One of the more notable growth stocks, GigaCloud Technology's appears to be taking a breather after a big run. GCT stock rocketed more than 200% in a seven-week period.
There's no mystery to GigaCloud's run. The e-commerce player has best-possible ratings of 99 in three key metrics graded by Investor's Business Daily — Composite Rating, Earnings Per Share Rating and Relative Strength Rating. It also stands as the highest rated stock in the IBD 50.
GigaCloud's ratings alone make the stock worth watching, particularly if it sets up for a new run.
Shares hit a low of 8.70 at the end of November before embarking on its earnings-fueled run. The company reported third-quarter earnings of 59 cents a share, roughly 30 times that of the year-ago period.
GCT stock then sprinted until Wednesday, when it spiked at 26.45 before retreating. That marked a 204% gain in that time span. The stock is up nearly 220% over the last 52 weeks.
On the stock market today, GCT stock fell roughly 6% to near 20. With the loss, shares are still up about 6% for 2024.
GigaCloud's Two Acquisitions
Founded in 2006, El Monte, Calif.-based GigaCloud "specializes in global end-to-end business-to-business e-commerce for large parcel merchandise," according to FactSet. It has operations in Hong Kong and elsewhere.
The GigaCloud Marketplace is a business-to-business e-commerce platform. It handles large parcel items such as furniture, exercise equipment and other bulky home goods.
Further, GigaCloud has been making acquisitions. It recently purchased digital signage company Apexis and its Wondersign business. It also bought Noble House Home Furnishings.
"The closing of the Noble House and Wondersign acquisitions highlights not only our strong profitability and cash position, but affirms our dedication to GigaCloud's mission of delivering a seamless end-to-end shopping experience for our marketplace participants," Chief Executive Larry Wu said in the GCT stock September-quarter earnings release.
He added: "Further, the two acquisitions provide additional scale and momentum beyond our organic growth and present customers with a diverse, wider range of ways to connect and transact through cutting-edge technology solutions."
September-quarter results, reported Nov. 30, were unaudited. In addition to its massive profit gain, revenue rose 39% to $178.2 million.
For the current December quarter, analysts polled by FactSet estimate adjusted profit of 58 cents. That's up from 31 cents a year earlier. Analysts see revenue climbing nearly 75% to $220.3 million from $125.6 million.
GCT Stock: How E-Commerce Platform Works
The company launched its e-commerce marketplace in 2019.
According to a recent profile in the Los Angeles Business Journal, the e-commerce platform works like this: "A manufacturer or supplier can list an item, such as a sofa, on GigaCloud's online marketplace and resellers such as Wayfair, Target or Amazon.com can purchase units of the item directly to list on their own websites."
The article went on to say: "GigaCloud then facilitates the shipping of orders directly from a warehouse to either a store location or an individual customer, meaning that the reseller doesn't need to transfer items to their own warehouse before distribution."
GigaCloud operates 24 warehouses globally. Resellers are able to rent warehouse space in order to store inventory.
"GigaCloud takes a commission from the transaction between the manufacturer and the reseller, usually between 1% to 5%," said the L.A. Business Journal report.
In addition to high ratings, GCT stock also holds "A" grades in two key metrics. One measures institutional buying of shares, while the other examines sales, profit margins and return on equity.
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