Bank of America is monitoring a number of themes analysts believe will create long-term value for investors, and the firm’s top-performing theme over the past four years is the Sharing Economy. The Sharing Economy is a term used to describe a number of activities and services that are shifting to online platforms, including on-demand, rental, gig, access, collaboration, e-commerce, circular and peer-to-peer business models. These models are unlocking value in previously unused assets, connecting customers and businesses more efficiently and disrupting traditional business at an impressive clip. Here are 10 of Bank of America’s top Sharing Economy stock picks.
Amazon.com, Inc. (AMZN) may be the quintessential Sharing Economy stock pick. AWS is the clear global leader in cloud services, Amazon is the top player in e-commerce retail and Amazon is a major force in digital media. Analyst Justin Post estimates AWS revenue will reach $25.6 billion in 2018, and high-margin AWS revenue will help boost Amazon’s overall margins and drive profitability over time. Post says Amazon is the one FANG stock most insulated from competitive pressures. Bank of America has a “buy” rating and $2,200 price target for AMZN stock.
Alphabet, Inc. (GOOG, GOOGL) has a booming online advertising business, but it’s Google’s cloud computing and driverless vehicle businesses that appeal most to Sharing Economy investors. Post says Google’s cloud business will enter 2019 at an annual revenue run rate of at least $6 billion and could generate $10 billion in 2019. In the longer-term, Bank of America sees cloud services as a potentially $1 trillion global opportunity. Earlier this year, Navigant Research named Alphabet subsidiary Waymo as the market leader in driverless vehicle technology. Bank of America has a “buy” rating and $1,390 price target for GOOGL stock.
Private startup Airbnb may be the best example of the Sharing Economy in the travel space, but Post says Expedia Group, Inc. (EXPE) is the top pure-play online travel stock for long-term investors. In addition to its primary platform, Expedia owns top online travel brands such as Orbitz, HomeAway, Travelocity, Hotels.com and Trivago. Post says travel bookings will continue their secular transition to online platforms, and investors shouldn’t be deterred by earnings headwinds created by Expedia’s ramping investments. Bank of America has a “buy” rating and $155 price target for EXPE stock.
The GrubHub, Inc. (GRUB) app has made food delivery and takeout easier than ever. GrubHub serves a network of nearly 80,000 U.S. restaurants and has an active user base of more than 15 million diners. Analyst Nat Schindler says take-out has been a huge trend in the restaurant industry in recent years, and GrubHub’s is well-positioned to capture an even larger share of high-margin take-out revenue in the future. With GRUB stock up 161 percent in the past year, near-term upside may be limited, but Bank of America has a “neutral” rating and $139 price target.
The most recent quarterly report from eBay, Inc. (EBAY) revealed slowing gross merchandise volume growth for eBay’s e-commerce platform, but Post says advertising and improving monetization will drive upside for EBAY stock in coming quarters. Post says eBay’s strong balance sheet and healthy cash flow suggest the potential for increasing capital returns over time. He says the stock’s attractive valuation and relatively low earnings multiple make it a low-risk defensive play on the secular growth trend in e-commerce. Bank of America has a “buy” rating and $44 price target for EBAY stock.
Netflix, Inc. (NFLX) is…
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