The gig economy has grown by leaps and bounds over the past several years. Moving ahead, there’s a good chance the American gig economy could continue to grow at a rate outpacing that of the overall labor force. Indeed, it’s hard to imagine, but gig work could continue to outpace traditional work as younger generations embrace the new way of work.
Though regulations to protect gig workers are sure to introduce some turbulence to the gig economy, I think few things can stop it in its tracks despite setbacks, such as lacking (or limited) benefits and uncertainties regarding hours and pay.
As an investor, there are more than a handful of ways to profit from the fast-growing gig economy. In this piece, we’ll outline three gig economy stocks that stand to benefit as the sector expands further.
DoorDash (DASH)
Food delivery platform DoorDash (NASDAQ:DASH) has been on the rise over the past year, more than doubling over the timespan as demand for quick eats has heated up. In the latest quarter, DASH stock suffered a bit of a setback, falling modestly following the release of some “mixed” results.
At the time of writing, DASH stock is down a mere 3.3%. Still, Morgan Stanley (NYSE:MS) views any such dips as great buying opportunities as the food-delivery heavyweight looks to reap the benefits from recent efforts. DoorDash continues growing its user base while doing its best to get them to spend more. The company may have what it takes to dash past Morgan Stanley’s $145.00 per-share price target.
It’s not just the improving environment that bodes well for the food-delivery firm; the firm seems poised to make a nice profitability push. If it’s able to manage costs without hurting growth, DoorDash stock is a gig economy top dog to stick with.
Lyft (LYFT)
Lyft (NASDAQ:LYFT) is a $7.1 billion underdog in the ride-hailing scene. And though LYFT stock has endured a brutal fall from grace, they have been showing signs of life of late. It more than doubled over the past year.
Just last week, Lyft stock received another analyst upgrade following improved results under the leadership of its new CEO, David Risher. I think the best is yet to come for a firm with a ton of ground to gain in the ride-hailing market.
Recently, RBC Capital Markets’ Brad Erickson raised the possibility that DoorDash partnering with Lyft is a move that could “create significant value for both [firms].” I think he’s right. A potential Dash-Lyft relationship would help even the playing field a bit with transportation kingpin Uber (NYSE:UBER), which has been a dominant force in mobility and food delivery.
To me, a DASH-LYFT partnership just makes sense. Who knows? If it works out, perhaps it could lay the groundwork for an acquisition.
Etsy (ETSY)
Finally, we have Etsy (NASDAQ:ETSY), a gig economy play I most fondly view. Shares of the homemade-focused e-commerce platform have been crushed in recent years, now down more than 75% from their peak. Though the firm has significant challenges to tackle, I see considerable value in it as it looks to turn a corner after its latest quarterly earnings miss.
With consumers in a tough spot, your average Etsy-focused gig has been put in a difficult position. Still, the consumer won’t be short on disposable income forever. Further, Etsy could certainly profit profoundly as it embraces generative AI tech to help consumers discover gifts they didn’t even know they wanted.
Indeed, when one wanders over to Etsy, many aren’t quite sure what treasures they’ll find. AI can help give merchants a shot in the arm as they look to better tailor the platform for the AI age. At just 32 times trailing price-to-earnings, perhaps ETSY stock seems too cheap for a firm that stands to gain so much at the hands of AI innovation.
On the date of publication, Joey Frenette did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.