5 Top Stocks For March

The stock market started 2021 with a bang, but those early gains evaporated in February. When Fools love it when stocks decline, because it gives us a chance to buy our favorite businesses at discounted prices.

What stocks do we think are top opportunities today? We asked five Motley Fool contributors to weigh in, and they called out SL Green Realty (NYSE:SLG), Carparts.com (NASDAQ:PRTS), Etsy (NASDAQ:ETSY), Etsy (NASDAQ:ETSY), Uber (NYSE:UBER), and Airbnb (NASDAQ:ABNB).

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A hidden e-commerce winner

Jeremy Bowman (Carparts.com): 2020 was a great year for e-commerce stocks thanks to the pandemic, and Carparts.com was among the big winners, with shares up nearly 500%. Even with the economic reopening coming up, however, 2021 looks set to be another strong year for the auto parts retailer.

First, the opportunity is more than just an e-commerce play. The company’s in the midst of a turnaround that began in 2019 when new management took over. Under CEO Lev Peker, Carparts.com has jettisoned underperforming brands and consolidated the company’s operations, which had previously included banners like JC Whitney and Auto Parts Warehouse, under the Carparts.com brand, making marketing and brand-building much more efficient. It also changed the corporate name from U.S. Auto Parts to Carparts.com. The turnaround initiatives, which also include opening new distribution centers and upgrading its tech infrastructure, are delivering results. Gross margin has increased for six quarters in a row now, allowing the company to reinvest a greater percentage of revenue back in the business, and e-commerce sales jumped 105% in the third quarter.

A number of macro factors are supporting the company as well. Auto parts sales are traditionally strong coming out of recessions as consumers delay buying new cars, and the spike in used car sales during the pandemic should favor auto parts sales as will the increase in vehicle miles once the economy reopens.

Carparts.com will report fourth-quarter earnings on March 8. Currently, Wall Street only sees the company’s revenue growing 12% this year, which looks like a lowball estimate. If that’s the case, the stock should have a lot of upside from here.

About to get a big shot in the arm

Matt DiLallo (SL Green Realty): Last year was a tough one for Manhattan’s largest office landlord, SL Green Realty. The pandemic greatly affected New York City, keeping office tenants out of their Manhattan skyrises.

However, office buildings are about to get a shot in the arm as vaccines roll out, allowing people to start occupying them again. While companies quickly pivoted to remote work, most can’t wait to return to their offices because they’re vital for productivity, mentoring, and creating culture. That’s why SL Green was able to collect 97.9% of the office rent it billed last year and sign more than 1.2 million square feet of new and renewal office leases even though most offices remained unoccupied.

Because of that eventual return, the value of high-quality office properties has held up relatively well. That allowed SL Green to take advantage of the market to sell several properties over the past year at excellent values. Those sales gave it the cash to shore up its balance sheet, pay a special dividend, and buy back its beaten-down stock, which tumbled by more than 25% since the start of 2020. The REIT was also able to increase its monthly dividend for the 10th straight year, pushing the yield above 5%.

Shares of SL Green could soar like a Manhattan skyscraper this year as companies get the “all clear” to return to their offices. Add that to its generous income stream, and this REIT looks like a winner.

An Amazon-proof e-commerce winner

Brian Feroldi (Etsy): When it comes to e-commerce, Amazon.com (NASDAQ:AMZN) tends to suck all the air out of the room. However, the shift from offline sales to online sales is so massive that lots of companies are poised to win.

Etsy has clearly established itself as one of those e-commerce winners. The company’s platform connects buyers and sellers of homemade goods, which is a growing niche that insulates it from the other e-commerce competition. 

Etsy’s 2020 numbers show that demand for the platform is soaring. The company ended the year with 4.4 million active sellers (up 62%) and 81.9 million active buyers (up 77%). Total spending on the site more than doubled to $10.3 billion.

Etsy took full advantage of the surging demand. Revenue grew 111% to $1.7 billion. The top-line growth was so strong that Ety’s net income grew 265% to $349 million even though it significantly increased its spending on marketing, product development, and hiring.

Management doesn’t think the hypergrowth is ending anytime soon. Revenue is expected to grow at least 125% in the first quarter of 2020, and margin is expected to remain strong for the foreseeable future.

All of this goodness has pushed…