E-commerce has become an essential part of the global economy. As financial markets move further into 2023, investors are looking for the best stocks to buy for long-term growth. Unsurprisingly, the e-commerce industry continues to expand at an impressive rate.
In this article, we will explore the three best e-commerce stocks that have significant potential to capitalize on the growing industry. We will analyze these e-commerce giants’ financial metrics, competitive advantages, and growth potential. Furthermore, their customer-centric approach, focus on value, commitment to innovation, and market dominance offer unique opportunities for investors in the thriving e-commerce sector.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) shows exceptional forward value and growth potential. Its revenue growth of 10.12% and EPS forward long-term growth of 27.58% surpass the sector median. The operating forward cash flow growth is also remarkable at 28.21% which is far above the sector median of 7.10%. These metrics indicate that Amazon is well-positioned for continued success and growth in the future.
Amazon’s greatest success stories have been in its customer-centric focus with the Prime membership program. Customers choose to renew their Prime subscription due to its great deals, fast delivery and wide selection of products from Amazon and third-party sellers. Prime subscriptions also come with a video streaming service, which includes the wildly popular Lord of the Rings and Thursday Night Football.
Furthermore, another area of growth potential for Amazon is its cloud services division, Amazon Web Services (AWS). Despite slower year-over-year growth rates due to enterprises optimizing their cloud spending, AWS’s new customer pipeline remains healthy and robust, with many customers committing to AWS over the long term.
Overall, Amazon’s Q4 2022 results demonstrate its focus on value and growth potential, with its commitment to customer focus, low prices and wide selection helping it stand out during economic uncertainty. Amazon is one of the best e-commerce stocks as it is positioned for continued expansion with its customer-centric approach like Prime.
PDD Holdings (PDD)
PDD Holdings (NASDAQ:PDD) offers a unique investment opportunity for value- and growth-minded investors. It has a forward revenue growth of 25.53% and an EPS forward long-term growth of 19.91%. The company also has operating cash flow growth of 31.12% which surpasses the sector median.
Meanwhile, PDD’s growth in 2022 can be attributed to it investing over 10.3 billion yuan in R&D to enhance its technological capabilities. PDD continues to focus on a wide variety of products on its platform to address its’ users’ diverse needs. The company is committed to providing more savings and investing in the supply chain to improve efficiency.
Furthermore, PDD has incubated thousands of manufacturers’ brands and is dedicated to building a platform accessible to brands and merchants of all sizes. In the agricultural sector, the company is promoting digital inclusion by utilizing its resources to facilitate the adoption of agritech solutions. PDD’s flagship Smart Agriculture Competition has offered a theme for agricultural researchers and growers to explore solutions that improve yield and shorten production cycles.
PDD is among the best e-commerce stocks as it demonstrated strong growth potential in 2022 with total revenues increasing by 46% YoY to RMB39.8 billion in Q4. The growth was primarily driven by an increase in revenues from online marketing and transaction services. It results from improvements in consumer sentiment. Its solid financial foundation, with net cash flow generated from operations of RMB48.5 billion for 2022, positions PDD for growth.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is one of the best e-commerce stocks as it provides investors with valuable returns and significant growth potential. Firstly, it has a forward revenue growth of 31.57% and a forward EPS long-term growth of 56.23%. These growth rates far exceed the sector medians of 7.14% and 12.00%, respectively. Additionally, the company’s operating cash flow growth of 55.56% is well above the sector median of 7.10%.
Notably, with heavy investments in new products and technologies, MercadoLibre delivered record revenues, gross merchandise value and EBIT in 2022. Also, the company has a substantial market share in Brazil and Mexico. It has a wide range of competitively priced products available for rapid delivery from sellers of all sizes.
In 2022, MercadoLibre focused on launching its own ad server, creating a credit card product and cross-selling new products and services to millions of users. It also offered a full stack of financial services and products to MercadoPago users. The credit card, Mercado Credito, contributed to the MercadoLibre’s profit growth despite a challenging economic scenario. Furthermore, MercadoLibre’s strong results are a testament to its efficient execution, discipline and scale.
Overall, with a complete product stack, MercadoPago is poised to attain leadership in financial services. It will lead to fostering financial inclusion across the region which has left the company is optimistic about its ability to capture significant upside and achieve principality.
On the date of publication, Yiannis Zourmpanos did not hold (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.
