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Why Overstock Is The Perfect Storm For This Market

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Why Overstock Is The Perfect Storm For This Market
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Traders are always on the lookout for a stock that can ride the market momentum in a given sector or business. Based on the way the market is trending in the past month or so, Overstock.com Inc (NASDAQ: OSTK) has major exposure to two of the hottest trends on Wall Street at the moment—cryptocurrency and retail.

Bitcoin Ties

Overstock.com made headlines in August when the company announced it would be keeping half of the bitcoin payments it receives as an investment. Overstock.com became one of the first major retailers to accept bitcoin way back in 2014.

So far, that decision to hold onto half its bitcoin payments has been a shrewd move for the company. Since Aug. 1, the price of bitcoin has skyrocketed another 535 percent, but DA Davidson analyst Tom Forte recently said there’s more to Overstock.com than just bitcoin. Earlier this month, Forte said Overstock.com’s e-commerce platform would make a relatively cheap acquisition target for a major retailer such as Target Corporation (NYSE: TGT), TJX Companies Inc (NYSE: TJX) or Costco Wholesale Corporation (NYSE: COST).

Retail Ties

The U.S. retail sector was hammered throughout most of 2017 under pressure from online competition from Amazon.com, Inc. (NASDAQ: AMZN) and Wal-Mart Stores Inc (NYSE: WMT). However, it has bounced back so far this holiday season after many U.S. retailers showed signs of stabilization in the second half of the year.

The SPDR S&P Retail (ETF) (NYSE: XRT) is up 11.2 percent in the past month. In that time, Overstock.com stock is up another 16.1 percent and is now up 252 percent year-to-date.

A Word Of Warning

But before traders get too eager to jump on the bitcoin and retail train with Overstock, some analysts are warning that the stock’s ties to bitcoin may do more harm than good at some point in the near future.

“I would stay away from this…very far,” AdvisorShares portfolio manager Eddy Elfenbein said Monday of Overstock on CNBC.

Price Action

Overstock isn’t the only stock with bitcoin ties that traders have chased to the moon in recent months. Here’s a look at how some of the other popular cryptocurrency plays have fared in the past three months:

  • Overstock.com is up 155.2 percent.
  • Digital Power Corporation (NYSE: DPW) is up 865.0 percent.
  • Riot Blockchain Inc (NYSE: RIOT) is up 486.9 percent.
  • U.S. Global Investors Inc. (NASDAQ: GROW) is up 277.3 percent.
  • Social Reality Inc (NASDAQ: SRAX) is up 271.0 percent.

Related Links:

A Guide To Who Loves And Hates Cryptocurrency

Does Bitcoin Actually Hold Any Value At All?

Latest Ratings for OSTK

DateFirmActionFromTo
Sep 2018Maxim GroupAssumesBuy
Mar 2018DA DavidsonMaintainsBuyBuy
Nov 2017DA DavidsonMaintainsBuy

View More Analyst Ratings for OSTK
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