In this article, we discuss the 10 best dating stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Dating Stocks to Buy Now.
The online marketplace is thriving and the coronavirus lockdowns over the past year have accelerated the digitization of goods and services around the world, fundamentally altering consumer behaviour. According to a survey by management consultancy McKinsey, close to 80% of Americans have not yet returned to pre-COVID ease with regards to outdoor activities. Another survey from the Shekel Group reveals that 87% of consumers now prefer shopping at stores with touchless or self checkout options.
These trends are not just limited to retail but have impacted all corners of everyday life. For example, there has been a surge in demand for online dating over the past few months. Match Group, Inc. (NASDAQ: MTCH), the Dallas-based company that owns several of the leading online dating services, reported in early May that average subscribers had increased to more than 11 million in the first quarter of 2021, an increase of 12% compared to the previous quarter, and revenues per user for Match Group, Inc. (NASDAQ: MTCH) had increased 9% to $0.64.
The trends highlight that consumer behaviour shaped over the coronavirus months is likely to outlast the pandemic itself. Momo Inc. (NASDAQ: MOMO), the Chinese company that owns one of the most popular mobile dating platforms in the country, beat profit expectations in the first three months of 2021 and has reported that monthly active users on the application had climbed above 115 million, an increase of more than 7 million compared to a year ago. Momo Inc. (NASDAQ: MOMO) is one of the best dating stocks to buy now.
Another stock that falls in the dating category and has significant upside potential is Netflix, Inc. (NASDAQ: NFLX), the California-based video streaming platform. Netflix, Inc. (NASDAQ: NFLX) recently launched an ecommerce platform to sell curated collections of digital content and other products separately from the main streaming service. Some of the products that the firm is planning to sell through the new initiative include streetwear and action figures, as well as limited edition attire and decor inspired by some television series.
Technology has permeated all aspects of our lives. Even the finance world has been affected by the revolutionary changes it has brought in its wake. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Yogas Design on Unsplash
With this context in mind, here is our list of the 10 best dating stocks to buy now. We selected these stocks based on their relevance to the dating scene in the United States, the growth potential they offer in the coming weeks and months, as well as the basic business fundamentals driving their earnings.
Best Dating Stocks to Buy Now
10. Bumble Inc. (NASDAQ: BMBL)
Number of Hedge Fund Holders: 29
Bumble Inc. (NASDAQ: BMBL) is a Texas-based social media company that owns and operates online dating applications. It was founded in 2014 and is placed tenth on our list of 10 best dating stocks to buy now. The company’s shares have offered investors returns exceeding 17% over the past month. The two dating applications it runs are named Bumble and Badoo. Tens of millions of users are active across both platforms. The company has a market cap of close to $10 billion and posted more than $580 million in revenue last year.
Bumble Inc. (NASDAQ: BMBL) stock has been sliding of late amid a broader lull in the market around growth stocks and tough competition in the market. On May 13, the share price of the firm dropped below the IPO price for the first time. The company went public in February this year at a valuation of around $8 billion.
Bumble Inc. (NASDAQ: BMBL) reported quarterly earnings results on May 12, posting a revenue of over $170 million for the first three months of 2021, up 43% year-on-year and beating market predictions by more than $6 million.
At the end of the first quarter of 2021, 29 hedge funds in the database of Insider Monkey held stakes worth $545 million in Bumble Inc. (NASDAQ: BMBL).
Just like Match Group, Inc. (NASDAQ: MTCH), Netflix, Inc. (NASDAQ: NFLX), and Momo Inc. (NASDAQ: MOMO), Bumble Inc. (NASDAQ: BMBL) is one of the best dating stocks to buy now.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Bumble Inc. (NASDAQ: BMBL) was one of them. Here is what the fund said:
“We also participated in two IPOs during the quarter (including) Bumble, which runs a popular social media dating app. Bumble is a women-first dating app founded in 2014 and is the second-highest grossing dating app globally. The company will benefit from a near doubling of industry spend in the next five years plus company-specific initiatives in international expansion, improved app payer conversion and higher average revenue per user premium tier upgrades.”
9. The Home Depot, Inc. (NYSE: HD)
Number of Hedge Fund Holders: 68
The Home Depot, Inc. (NYSE: HD) is a Georgia-based home improvement company founded in 1968. It is ranked ninth on our list of 10 best dating stocks to buy now. The stock has returned more than 21% to investors over the course of the past year. It is set to thrive further as the vaccine rollout makes it easier for people to entertain small gatherings at their homes after months of isolation and a general climate of fear around large gatherings. The firm is the largest home improvement retailer in the United States. Some of the products the firm retails include building materials, lawn products, and home decoration, among others. It operates over 2,200 retail stores across North and Central America.
In quarterly earnings results posted on May 18, The Home Depot, Inc. (NYSE: HD) reported earnings per share of $3.86, beating market predictions by $0.84. The revenue for the first three months of 2021 was over $37 billion, up 32% year-on-year.
A few weeks ago, investment advisory Bank of America maintained a Buy rating on The Home Depot, Inc. (NYSE: HD) stock with a price target of $375 on the back of strong medium-term outlook for the firm.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in The Home Depot, Inc. (NYSE: HD) with 7 million shares worth more than $2 billion.
Just like Match Group, Inc. (NASDAQ: MTCH), Netflix, Inc. (NASDAQ: NFLX), and Momo Inc. (NASDAQ: MOMO), The Home Depot, Inc. (NYSE: HD) is one of the best dating stocks to buy now.
In its Q1 2021 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and The Home Depot, Inc. (NYSE: HD) was one of them. Here is what the fund said:
“Notable contributors to the Fund’s returns this quarter (included) Home Depot. Home Depot (8.9% weight in the Fund) continued to benefit from a red-hot housing and home improvement market, delivering record financial performance in 2020. As a high return on invested capital business, any step-up in growth results in considerable shareholder value creation. While 2021 comparable sales may not yield impressive headline results, we believe there are several secular tailwinds supporting continued housing investment, including millennials entering prime household formation/peak earnings years, relatively low interest rates, and government policies.
Home Depot (8.9% weight in the Fund): The big orange sign of Home Depot is a familiar sight for homeowners across the country. Despite the rise of Amazon, Home Depot has generated outstanding results for shareholders during the rise of eCommerce, even as Home Depot’s end market in housing suffered the worst collapse in a century. Over the last fifteen years, a period which began at the peak of the housing bubble, Home Depot’s stock has generated annual returns of 17% a year, outperforming the S&P 500 by approximately 7% a year.
But while homeowners can attest to their continued shopping at Home Depot, they may not be aware that only about half the company is dedicated to serving Do It Yourself homeowners, with the other half acting as a key supplier to small contractors – which the company calls Pros – who depend on Home Depot as a mission critical business partner.
While the company does not report on their contractor business separately from their homeowner business, they have regularly offered comments indicating that contractors make up just 4% of their customer base, but about 45% of revenue. Basic math implies that this means the average contractor customer spends about twenty times the amount that the average homeowner customer spends. In an industry where you want to drive high levels of sales per store, the contractor customer profile is super attractive. It is Home Depot’s focus on and success in serving contractors that has led to them generating about 30% more revenue per store than competitor Lowe’s which has far fewer professional contractor customers.
Therefore, we think about Home Depot as two different businesses built on top of a single operational platform that allows them to better leverage their cost structure. This has led the company to generate returns on invested capital of about 45%, putting them top tier of high return on capital retailers.
Everyone likes growth, but one way to think about companies like Home Depot that generate high returns on invested capital is that these businesses can grow without needing to invest as much in their business to generate any given level of growth compared to companies with lower returns on capital. In the case of Home Depot, their success in growing the business without needing to invest that much to do so is well illustrated by the fact that over the last decade, the number of stores they operate has only increased by 2%, even while revenue has nearly doubled.
On the Pro side of their business, Home Depot is the first choice for small contractors who are not large enough to buy directly from distributors at the scale required to get discounted pricing. If you own a house and have had a contractor do some sort of work, you are familiar with the way that most every job ends up needing some part or tool that the contractor does not have on hand. In this circumstance, the contractor wants to make as time efficient of a trip as possible to go pick up the part and complete the job. Since the contractor passes along the cost of parts to the homeowner, it is the efficiency with which Home Depot is able to get them back to the job site and working, rather than the lowest possible price for the part, that drives the contractor’s shopping behavior. In fact, a number of contractors we’ve talked to describe driving past a Lowe’s to get to a further away Home Depot store because it is their preferred supplier.
Home Depot has also invested heavily in their online capabilities. Truly an “omnichannel” retailer that strives to be able to serve both Pro and Do It Yourself customers via in store shopping, online delivery, or curbside pickup, the company has been held up by Google’s Cloud services group as A CASE STUDY of a data driven retailer using modern data and analytics to drive results.
Of course, when competing with Amazon, having a strong eCommerce or Omnichannel strategy is just table stakes. But due to the nature of home improvement spending, where parts are often needed the same day and in many cases are heavy, bulky objects, the fact that well over 50% of Home Depot’s online orders are picked up in store, despite offering 2-day delivery to 90% of US households, speaks to the unique nature of this category and why we do not view Amazon as a meaningful threat.
While the company has been able to drive growth without building many new stores, they have indeed invested aggressively into three core areas. They’ve invested into their existing stores to keep them up to date and efficiently run. They’ve invested in technology, such as a mobile app that can locate a part in a given store and guide you directly to the aisle it is on. And importantly, they’ve invested in their supply chain, warehouses, and delivery capabilities to allow them to thrive in an omnichannel world. Unlike many retailers who still manage their online offering as a separate division, Home Depot operates as a single company, with a single supply chain, and simply offers different means for customers to shop their single set of inventory.
Their Pro Online investments have been of particular note, given it is with their Pro customers that their offering is most differentiated. The company talks about Pro Online as a “platform for Pros to build their business.” While Amazon, like most consumer facing online retailers, offers the same user interface for consumers and business customers, Home Depot recognizes that the needs of their Pro customers are fundamentally distinct from homeowners.
For instance, their Pro Online interface allows for the exporting of order history to Quickbooks, the accounting software used by most small contractors, and makes it easy to manage delivery options to a large number of active job sites. If you go into a typical consumer online shopping site and try to ship items to multiple addresses other than your own, you’ll quickly trigger a fraud alert. But while this behavior is atypical for consumers, it is standard behavior for Pro contractors who appreciate that Home Depot understands how they operate.
While Pro customers have gone from making up 30% of revenue a decade ago to 45% today, there is meaningful opportunity still ahead. According to the company, 70% of Pro customers never visit the dedicated Pro desk at the store. But when Home Depot is able to identify these contractor customers and engage with them at the Pro Desk or other Pro services, their annual spending quickly doubles on average.
While Home Depot has executed extremely well over the last decade, it did so in the context of a weak overall economy, the worst housing crash in a century, an existing base of homes that had more new homes (needing less home improvement work) than the historical average, and low or even negative equity restricting homeowners’ ability to finance home improvement projects. But we believe the housing end market is in the midst of a Great Reshuffling.
While Home Depot generated solid 5% annual revenue growth during the decade between the end of the housing crash and the beginning of the COVID pandemic, it is important to note that the Do It Yourself homeowner segment grew at about 3% a year, while the Pro segment serving contractors grew at 9% a year. We believe that the low growth of Do It Yourself sales was related to the depressed housing activity that characterized the last decade, but is now in the midst of reverting to more normalized activity levels. The faster growth in the contractor segment on the other hand was due to them taking material market share and building a better set of services for Pro customers. Thus, this segment grew nicely despite the low levels of housing activity and will benefit further from a reversion to more normalized home improvement activity.
As Americans emerge from the pandemic, they will be reevaluating their housing needs. Remote work options may cause more homeowners to consider moving, with home improvement projects being common in preparation for sale as well as when a new family first moves into a house. Many people who do not move will still plan to work from home with some regularity, driving demand to create office space in their house with associated remodeling expenditures.
Home Depot is firing on all cylinders. They did right by their employees during the pandemic, remaining open as an essential business, spending $2 billion in increased pay and bonuses, half of which they have decided to make permanent. While 2021 will face difficult comparisons to last year’s off the charts home improvement spending due to home owners being stuck in their homes during shelter in place, we think Home Depot has an extremely promising decade ahead.”
8. The Hershey Company (NYSE: HSY)
Number of Hedge Fund Holders: 42
The Hershey Company (NYSE: HSY) is a Pennsylvania-based chocolate firm founded in 1894. It is placed eighth on our list of 10 best dating stocks to buy now. The company’s shares have returned more than 31% to investors in the past twelve months. Chocolate has always been associated with dating and the company is one of the largest chocolate makers in the world and offers chocolate-related products like cakes, candies, cookies, beverages, and others. Some of the famous brands it owns include Hershey’s, Reese’s, Kisses, Jolly Rancher, Almond Joy, and Brookside, among others.
In quarterly earnings results, posted on April 29, The Hershey Company (NYSE: HSY) reported earnings per share of $1.92, beating market estimates by $0.12. The revenue over the period was more than $2.2 billion, up over 12% year-on-year.
The Hershey Company (NYSE: HSY) is a great stock for those who want some side income on the side as the firm pays a healthy dividend. In late April, the firm declared a quarterly dividend of $0.804 per share, in line with previous. The forward yield was 2.02%.
At the end of the first quarter of 2021, 42 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in The Hershey Company (NYSE: HSY), up from 39 in the previous quarter worth $1.4 billion.
Just like Match Group, Inc. (NASDAQ: MTCH), Netflix, Inc. (NASDAQ: NFLX), and Momo Inc. (NASDAQ: MOMO), The Hershey Company (NYSE: HSY) is one of the best dating stocks to buy now.
7. Signet Jewelers Limited (NYSE: SIG)
Number of Hedge Fund Holders: 26
Signet Jewelers Limited (NYSE: SIG) is a Bermuda-based company that retails diamond jewels. It was founded in 1949 and is ranked seventh on our list of 10 best dating stocks to buy now. The company’s shares have returned more than 500% to investors in the past twelve months. Jewelry items are a popular gift between romantic couples and as people go out on dates after months in isolation, the company stands to benefit from an increase in demand for its products. The company sells diamond jewels at stores branded Kay Jewelers, Kay Jewelers Outlet, and Jared The Galleria Of Jewelry, among others. The firm operates more than 2,800 stores across the United States,
On June 10, Signet Jewelers Limited (NYSE: SIG) posted earnings results for the first quarter of 2021, reporting earnings per share of $2.23, beating market estimates by $0.96. The revenue over the period was more than $1.6 billion, up 98% year-on-year.
Signet Jewelers Limited (NYSE: SIG) has recently started an aggressive push into the online marketplace for jewels, with CEO Gina Drosos telling news channel CNBC that COVID-19 lockdowns had permanently changed consumer buying patterns.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Select Equity Group is a leading shareholder in Signet Jewelers Limited (NYSE: SIG) with 6.7 million shares worth more than $394 million.
Just like Match Group, Inc. (NASDAQ: MTCH), Netflix, Inc. (NASDAQ: NFLX), and Momo Inc. (NASDAQ: MOMO), Signet Jewelers Limited (NYSE: SIG) is one of the best dating stocks to buy now.
In its Q3 2020 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Signet Jewelers Limited (NYSE: SIG) was one of them. Here is what the fund said:
“We also saw Signet Jewelers (SIG) start to deliver improved performance during the quarter and believe their initiatives on closing unprofitable stores, expanding new Omni-channel capabilities, and launching new product offerings should begin to drive an improvement in their operations over the coming quarters. Historically, Signet’s stock price has performed very well coming out of an economic downturn. With the company valuation multiples near 2009 lows, it wouldn’t take much to see Signet’s share price double during the ongoing economic recovery. While we are highlighting the consumer space, we also wanted to mention a new investment, Chicos FAS, Inc. (CHS). The investment opportunity reminds us a lot of Bed Bath and GameStop earlier this year: a new CEO who is executing well on a new transformation plan, closing unprofitable stores, significantly streamlining and realigning their operations, and enhancing new product for their Chicos, White House Black Market, and Soma brands. Chicos has an asset-rich balance sheet, nearly $1.4B in total assets. The company’s real estate assets (land and buildings) combined with the cash on the balance sheet are significantly higher than the company’s current equity market capitalization! Over the next couple of years, the company has the potential to return to a $2B+ revenue base, which would support $100M in free cash flow. We believe a successful turnaround over the next couple of years has the potential to drive the share price 5-10x higher than current levels.”
6. Marriott International, Inc. (NASDAQ: MAR)
Number of Hedge Fund Holders: 58
Marriott International, Inc. (NASDAQ: MAR) is a Maryland-based company that operates a famous hotel chain. It was founded in 1927 and is placed sixth on our list of 10 best dating stocks to buy now. The stock has offered investors returns exceeding 53% over the course of the past twelve months. Romantic couples often prefer to get away from the hustle and bustle of everyday life to spend some time in luxury hotels or resorts for a good time together. The company operates luxury hotels and properties under names such as JW Marriott, The Ritz-Carlton, Ritz-Carlton Reserve, and W Hotels, among others. The firm runs more than 7,000 properties in more than 130 countries across the world.
On May 10, Marriott International, Inc. (NASDAQ: MAR) posted earnings results for the first three months of 2021, reporting earnings per share of $0.10, beating market estimates by $0.07. The revenue over the period was $2.3 billion, down 50% year-on-year.
On June 10, investment advisory Wells Fargo gave Marriott International, Inc. (NASDAQ: MAR) stock an Overweight rating and called it an attractive value for the momentum it was generating.
At the end of the first quarter of 2021, 58 hedge funds in the database of Insider Monkey held stakes worth $3 billion in Marriott International, Inc. (NASDAQ: MAR), the same as in the previous quarter worth $3.4 billion.
Just like Match Group, Inc. (NASDAQ: MTCH), Netflix, Inc. (NASDAQ: NFLX), and Momo Inc. (NASDAQ: MOMO), Marriott International, Inc. (NASDAQ: MAR) is one of the best dating stocks to buy now.
In its Q1 2021 investor letter, LRT Capital Management, an asset management firm, highlighted a few stocks and Marriott International, Inc. (NASDAQ: MAR) was one of them. Here is what the fund said:
“We are also long shares of Marriott International, Inc. (MAR). Our investment thesis with respect to Marriott is essentially the same as with Hilton: excellent business economics, a consolidating industry and a good track record of capital allocation. Shares of Marriot are up 12.39% year-to-date.”
Click to continue reading and see 5 Best Dating Stocks to Buy Now.
Disclose. None. 10 Best Dating Stocks to Buy Now is originally published on Insider Monkey.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .