Etsy (NASDAQ:ETSY) is an online marketplace for handmade goods. That may not seem like a big business, but it’s big enough for the company to carry a $6.7 billion market cap. Certainly that’s about 20% of the size of online merchandiser eBay (NASDAQ:EBAY) and more than two orders of magnitude smaller than Amazon (NASDAQ:AMZN). But ETSY stock isn’t all about size. And that’s what makes it unique.
It’s homespun e-commerce. It’s more of a marketplace where individuals sell goods to other individuals. Etsy doesn’t have its own brand of clothing or jewelry that it pitches on its platform. It simply provides the platform for buyers and sellers to meet.
Etsy is a very specific community with loyalty among users and buyers that’s hard to beat. And that’s the kind of business model that gets my attention as a strong buy for my model portfolios.
Increasingly these sellers and buyers are an international lot and that’s testament to the platform. Now a local artisan in Spain can create a global market for their designs.
And given the slowing global economy, this kind of exposure offers diversification and sometimes a lifeline to artisans that may not be able to weather the slowdown if they didn’t have an outlet like Etsy. Also remember that the big trade wars and skirmishes around the globe tend to impact major companies that are producing significant amounts of goods. If they weren’t, a tariff threat wouldn’t be a threat at all.
Etsy Appeals to the Younger Generations
The sellers on Etsy’s platform are small players and they fly under the radar of these types of issues. While there might be a premium for handcrafted goods, buyers aren’t getting stuck with tariff penalties.
Granted, this isn’t some great global marketplace like Amazon. It’s not about getting the best price for a set of screwdrivers that will arrive tomorrow. Etsy is like the goods equivalent of the Slow Food movement. It’s all about what you buy and how you consume it.
And that’s not for everyone, to be sure. But the bet here is that younger generations will get it.
Members of Gen X and Gen Z who have seen the pinnacle of fast and cheap clothes, foods and products aren’t seeing it as a sustainable or enjoyable way to live their lives. They’re opting for quality over quantity. And this is where ETSY shines.
Its also about these younger generations needing a side gig to pay off student loans or just to makes some spending money. They can turn an artistic hobby into a source of income.
The Bottom Line on ETSY Stock
While third-quarter numbers will be out in early November, Q2 numbers were strong. About 38% of Etsy’s business is now international, and gross merchandise value — like revenue for peer-to-peer sales — was up 38% year over year. Revenue growth for the whole company was up 36%. Active buyers were up 19% and active sellers up 17% year-over-year.
My Portfolio Grader rates ETSY stock a “B” right now, given global market conditions. But it has what it takes to make it through and deliver in the long term.
The one thing ETSY doesn’t offer is dividends. And if you’ve been at this game for awhile, as I have, you know that income is really valuable to “smooth out” your portfolio returns over time.
‘Money Magnets’: The Best Dividend Growth Stocks Around
So — whatever your portfolio size and goals — you’ll also want to look at the group of stocks I’ve nicknamed the Money Magnets.
Not only did these stocks earn an “A” in my Portfolio Grader, thanks to strong buying pressure and great fundamentals …
The stocks also earn an “A” in my Dividend Grader. These stocks are able to pay great yields — and have the strong business model to back it up.
All in all, I’ve got 28 strong dividend growth stocks for you now in Growth Investor — averaging 4.2% yields — far more than the S&P 500 or even a Treasury bond. These stocks are poised to do well as we continue to see international capital flow to the U.S. markets. Click here to see how I found these stocks, and how you can get great performance out of YOUR portfolio — come what may.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
