E-commercial stocks suffer from a perception problem. As the pandemic emerges, some investors believe e-commerce will suffer as more shoppers demand the in-store experience. While this may be true in the short term, e-commerce is well positioned for long term growth.
Even in the United States, where e-commerce seems almost ubiquitous, eMarketer reports that only 13% of total retail sales are made over the internet – and that figure is expected to grow to 23.5% by 2025. In this context, the adding an e-commerce stocks to your portfolio makes perfect sense. Here are three e-commerce growth stocks buy now.
Image source: Getty Images
Amazon ecommerce is just one reason to own the stock
You can’t talk about e-commerce without mentioning Amazon (NASDAQ: AMZN)because the company basically started e-commerce in the United States. Amazon has taken advantage of somewhat forward-thinking retail CEOs who have conceded space for decades, giving Amazon a long lead in perfecting its product.
Those days are now over. Amazon faces significant competition on many fronts in e-commerce. Previous investments of Walmart and Target in their digital channels are paying off in a big way. Frictions for new entrants have also been eased due to Shopifythe plug-and-play e-commerce subscription platform of.
But Amazon is not worried. eMarketer notes that the company’s market share will be 41.4% of all online sales this year. Even though Amazon is experiencing an erosion in market share, the long-term growth trajectory as traditional retail shifts to e-commerce will increase Amazon’s revenue for years to come.
Amazon shares were recently sold due to slower growth, following supercharged growth rates posted at the height of the pandemic. While Amazon’s e-commerce business could experience tough year-to-year comparisons, savvy investors are paying close attention to the growth rates Amazon is showing in higher margin segments like Amazon Web Services, third-party vendor services, and its “other” segment, primarily advertising. Compared to revenue growth of 27%, revenues attributable to these segments increased by 37%, 38% and 87% respectively. Ecommerce is just one reason to own Amazon stocks.
Buying Mercado Libre today could be like buying Amazon 10 years ago
Many know Free market (NASDAQ: MELI) as “Latin American Amazon”, due to the fact that the company is the largest e-commerce provider in the region, with a presence in 18 countries. The company is well positioned to take advantage of a region that has nearly twice the population of the United States and has one of the fastest growing internet penetrations in the world.
The easy to understand investment thesis is to imagine buying Amazon ten years ago. The brick-and-mortar transition is still in its infancy in Latin America, and Mercado Libre is well positioned to benefit from the growth of e-commerce, as evidenced by its monster second quarter.
The company exceeded analysts’ expectations for revenue by declaring $ 1.7 billion, 102% more at constant exchange rates than last year. In the end, the company posted earnings per share (EPS) of $ 1.37, beating analysts’ expectations by 637%.
Like Amazon, Mercado Libre also has a non-e-commerce growth engine in the form of its fintech payment product Mercado Pago. Originally designed to support transactions on its website, the service has now migrated to “off-platform” uses such as physical retailers. In the second quarter, Mercado Pago’s total payment volume increased 72% from the previous year, while off-platform usage nearly doubled.
Mercado Libre could be like buying Amazon and fintech payment company Pay Pal a decade ago. The company’s shares have risen 1000% over the past five years, but the long-term story is only just beginning.
Down 55%, recent Coupang stumbles are an opportunity
In recent years, investing in e-commerce businesses has almost been an investment not to be lost. Companies like Amazon, Limited sea, Free Market, and Ali Baba were winners. Even lagging behind Jumia Technologies, hampered by a business transition, has seen its shares explode by 130% in the past year.
Unfortunately, there was one notable underperformance: South Korea Coupang (NYSE: CPNG). The shares are currently below their IPO price of $ 35 and down 55% from the intraday high of $ 69, briefly giving the company a market cap of $ 100 billion. Since then, the actions have been battered by increased criticism of working conditions, especially due to a deadly fire at his warehouse in June.
The long-term story remains intact: South Korea is among the most densely populated countries, which contributes to easy delivery. The company boasts that 70% of all South Koreans live within 10 minutes of a delivery center. Second, at 98%, the country has higher internet penetration rates than the United States, as well as high levels of disposable income.
Coupang’s history as a public company may be disappointing so far, but if it continues to show year-over-year growth like the 71% year-on-year rate he recorded in the second quarter, stocks could be seen as a real opportunity for long-term investors.
10 stocks we like better than MercadoLibre
When our award-winning team of analysts have stock advice, it can pay off to listen. After all, the newsletter they’ve been running for over a decade, Motley Fool Equity Advisor, has tripled the market. *
They have just revealed what they believe to be the ten best stocks investors to buy now … and MercadoLibre was not one of them! That’s right – they think these 10 stocks are even better buys.
* The portfolio advisor returns on August 9, 2021
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of The Motley Fool. Jamal Carnette, CFA owns shares of Amazon, Coupang, Inc. and MercadoLibre. The Motley Fool owns shares and recommends Alibaba Group Holding Ltd., Amazon, Coupang, Inc., Jumia Technologies AG-ADR, MercadoLibre, PayPal Holdings, Sea Limited and Shopify. The Motley Fool recommends the following options: January 2022 long calls at $ 1,920 on Amazon, $ 75 long calls in January 2022 on PayPal Holdings, $ 1,140 long calls in January 2023 on Shopify, short calls at $ 1,940 in January 2022 on Amazon and short calls to $ 1,160 in January 2023 on Shopify. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.