket exchange that caters to events tickets including Broadway, sporting events and concerts. 7.7 million visitors per month in January. www.orbitz.com



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