It’s time I roll out some of my favorite consumer spending plays.
Because, if you haven’t noticed, the surge of inflation in the US last month hasn’t slowed consumer spending. US households are still flush with the $2.5 trillion in savings amassed during the pandemic. Mix that with pent-up consumer demand, and you create the perfect storm.
Sales are 21% higher than before COVID, as Americans spend more on anything and everything, from electronics to furniture to building materials.
And they’ll climb even higher before this month is done, especially online.
Cyber Monday, a day that brought in $10.8 billion in e-commerce sales at the height of the pandemic, is right around the corner. That lines up these three e-commerce plays for exceptional profits if you get in now.
The first of which is Etsy Inc (Nasdaq: ETSY), the only marketplace that pairs e-stores stocked with homemade goods with buyers on the hunt for unique gifts.
What truly makes this company stand out is its distance from the supply chain issues that have loomed over this year’s holiday season. Almost everything sold on the website is handmade or sold second-hand by antique dealers – which has been a definite plus throughout its third quarter.
ETSY beat expectations on earnings and revenue, pulling in $532.4 million between July and September, while other companies were scrambling to get their stock out of ports in California.
On the news, the stock surged 18.27% on Nov. 4.
Since then, though, the stock drifted back down to recent support, and now it broke out to new highs in Friday’s session.
I was already watching ETSY, waiting for it to give back some of the November 4, 2021 gains, and now it looks good.
ETSY January 21, 2022 $310/$320 Call Spread for $4.00 for less would make a great play on this company. Plan on exiting the ETSY January 21, 2022 $310/$320 Call Spread for a 100% profit, or if shares of ETSY close below $258.00.
Next up is a play on Shopify Inc (NYSE: SHOP). This e-commerce platform provides merchants with everything they need to run their businesses, from web and mobile-friendly storefronts to physical retail locations.
Shopify doesn’t generate money from selling anything. It just provides the platform that allows businesses to monetize their own goods and services.
Shopify boasts the number two market position in U.S. retail e-commerce with an 8.6% market share (based on Gross Merchandise Value). The leader is, of course, Amazon with a 39% market share.
The fact that Amazon has a 30.4 percentage points lead in market share just means that SHOP has a lot of room for it to move into AMZN’s market share.
On Oct 28, the company reported a total revenue of $1.12 billion – that’s a 46% increase from last year.
Since then, the stock has climbed up more than 28%. That’s a little too lofty for my tastes, and I expect it’ll sink back down again before taking off once again.
Patience is key with this play. If SHOP trades down to $1,700 by November 30, 2021, I like buying the SHOP January 21, 2022 $1,780/$1,800 Call Spread for $8.00 or less. Plan on exiting the spread for a 100% profit or if SHOP closes below $1,530.
And finally, the most obvious choice: Amazon.com Inc (Nasdaq: AMZN).
The stock has been trading sideways for over a year, but now it looks like it’s about to break into new heights.
If shares of AMZN close above $3775 before November 30, 2021, I like buying the AMZN January 21, 2022 $3,800/$3850 Call Spread for $24.00 or less. Plan on exiting this call spread for a 100% profit or if AMZN closes below $3,155.00.