E-commerce offers consumers a more convenient solution to buy their favorite products. Instead of commuting to the nearby store, shoppers can buy products online from the comfort of their homes or anywhere else, creating big opportunity for some of the best e-commerce stocks. This trend has become a popular way to spend money, with companies raking in billions because of it. In fact, here are some of the best e-commerce stocks you may want to consider.
Best E-Commerce Stocks: Amazon (AMZN)
When most people think of e-commerce, they immediately think of Amazon (NASDAQ:AMZN). The company ships out 66,000 orders per hour and 19 products per second. The company’s Amazon Prime membership program has also been a big hit with consumers. Amazon Prime has over 200 million members who receive discounts, quicker deliveries, free shipping, and other perks.
Even better, the company has delivered strong results for shareholders for many years. The stock has gained 60% year-to-date and has gained almost 2,000% since the start of 2010. Recent earnings suggest the gains can continue. In fact, recent net sales increased by 11% year-over-year in the second quarter. The company also reported a $6.7 billion net income, compared to a $2.0 billion loss in Q2 2022.
Amazon’s second quarter downfall primarily comes from an unprofitable Rivian (NASDAQ:RIVN) investment. Amazon lost over $11 billion thanks to Rivian in 2022, but that doesn’t reflect any issues with Amazon’s underlying business. This loss explains why Amazon has a P/E ratio above 100, but the forward P/E ratio of 42 suggests a better outlook for the stock’s future.
Shopify (SHOP)
Shopify (NYSE:SHOP) shares have gained over 80% year-to-date and are up by 374% over the past five years. The stock has enjoyed substantial highs and dramatic drops. Shares rallied recently on the e-commerce company’s recent partnership with Amazon. Under this partnership, merchants can use Amazon’s ‘Buy with Prime’ option.
Profitability has been an issue in recent quarters, but Shopify has reported profitable quarters in the past. For instance, Shopify reported a $68 million profit in the first quarter. However, the company reported a second-quarter loss of $1.3 billion. Shopify can steer the ship and return to profitability, and its reliable revenue growth will help. Shopify grew its revenue by 31% year-over-year. Investors have enjoyed high revenue growth rates for quite some time, and Shopify stock stands to reward long-term investors if it can keep up with those growth rates while fixing profitability.
Best E-Commerce Stocks: MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is a South American e-commerce company that doubles as a fintech company. Shares are up by 72% year-to-date and have gained 335% over the past five years. Those numbers aren’t as good as Shopify, but MercadoLibre has better profitability and revenue growth.
Revenue jumped by 31.5% year-over-year in the second quarter. It also delivered $262 million in net income, more than doubling the previous year’s net income – which translates into a profit margin of close to 8%. MercadoLibre has a $71 billion market cap and a price-to-earnings (P/E) ratio just shy of 100. The firm’s forward P/E ratio is currently under 50. Investors who are bullish on Shopify should also give MercadoLibre a closer look due to the firm’s better financial performance, lower valuation, and lower stock returns.
Walmart (WMT)
Walmart (NYSE:WMT) is the first stock on this list that offers a dividend. The yield sits at roughly 1.4%, and the stock has a 31 P/E ratio. Walmart is an e-commerce leader that many people turn to for affordable prices. With inflation heating up again, more consumers may buy goods from Walmart to keep their bills lower. The company hasn’t performed as well as its peers, and has only generated a 12% year-to-date return. Still, shares are up by 68% over the past five years.
It has also been growing at a moderate pace. Revenue went up by 5.7% year-over-year in the second quarter. The retailer’s net income growth is the bigger story, as the company reported 53.3% year-over-year growth for that metric.
eBay (EBAY)
eBay (NASDAQ:EBAY) has been a laggard compared to other e-commerce stocks. Shares have only gained 7% year-to-date and are up by 32% over the past five years. The company’s 18 P/E ratio and 2.20% dividend yield make it a value stock worth watching.
Just like Walmart, eBay had low revenue growth and high net income growth. The firm reported 5% year-over-year revenue growth and 132% year-over-year net income growth in the second quarter. eBay has over 132 million active buyers. Some of those buyers also sell products on the site to declutter and make side hustle income. The e-commerce company projects 2%-4% revenue growth in the third quarter. Its outlook also called for a diluted GAAP EPS between $0.67-$0.72. It’s a substantial improvement from a diluted GAAP EPS of $(0.13) in Q3 2022.
Visa (V)
Visa (NYSE:V) is a leading credit card producer that has over 341 million credit cards in circulation. Credit card companies benefit from consumer spending since they charge fees and interest. Credit cards are more convenient for consumers because they don’t have to pay credit card debt right away. While it’s better to get rid of debt right away, these cards give customers more flexibility.
Visa has been a steady performer and has gained almost 20% year-to-date. The company has also gained over 70% over the past five years. If e-commerce stays hot, credit card companies will also stay hot. In addition, Visa has fulfilled its end of the bargain for investors with 12% year-over-year revenue growth in the third fiscal quarter. The credit card issuer’s profit margins expanded due to 22% year-over-year net income growth.
Alphabet (GOOG/GOOGL)
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) makes the bulk of its revenue from online ads on Google and YouTube. Many businesses turn to these advertising platforms to reach new prospects and increase their sales.
It’s also one of the top advertising companies on the planet and has great targeting capabilities. Advertisers can create predictable and scalable advertising campaigns with this platform. Better, Alphabet shares have gained over 50% year-to-date and are up by 135% over the past five years. The search engine conglomerate delivered 7% year-over-year revenue growth in the second quarter. Net income came in at $18.4 billion which is good for a 14.8% year-over-year increase.
As online advertising recovers, Alphabet stands to benefit immensely. It has been a promising long-term stock for many investors, and the company can still deliver good returns. Alphabet currently has a 30 P/E ratio.
On the date of publication, Marc Guberti 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.
