With the fading of the coronavirus pandemic, the inevitable push to the office sparked fundamental interest in gig economy stocks. After enjoying the freedoms of gig life, corporate employees simply don’t want to return to business as usual. What’s more, 40% of respondents in a Reli Exchange revealed that if they faced termination for their refusal to return to the office, they would instead start their own business.
Thus, we have two paradigm shifts that bolster gig economy stocks. First, a radical telecommuting transition materialized in early 2020. Second, more people now consider entrepreneurialism as a viable career path. And essentially, that’s what the gig economy is: independent contractors branching out on their own.
What’s more, experts project that this segment will continue to expand. By 2023, analysts anticipate that the projected gross volume of the gig economy is expected to reach $455.2 billion. Therefore, simply by logical deduction, gig economy stocks should explode next year.
Better yet, this market sector features diverse opportunities. It’s not just about freelance marketplaces, though that’s always an option. Instead, companies providing the tools and platforms for success may enjoy a significant upside. Below are the gig economy stocks to put on your radar.
Intuit (NASDAQ:INTU) might not intuitively rank among the gig economy stocks as a tax software provider. That is until you realize that taxes for independent contractors – colloquially referred to as 1099 workers – present significant differences from W2 employees.
While it’s possible to write volumes on this subject, the gist of the matter is that gig workers are in business for themselves. Therefore, their taxes run similarly to corporate taxes. Rather than working for a salary, gig workers generate revenue and hopefully earn net income. From there, these 1099 workers can deduct legally allowed expenses from their gross income to whittle down their tax obligations.
On the other hand, W2 employees whose sole income stems from their jobs have an easy tax-filing process. That’s why so many platforms offer free W2 services – it doesn’t take much skill to file these things.
However, the opposite is true for 1099 folks. Therefore, Intuit’s tax-prep software should be in great demand in 2023 and beyond, making INTU one of the gig economy stocks to buy.
H&R Block (HRB)
One of the companies I’ve been pounding the table on recently, H&R Block (NYSE:HRB), finally made good on its potential in 2022. Since the January opener, HRB gained about 58%, making it a scorcher. Remember that the benchmark S&P 500 index fell around 25% during the same period.
At the same time, the massive jump makes HRB risky relative to other gig economy stocks. For instance, in the trailing month, shares fell over 15%. Fundamentally, I suspect people cashing out of cryptos led to greater demand for H&R Block. Due to cryptos’ novelty, this asset class’s taxation presents enormous complexities. Cynically, that’s a positive for HRB.
While the enthusiasm was probably most significant for the tax year 2021, it’s also possible that H&R Block will see a boon next year as well. That’s because many folks probably panicked this year. In addition, the company may provide excellent guidance for handling capital losses.
While you may want to wait a bit for the volatility in HRB to die down, fundamental circumstances should improve. If so, it represents one of the gig economy stocks to buy.
Perhaps best known as an all-around consumer technology giant, Microsoft (NASDAQ:MSFT) represents one of the most critical gig economy stocks. Mainly, I’m referring to its Software as a Service platform featuring myriad utilitarian applications like Word and Excel. When it comes to the language of business, gig workers need to be fluent in Microsoft.
Frankly, if you don’t know these programs, you will not get very far in the gig economy.
Based on the latest data, Microsoft Windows owns 75% of the desktop operating system market. Cynically, this should keep MSFT humming as one of the gig economy stocks to buy. True, Apple (NASDAQ:AAPL) symbolizes sizable competition at nearly 15% market share. But again, lacking familiarity with the Microsoft ecosystem is fatal in the business world.
Plus, according to Gurufocus.com, MSFT ranks as modestly undervalued. Featuring financial strengths across the board, Microsoft is a good pick-up, especially with shares down 33% year-to-date.
While Microsoft is a non-starter in terms of gig success, PayPal (NASDAQ:PYPL) helps transition folks into the paradigm of the 1099 ecosystem. Unlike being a corporate employee, you don’t punch a clock in the gig economy. Nor do you have a paycheck coming in automatically every two weeks.
Instead, you’ve got to present a sterling reputation to prospective clients (not employers). Otherwise, you’re not going to be winning many contracts. Moreover, you’ve got to generate your own invoices and submit them accordingly. And if circumstances go awry in this arena, it’s up to you to seek a resolution. Plenty of responsibilities exist, which can be initially overwhelming. Thankfully, PayPal’s financial technology (fintech) platform offers intuitive operations.
I’m not going to claim to be a PayPal expert but in short, it acts as a self-employment portal. Not only do you essentially have a digital bank account, but you can also invoice and receive payment through the platform, all the while having the associated “paperwork” neatly organized.
You really have to join the gig life to understand the true beauty of PayPal. But when you do, you’ll see why it’s one of the gig economy stocks to buy.
Headquartered in Santa Clara and San Francisco, California, Upwork (NASDAQ:UPWK) represents a freelancing platform. Essentially, Upwork connects professional talent with enterprises seeking specific gaps to fill. Fundamentally, UPWK is a direct play among gig economy stocks. That said, such a framework hasn’t been exceptionally positive.
For instance, since the start of this year, UPWK stock has hemorrhaged over 60% of market value. That’s exceptionally steep, far more than the heavy-hit Nasdaq Composite, which dropped 34% during the same period. However, it’s also fair to point out that contrarians might view UPWK as a potential upside opportunity.
Per Gurufocus.com, Upwork’s business is significantly undervalued. But even here, prospective investors should note that they must exercise patience. Yes, in the second quarter of 2022, Upwork generated nearly $157 million in revenue, up 26% against the year-ago period. However, net losses in the most recent quarter came out to $23.8 million versus a loss of $16.5 million one year ago.
Still, with more people eager to consider making the pivot to the gig life, UPWK could be one of the gig economy stocks to buy.
For those folks that want a unique take on gig economy stocks, Rover (NASDAQ:ROVR) may provide just that. Similar to Upwork, Rover connects service providers with service seekers. But in Rover’s case, the focus centres on pet care services. Mainly, this involves dog walking but could also incorporate other offerings like pet sitting and boarding.
Fundamentally, Rover benefits strongly from America’s love for its pets. According to the American Pet Products Association, in 2021, consumers spent $123.6 billion on pets and related products and services. What’s more, every year since at least 2018, the total revenue of this industry has increased significantly.
However, ROVR hasn’t exactly benefitted from the trend. Since the start of 2022, ROVR stock has tanked over 62% of its equity value. However, as society gradually normalizes – and especially if the return-to-the-office movement succeeds – 2023 could be a banner year for pet service providers. Therefore, it’s worth keeping ROVR on your radar for gig economy stocks to bu
One of the software giants, Adobe (NASDAQ:ADBE), specializes in various applications. However, it’s probably best known for its Photoshop program. Much like Microsoft represents a must-have in the business world, Adobe is vital for creatives. But will this alone make it a solid buy among gig economy stocks? It turns out the answer is a surprising yes.
While the creative industry carries a reputation for being a soft – and thereby lesser – skill, nothing could be further from the truth. Without getting bogged down into various statistics, just do a thought experiment: how successful will your startup be if your logo looked like it was drawn by a monkey with a paintbrush in its mouth? Creatives can be the difference between getting the critical contract and not.
Now, if you really want hard data, take a look at this. “Fifty-nine percent of animators, art directors, painters, and illustrators are self-employed, according to BLS. That number is even higher for writers (64 percent) and photographers (68 percent).” It may not seem like it at first, but ADBE is a hidden opportunity among gig economy stocks to buy.
On the date of publication, Josh Enomoto did not have (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.