Analysts at Cowen have identified several tech, internet and e-commerce stocks they rate as likely to outperform, some of which are set to return "at least" 15% over the next 12 months. Cowen's analysts looked at trends that started during the coronavirus pandemic and are likely to be permanent — such as a shift to e-commerce during lockdowns — in a research note published March 23. "We favor stocks that benefit from structural tailwinds to consumer behavior (which in some instances pulled forward what we deem to be an inevitable evolution), while contemplating the pricing power that companies / categories can show to insulate / expand profit margins," the analysts stated. Financial stimulus checks handed out during the pandemic in 2021 mean people can afford to deal with price increases due to inflation, the bank's survey of 2,500 consumers suggested. Amazon , rated outperform, is "well positioned to benefit from a permanent shift in consumer preferences towards online grocery, given its leadership in grocery delivery with two options available via Amazon.com and Whole Foods," Cowen analyst John Blackledge stated. Cowen's outperform-rated stocks are those that it expects to make a return of at least 15% over the next 12 months. "AMZN has also demonstrated a growing focus on their physical grocery footprint, as they've expanded their Amazon Fresh presence to 25 stores across 7 states, implementing Just Walk Out contactless check-out," he added. Online luxury fashion marketplace Farfetch , also rated outperform by Cowen, acquired around 500,000 new customers each quarter during Covid, the bank said. "As online continues to be a dominant trend among luxury consumers, we believe FTCH is well-positioned to benefit from this structural tailwind and gain share from department stores and other legacy retailers," stated analyst Max Rakhlenko. Cowen also identified retail stocks likely to benefit from a permanent shift to online sales, and highlighted Walmart . "Outperform-rated WMT is well positioned to maintain its dominant online grocery market share position given its massive store base, investment in robotics and automation to increase throughput, and capital flexibility to invest in growing the channel," the analysts said. Cowen's research suggests that "well above" half of Walmart's monthly shoppers buy goods online, while more than 30% use curbside pickup. Read more ‘MANGO:’ Bank of America thinks these chip stocks can do well despite investor concerns Five months in, bitcoin ETFs are down big but showing signs of staying power Wall Street analysts say sustainable investing is being shaken up — and name the stocks to cash in The bank also rated Target as outperform, liking its "improved fundamentals" as well as private label brands and "strong curbside pickup execution." "Impressively, at FY21-end, TGT's digital penetration in Food & Beverage increased to 13.2% from 2.3% in 2019 … we expect ongoing growth as TGT continues to improve brands (private label & national), experiences, payment options, and provides a compelling value proposition," the analysts added. Cowen also said Alphabet and online used car retailer Carvana were set to benefit from "elevated eCommerce purchasing," while Uber would benefit from more demand for restaurant delivery via its Uber Eats service. "Consumers are showing the ability to absorb high pricing in select sectors, which is encouraging as they contend with record levels of inflation," the analysts wrote. "We favor stocks that benefit from structural tailwinds to consumer behavior and / or strong pricing power to offset inflation and expand Margins," they added.
A trader works at the New York Stock Exchange in New York, the United States, Feb. 25, 2022.
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Analysts at Cowen have identified several tech, internet and e-commerce stocks they rate as likely to outperform, some of which are set to return "at least" 15% over the next 12 months.