Ask 100 investors what the largest e-commerce stock in the U.S. is and most would answer Amazon (NASDAQ:AMZN). It’s just so obvious.
In 2024, it’s expected to generate $248 billion in online sales, $21 billion in physical store sales, and $172 billion in third-party seller fees, for a total of $441 billion, up 12.5% from $392 billion in 2023. It has few competitors with so much revenue.
Although Amazon is an excellent choice for stocks to own for the long haul, it doesn’t hurt to consider owning other e-commerce stocks that also benefit from global online sales.
After all, an April 2024 blog post from Shopify (NYSE:SHOP) estimates that global e-commerce sales will grow from $4.98 trillion in 2021 to $7.96 trillion in 2027, a compound annual growth rate (CAGR) of 8.1%.
If my business could grow by 8% annually, I’d be very happy. But I digress. The important point is that e-commerce is still a very lucrative business.
Here are three e-commerce stocks from the Global X E-commerce ETF (NASDAQ:EBIZ) to ride the second wave.
Williams-Sonoma (WSM)
Williams-Sonoma (NYSE:WSM) is the third-largest holding from EBIZ with a 5.13% weight. WSM shares are up nearly 50% YTD and 378% over the past five years.
I’ve said for years that Williams-Sonoma is one of the best omnichannel retailers anywhere because it balances its brick-and-mortar and online businesses so well.
In recent years, the home furniture and home goods retailer has leaned into e-commerce. In 2023, its e-commerce business accounted for 66% of its $7.75 billion in net revenue. That’s considerably higher than when I first wrote about the stock back in June 2016. Back then, e-commerce accounted for about 53% of revenues.
What’s that done for profitability?
In 2016, it had an operating profit of $472.6 million, good for an operating margin of 9.3%. In 2023, its operating profit was $1.50 billion, good for an operating margin of 17.3%, 800 basis points higher.
I’d say e-commerce has done a lot for profitability. It’s why WSM remains one of the top e-commerce stocks to buy.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is the 15th-largest holding from EBIZ with a 3.32% weight. MELI shares are up nearly 9% year-to-date and 169% over the past five years.
MercadoLibre is a combination of e-commerce and fintech businesses.
In Latin America, that’s vital because the access to banks is far lower than in the U.S. It was started in 1999 as MercadoLibre.com. Today, it has one of the five highest market caps of e-commerce companies worldwide. It also has one of the 60 largest market caps of tech companies worldwide.
As far back as May 2013, I was recommending its stock, and even though I’ve become a big fan of Amazon as well, I still love what it’s doing in Latin America, which operates in a much tougher business environment than America.
At the time, it had $472.6 million in revenue, most of which was from the MercadoLibre Marketplace. Fast-forward to 2023. It generated revenue from two segments: Commerce and Fintech. The former accounted for $2.39 billion in revenue (34%), 41.2% higher than in 2022, while the latter accounted for $4.73 billion (66%), 32.6% higher than a year earlier.
Part e-commerce, part fintech, total profit machine.
Shopify (SHOP)
Shopify is the 22nd-largest holding from EBIZ with a 2.50% weight. SHOP shares are down nearly 20% YTD and up 79% over the past five years.
Shopify stock was pretty much on a straight up trajectory until the end of 2021. Since then, it’s been mostly misery mixed in with a little bit of good news. As a result, of the 51 analysts that cover its stock, only 30 rate it a “buy” (59%), with a target price of $76.20, nearly 30% higher than where it currently trades, so there’s hope.
On July 22, CIBC analyst Todd Coupland reiterated his “buy” rating for the stock with an $85 target price, even better than the median.
When the company reported its Q1 2024 results in May, President Harley Finkelstein had some confident statements about the company’s future. Cantech Letter reported Finkelstein’s comments:
“You’re seeing the strongest version of Shopify in our history. Our outstanding Q1 performance is clear proof of our dedication to the new shape of Shopify, our commitment to operating with a consistent team size, and our focus on building for the long-term to deliver both growth and profitability.”
I would buy after it reports Q2 2024 results on August 7.
On the date of publication, Will Ashworth 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.