E-commerce stocks provide some of the best investment opportunities for investors looking to cash in on the digital purchasing boom.
The global pandemic helped boost e-commerce sales around the world as consumers were forced to remain inside their homes due to COVID-19. Many companies saw their digital e-commerce sales soar and I don’t expect these trends to slow down anytime soon.
According to Forbes, the global e-commerce market will grow by over $1 trillion by 2025 so there’s plenty of reasons to invest in high growth e-commerce stocks.
20% of all retail sales come from online purchases and e-commerce sales will continue to grow throughout this decade.
There are dozens of e-commerce stocks out there covering a wide variety of industries and niches but I identified my favorite stock picks and listed them below.
Best E-Commerce Stocks
- Amazon (NASDAQ: AMZN)
- Jumia (NASDAQ: JMIA)
- Etsy (NASDAQ: ETSY)
Market Cap: $1.65 trillion
Amazon is one of the best performing e-commerce stocks of all time and tops the list due to its massive market cap and huge moat.
Founded by Jeff Bezos in 1997, Amazon generated $386 billion in 2020 revenue and continues to stack cash even though Bezos resigned as CEO to pursue his life long dream of afforable space travel.
In Q2 2021, Amazon net sales increase 27% to $113 billion and EPS reached $15.12 per share. The market didn’t react well to lower guidance for Q3 2021 and as a result Amazon stock sold off sharply.
I also attribute the decline in AMZN stock to Jeff Bezos stepping down as CEO. There is a lot of research supporting the belief that founder led companies outperform the broader market.
We’ll see how Amazon responds to new CEO Andy Jassy but I believe Jassy will do just fine as long as Amazon keeps serving its customers in the long run.
AMZN stock looks like a solid buy on this price dip and I still believe we could see AMZN stock worth $10,000 by 2030.
Market Cap: $1.8 billion
Jumia is the first African based company to go public on a market stock exchange and many investors consider it the “Amazon of Africa.” The company was founded in Lagos, Nigeria back in 2012 and offers e-commerce, digital payment services, and food delivery to around 12 African countries.
Jumia is one of the smallest e-commerce stocks on this list in terms of market cap but own the top market share in the increasingly competitive African e-commerce market.
Market Cap: $24 billion
Etsy is a global online e-commerce marketplace that connects buyers and sellers throughout the world with a specialization on handmade arts, clothing, and crafts.
In Q2 2021, Etsy hit $3.0 billion in GMS (gross merchandise sales) while revenue was up 23% YOY to $528.9 million. EPS hit 68 per share while the company finished the quarter was $2.5 billion in cash holdings.
The company continues to grow even though Etsy may experience in temporary slow down in growth as more people spend time outside after recent Covid-19 Delta lockdowns.
The good news is Etsy should continue to grow its gross merchandise sales and add more people to its platform. As long as the global e-commerce market grows, Etsy will benefit from this positive market momentum.
Market Cap: $3 billion
Overstock is a major online retailer that sells home based furnishings. The company remains one of the few major e-commerce stores to accept cryptocurrencies such as Bitcoin for payment.
In Q2 2021, Overstock reached 9.2 million active customers with total revenue hitting $795 million (up 4% YOY). EPS reached $1.72 and the company held $536 million in cash on its balance sheet.
After performing extremely well during the COVID-19 induced home buying surge, I expect OSTK stock to cool off as things slowly wind back to normal. If Overstock wants to really return value to shareholders then perhaps management could expand outside of home furnishings to boost revenue in the future.
OSTK is a niche e-commerce stock play but could continue to grow if competitors like Wayfair lose market share.
Chewy is a leading pet online retailer with a major focus on selling products to happy pet owners.
In Q1 2021, Chewy grew revenue to $2.14 billion (Up 31.7% YOY) and hit $28 million in net income. Slim margins of just under 2% helped Chewy reach profitability with lots of growth potential in the future.
Americans are choosing not to have children as fertility rates continue to decline, which makes pet ownership a cheaper and more manageable alternative for many people.
I expect Chewy to greatly benefit from the ongoing pet ownership boom in western countries.
The “Amazon of China” is dealing with some short term issues because founder Jack Ma must deal with China’s anti-trust laws to prevent a massive Alibaba monopoly. BABA stock sold off a bit recently but I think it’s still a great long term hold. The COVID-19 pandemic only accelerated e-commerce trends in China and the world’s largest population will surely buy a lot of things in the future.