Cyber Monday: 3 Rallying Consumer Stocks

Marilyn Monroe said, “Happiness is not in money, but in shopping.”

Now that Black Friday is behind us, let’s review some happy shopping news. Yesterday was Cyber Monday, the day of online sales and deals, and the day when shoppers, unencumbered by the need to show up at a crowded store, can pick up some deals at lunch on their day back at work after the holiday weekend.

Online retail has become a giant in its own right. According to Adobe’s tracking of major US online retailers, this year’s Cyber Monday sales reached $7.9 billion in total volume, shattering last year’s record of $6.59 billion with a near-20% increase. Even more important, from the perspective of the retailers: more than $2 billion of that total – almost one third of the volume – was conducted via smartphone. Online retail isn’t just growing; it’s also changing its own industry, in real time.

eBay, Inc. (EBAY – Research Report)

eBay, a survivor of the 90’s bubble, is the second largest player in the US online selling game – only (AMZN) is bigger. Last year, eBay generated over $9.5 billion in revenue through its fee-for-service model.

As a major player in online retail, eBay was well positioned to profit from Cyber Monday, and the stock price reflects that. EBAY share prices gained 1.27% yesterday, marking the fourth straight trading day of gains. The stock’s current share price is $28, and the average price target of $37 yields a 30% upside potential. The analyst consensus is a ‘Moderate Buy,’ based on an even split: 12 ‘buy’ ratings, 12 ‘hold’ ratings, and one ‘sell.’

Market analysts give similarly split reviews of eBay, but anticipate a strong holiday season. Baird’s Colin Sebastian (Track Record & Ratings) gives a typical statement, saying, “[G]iven management’s updated strategic priorities and more cautious tone around marketplace growth, he anticipates growth trends will remain subdued. I expect Black Friday/Cyber Week promotions will drive a seasonal uplift in volume.” His $41 price target reflects his holiday season optimism with a 41% upside. Given the Cyber Monday totals, that optimism may be well-placed.


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