How much would you have today if you had invested $10,000 in the Kogan.com Ltd (ASX: KGN) share price 5 months ago?
Kogan has been one of the most dramatic ‘rags-to-riches’ ASX shares to have held over the past 5 months. Like other hot growth stocks such as Afterpay Ltd (ASX: APT), Kogan shares have significantly whipsawed in value over the course of 2020 so far. It was hard hit during the March crash, but investors quickly re-rated Kogan when it became clear how much the coronavirus pandemic was benefitting the business.
What does Kogan do?
Kogan is an e-commerce company that is quickly emerging as the ASX’s answer to the famous Amazon.com, Inc – the undisputed behemoth of global online retailing. Kogan started life way back in 2006 and has always adopted an ‘online only’ model. It started out by selling electronics and TVs, but has expanded over the past 15 years into everything from insurance and groceries to furniture and superannuation. It sells a wide range of branded products as well as its own ‘home-brand’ range.
How has the Kogan share price performed in 2020?
Now to the part you’ve all been waiting for. So, Kogan shares have had a volatile 2020 so far. They started the year trading for $7.47 but crashed spectacularly in the market crash that the pandemic brought on in March. Kogan reached a low of $3.45 on 16 March. If an investor had invested $10,000 in Kogan shares on that date at that price (unlikely, but possible), they would have picked up 2,898 shares with some change left over. Fast forward to today and Kogan shares are trading for $20.80 at the time of writing. That would give those 2,898 shares a value of $60,278.40 today, a 500% gain. That’s some return! If that hypothetically lucky investor had sold those shares when Kogan set a new all-time high of $22.99 earlier this month, they would have banked a $66,625 windfall.
Eat your heart out.
Are Kogan shares still a buy today?
So, is the Kogan share price still a good buy post-$20? Well, I don’t think so, not if you’re after another 500% gain over the next 5 months anyway. But I still think Kogan is a great company which might be worthy of an investment today if you’re a long-term investor. Kogan was certainly the beneficiary of the March/April lockdowns which forced people to turn to inline shopping like never before. The company did post sales growth of around 40% in FY2020, which I don’t think will be topped in FY21. Even so, Kogan is a company growing its market share in the growing trend of online shopping. That’s a pretty good spot to be.
Kogan is a volatile share, so I’m not too keen on buying it this close to its all-time high. I’d love to own some, but I’ll be waiting for a pullback sometime in the future. Fingers crossed.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Amazon and Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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