The one constant, maybe the only constant, in our world is change. And the internet age has accelerated that change. Web 2.0, as it's known, expanded the internet from a way to find information to a global instrument of commerce. Overnight, businesses had a way to reach consumers from around their home country and around the world. The world of eCommerce was born.
And that child is growing up fast. According to Statista, eCommerce revenue is expected to grow from $3.65 trillion in 2023 to $5.58 trillion by 2027. That's a compound annual growth rate of 11.22%. At that time, the average revenue per user (ARPU) is expected to reach $829.50.
It's not that surprising. Most Americans have a computer in their pocket, purse, or car that allows them to make purchases in real time. The global pandemic in 2020 has cemented behaviors into our society.
That creates an opportunity for investors. In this special report, we look at seven eCommerce stocks that are not only performing well today but will continue to be good investments for years to come.
Quick Links
- Amazon.com
- eBay
- JD.com
- MercadoLibre
- Shopify
- Walmart
- Chewy
#1 - Amazon.com (NASDAQ:AMZN)
Any discussion of e-commerce stocks has to include Amazon.com, Inc. (NASDAQ: AMZN). As a way of bringing merchants and customers together, Amazon continues to be the leading, and largest e-commerce platform. If you are looking for it, you will most likely be able to find it on Amazon. And with the ability to get your items as soon as the next day, Amazon has become a habit that will be difficult for many consumers to break.
And you can’t ignore the fact that when you buy AMZN stock, you’re also buying its Amazon Web Services (AWS) business. This gives you exposure to the cloud as well as artificial intelligence (AI). In fact, AWS is likely to drive the growth in the company’s business.
That would leave some analysts to question whether Amazon should still be considered one of the best e-commerce stocks to buy. The simple answer may be to just look around your neighborhood on any given day.
That being said, AMZN stock is not cheap. As of June 2023, it’s trading at over 311x earnings. And Amazon.com analyst ratings on MarketBeat only give the stock about a 10% upside from its current level. However, like the market itself, it’s important to view Amazon with a wide lens. When you do, the stock still looks like a long-term winner.
About Amazon.com
Amazon.com, Inc engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content.
Read More - Current Price
- $224.92
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 42 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $243.00 (8.0% Upside)
#2 - eBay (NASDAQ:EBAY)
Next up on this list of eCommerce stocks is eBay, Inc. (NASDAQ: EBAY). Although there is likely to be crossover between the target markets, eBay has a different business model than Amazon. Specifically, eBay is an online auction site that brings buyer and sellers together in a “treasure hunt” model where anyone can be a seller.
In a world where consumers have become increasingly sensitive to supply chains, eBay’s model largely avoids that since it focuses on peer-to-peer selling.
Despite being down almost 50% from its all-time high in October 2021, EBAY stock is still up approximately 20% in the last five years. However, at about 36x earnings, you will be paying a premium for the stock.
Analysts give eBay a consensus price target of $49.43 which is an upside of more than 13% from the stock’s price as of June 26, 2023. Investors also get a dividend which has grown for four consecutive years and currently has a yield of over 2.30%.
About eBay
eBay Inc, together with its subsidiaries, operates marketplace platforms that connect buyers and sellers in the United States, the United Kingdom, China, Germany, and internationally. The company's marketplace platform includes its online marketplace at ebay.com, off-platform businesses, and the eBay suite of mobile apps.
Read More - Current Price
- $65.01
- Consensus Rating
- Hold
- Ratings Breakdown
- 9 Buy Ratings, 16 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $62.63 (3.7% Downside)
#3 - JD.com (NASDAQ:JD)
You can’t have a list of eCommerce stocks without analyzing at least one Chinese stock. China is the largest market for eCommerce and that’s not expected to change. In this case, you may want to consider JD.com, Inc. (NASDAQ: JD).
This is one of the older Chinese companies, but that has its advantages specifically when it comes to revenue. Even as the Chinese economy has struggled in the last four quarters ending in March 2023, JD.com still managed to generate over $150 billion in revenue.
The concern is margin growth. Companies in this sector generally operate on low margins and JD.com is no different. The company’s net margin in the last 12 months is 1.9%.
But there may be some changes coming. In late June, JD.com announced plans to establish an autonomous division that would integrate its 7Fresh supermarket chain with other online services.
That will take time to play out. In the meantime, the company is a stable play at a time when the Chinese economy is struggling and is likely to be one of the best performers as it recovers. Investors can buy JD stock for a reasonable P/E ratio of 19.9x as of June 26, 2023. JD.com analyst ratings on MarketBeat give the stock a 71.5% upside with a consensus price target of $60.17.
About JD.com
JD.com, Inc operates as a supply chain-based technology and service provider in the People's Republic of China. The company offers computers, communication, and consumer electronics products, as well as home appliances; and general merchandise products comprising food, beverage and fresh produce, baby and maternity products, furniture and household goods, cosmetics and other personal care items, pharmaceutical and healthcare products, industrial products, books, automobile accessories, apparel and footwear, bags, and jewelry.
Read More - Current Price
- $35.64
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $41.36 (16.0% Upside)
#4 - MercadoLibre (NASDAQ:MELI)
When many investors think about eCommerce stocks, the U.S. and China come to mind. But you shouldn’t forget about MercadoLIbre, Inc. (NASDAQ: MELI). The company has the nickname “Amazon of Latin America” and it has the numbers to back that up.
Operating in 18 countries, the company generated earnings per share (EPS) of $9.54 on revenue of $10.48 billion. And in the first quarter of 2023, it generated $3.04 billion in revenue, a 35% year-over-year increase. The company even showed strong year-over-year EPS growth of 205%.
By many measures, MELI stock is expensive. It has a forward P/E ratio of over 70x earnings. And the stock itself changes hands at $1,223.02 per share as of this writing.
However, MercadoLibre analyst ratings on MarketBeat give the stock an upside of 21% from its price as of June 26, 2023. And the company is expected to deliver earnings growth of over 54% between 2023 and 2024. If the company hits those numbers, then MELI stock will grow into that valuation.
About MercadoLibre
MercadoLibre, Inc operates online commerce platforms in the United States. It operates Mercado Libre Marketplace, an automated online commerce platform that enables businesses, merchants, and individuals to list merchandise and conduct sales and purchases digitally; and Mercado Pago FinTech platform, a financial technology solution platform, which facilitates transactions on and off its marketplaces by providing a mechanism that allows its users to send and receive payments online, as well as allows users to transfer money through their websites or on the apps.
Read More - Current Price
- $1,720.36
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $2,267.67 (31.8% Upside)
#5 - Shopify (NYSE:SHOP)
If you’re looking for a different way to invest in eCommerce stocks, Shopify Inc. (NYSE: SHOP) may offer just what you’re looking for. Shopify is an alternative to Amazon for many small business owners that want to differentiate their brand on factors other than price. Shopify allows businesses to set up a customized website with all the tools they need to get their eCommerce site up and running.
The immediate issue for the stock in 2023 is profitability. The company’s revenue is about 10% that of Amazon’s. But the company, which was profitable prior to the pandemic, has posted negative earnings per share for five consecutive quarters. Consistent profitability is not seen until at least 2025.
With all that said, SHOP stock is up nearly 100% in 2023. And with 58% of the stock owned by institutions, the stock closely matches the percentage of institutions that hold AMZN stock.
About Shopify
Shopify Inc, a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company's platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing.
Read More - Current Price
- $108.95
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 15 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $99.03 (9.1% Downside)
#6 - Walmart (NYSE:WMT)
One of the companies that is embracing the omnichannel business model is Walmart, Inc. (NYSE: WMT). The company became synonymous with brick-and-mortar retail. But even before 2020, Walmart was taking steps to adapt to an increasingly digital world.
Walmart continues to embrace the evolution of retail with its investment in Symbotic, Inc. (NASDAQ: SYM) - an AI-powered robotic and software platform for warehouse use. That’s just one example of how Walmart is trying to increase efficiency – and add to its bottom line.
Still, with a forward P/E ratio of around 25x earnings, WMT stock is not necessarily cheap. At the same time, investors in 2023 are looking for best in class. Walmart belongs in that category and therefore may be worth an elevated valuation.
The company continues to stack quarter after quarter of consistent revenue and earnings. Plus, Walmart is a dividend king having increased its dividend for 51 consecutive years. As of June 2023, the dividend yield was 1.47%.
About Walmart
Walmart Inc engages in the operation of retail, wholesale, other units, and eCommerce worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores under Walmart and Walmart Neighborhood Market brands; membership-only warehouse clubs; ecommerce websites, such as walmart.com.mx, walmart.ca, flipkart.com, PhonePe and other sites; and mobile commerce applications.
Read More - Current Price
- $92.24
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 29 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $93.69 (1.6% Upside)
#7 - Chewy (NYSE:CHWY)
One of the cautionary tales of the dot-com era was a company name Pets.com. But as the 2020s are proving, it was simply an idea ahead of its time. The last name on this list of eCommerce stocks to buy for the long haul is Chewy, Inc. (NYSE: CHWY).
The company is a pure-play eCommerce business that supplies pet food, supplies, medications and services for many pets. This is a niche company, but it’s a niche that is only going to grow over the next decade. Consumers continue to pay more and more to give their pets the best quality of life that they can. And there’s nothing to suggest that will be changing anytime soon.
Chewy has been profitable in its last five quarters ending in March 2023. And in each of those quarters, the company topped expectations that called for negative earnings per share. Another fact to consider is that institutions own 97% of CHWY stock. That’s a staggering number that reinforce the axiom that investors should pay attention to what institutional investors do more than what they say.
About Chewy
Chewy, Inc, together with its subsidiaries, engages in the pure play e-commerce business in the United States. It provides pet food and treats, pet supplies and pet medications, and other pet-health products, as well as pet services for dogs, cats, fish, birds, small pets, horses, and reptiles through its retail websites and mobile applications.
Read More - Current Price
- $33.72
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 14 Buy Ratings, 9 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $34.60 (2.6% Upside)
What we know as eCommerce started out as an online bookstore and has now grown to include your neighborhood grocery store and restaurant. Small businesses are making the transition to an omnichannel sales model that allows consumers to buy what they want, when they want and pick it up where they want.
And the reality is, the eCommerce sector will only continue to evolve as the internet moves into its next phase, called Web 3.0. Many of the companies on this list are already taking steps to ensure they remain relevant in this constantly evolving sector. But undoubtedly some new names will pop up.
As investors, it's up to each of us to pay attention to this market. And that's why you should count on MarketBeat to help you find opportunities in any market. If stock picking isn't for you, there are several exchange-traded funds (ETFs) that can give you exposure to this market.
One of the leading names in this space is the ProShares Online Retail ETF (NYSEARCA: ONLN). This fund focuses on many of the large cap names in this space which makes it less volatile.
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