E-commerce stocks are a good choice for high growth investors looking for massive upside.
Why Invest in E-commerce Stocks?
According to Forbes, the global e-commerce market will grow by over $1 trillion by 2025 with 20% of all retail sales coming from online purchases. E-commerce stocks will grow in value as more people buy goods & services online.
Best E-Commerce Stocks
- Amazon (NASDAQ: AMZN)
- Alibaba (NASDAQ: BABA)
- Paypal (NASDAQ: PYPL)
- Shopify (NASDAQ: SHOP)
- Jumia (NASDAQ: JMIA)
- Etsy (NASDAQ: ETSY)
- SEA Limited
1. Amazon (AMZN)
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 generates revenue through two main products: e-commerce and Amazon web services. While e-commerce sales have been sluggish, Amazon continues to generate higher revenue with Web services to counteract a slowdown in e-commerce revenue.
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.
However, most e-commerce stocks are down big in 2022 so this could be an industry-wide problem that’s not specific to Amazon.
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.