12 Best Ecommerce Stocks to Invest In

Brahm Buck

In this article, we will be looking at the 12 best ecommerce stocks to invest in. To skip our detailed analysis of ecommerce stocks, you can go directly to see the 5 Best Ecommerce Stocks to Invest In. The ecommerce industry is surprising the global markets with its explosive growth […]

In this article, we will be looking at the 12 best ecommerce stocks to invest in. To skip our detailed analysis of ecommerce stocks, you can go directly to see the 5 Best Ecommerce Stocks to Invest In.

The ecommerce industry is surprising the global markets with its explosive growth and massive returns.

But here is an interesting fact to convey the magnitude of growth this industry is bound to go through in the future: ecommerce still accounts for less than 14 percent of all the stuff that Americans buy. That means the ecommerce revolution is still getting started, and now is the best time to pile into ecommerce stocks.

The global e-commerce market was able to reach unprecedented heights, with significant sales growth last year. E-commerce sales grew by about 33.6% in 2020, reaching $799.18 billion. In 2021, e-commerce sales are expected to grow even further by 13.7% to reach $908.73 billion, as people get accustomed to the new normal.

This development has resulted in the rising popularity of e-commerce companies on Wall Street. The consensus this year is so far leaning towards to belief that consumer behavior towards online retail will remain the way it is now even after the pandemic subsides. As such, big names in the e-commerce sector such as Amazon.com, Inc. (NASDAQ: AMZN), Walmart Inc. (NYSE: WMT), eBay Inc. (NASDAQ: EBAY), and Shopify Inc. (NYSE: SHOP) are gaining investor and analyst confidence as they spread their wings in the pandemic’s online environment.

At the same time, traditional retailers are the ones facing the brunt of the pandemic-induced financial drop in the global economy. Bloomberg has reported that ten of the largest public US companies in retail lost about $38 billion in revenue in 2020, while the online retail market grows exponentially and is facing a boom in business. The e-commerce market is expected to reach $16,215.6 billion in valuation by 2027, growing at a CAGR of 22.9% between last year and the forecasted year while traditional retailers continue to suffer huge financial losses. As such, the global e-commerce market is steadily becoming one of the best investment options for investors across the globe.

The coronavirus crisis changed the retail industry and shopping trends forever. The pandemic also upended the financial markets and the hedge fund industry is still feeling its effects. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and May 28th, 2021, our monthly newsletter’s stock picks returned 206.8%, vs. 91.0% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Best Ecommerce Stocks to Invest In

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Without further ado, let’s look at the 12 best ecommerce stocks to invest in. Keeping the above in mind, we have compiled a list of the best ecommerce stocks to invest in. The stocks added to our list were selected on the basis of hedge fund sentiment, analysts’ ratings, fundamentals, and growth potential based on core business strengths.

Best Ecommerce Stocks to Invest In

12. Jumia Technologies AG (NYSE: JMIA)

Number of Hedge Fund Holders: 16

Jumia Technologies AG (NYSE: JMIA) is an e-commerce platform operating in Africa, Portugal, Germany, and the UAE. The company’s platform includes a marketplace that connects buyers to sellers and also enables the shipment and delivery of packages. The company ranks 12th on our list of the best ecommerce stocks to invest in.

This May, Jumia Technologies AG (NYSE: JMIA) was reportedly still rising since the company’s reported losses in Q1 began to decrease, as operating losses fell by 23%, while adjusted EBITDA losses fell by 24%. In the first quarter of 2021, Jumia Technologies AG (NYSE: JMIA) brought in $33.26 million in revenue, up 5.1% year over year but missing estimates by $10.1 million. The company has a gross profit margin of 68.86%.

By the end of the first quarter of 2021, 16 hedge funds held stakes in Jumia Technologies AG (NYSE: JMIA) worth roughly $123 million. This is compared to 13 hedge fund holders in the previous quarter with a total stake value of approximately $241 million. Like Amazon.com, Inc. (NASDAQ: AMZN), Walmart Inc. (NYSE: WMT), eBay Inc. (NASDAQ: EBAY), and Shopify Inc. (NYSE: SHOP), this is a good e-commerce stock to invest in.

11. Overstock.com, Inc. (NASDAQ: OSTK)

Number of Hedge Fund Holders: 31

Overstock.com, Inc. (NASDAQ: OSTK) is an online retailer operating in the US. The company operates through Retail, tZERO, and Medici Ventures. It offers a range of products including furniture, home décor, kitchen, and dining items, among others, and ranks 11th on our list of the best ecommerce stocks to invest in.

This June, Overstock.com, Inc. (NASDAQ: OSTK) was seen to be gaining in light of reports that tZERO, the crypto trading platform, would be sold. The company is reportedly looking for a strategic partner, according to Coindesk, to either take over tZERO or make it public through a SPAC. The stock also received positive responses after announcing that its revenue beat consensus estimates for the first quarter. In the first quarter of 2021, Overstock.com, Inc. (NASDAQ: OSTK) had an EPS of $0.33, beating estimates by $0.12, while its revenue of $659.86 million was up 87.69% year over year and beat estimates by $77.51 million. The company has a gross profit margin of 22.96% and the stock has gained 103.34% in the past 6 months and 97.21% year to date.

By the end of the first quarter of 2021, 31 hedge funds held stakes in Overstock.com, Inc. (NASDAQ: OSTK) worth roughly $168 million. This is compared to 24 hedge fund holders in the previous quarter with a total stake value of approximately $157 million. Like Amazon.com, Inc. (NASDAQ: AMZN), Walmart Inc. (NYSE: WMT), eBay Inc. (NASDAQ: EBAY), and Shopify Inc. (NYSE: SHOP), this is a good e-commerce stock to invest in.

10. Chewy, Inc. (NYSE: CHWY)

Number of Hedge Fund Holders: 32

Chewy, Inc. (NYSE: CHWY) is an e-commerce business operating in the US. It offers pet food, treats, supplies, and medications, alongside other pet-related products through its retail website, chewy.com. The company ranks 10th on our list of the best ecommerce stocks to invest in.

On June 10th, Chewy, Inc. (NYSE: CHWY) offered guidance for the year with expected full-year revenue of $8.9 billion to $9 billion. The company has also announced its partnership with Freshpet on vital brand products for this year and was among the gainers in the retail sector last month. In their fiscal first quarter of 2022 report, Chewy, Inc. (NYSE: CHWY) had an EPS of $0.09, beating estimates by $0.11, while its $2.14 billion revenue, up 31.69% year over year, beat estimates by $6.08 million. It also has a gross profit margin of 26.53% and the stock has gained 83.22% in the past year.

By the end of the first quarter of 2021, 32 hedge funds held stakes in Chewy, Inc. (NYSE: CHWY) worth roughly $433 million. This is compared to 38 hedge fund holders in the previous quarter with a total stake value of approximately $728 million. Like Amazon.com, Inc. (NASDAQ: AMZN), Walmart Inc. (NYSE: WMT), eBay Inc. (NASDAQ: EBAY), and Shopify Inc. (NYSE: SHOP), this is a good e-commerce stock to invest in.

Nelson Capital Management, an investment management firm, mentioned Chewy, Inc. (NYSE: CHWY) in its fourth-quarter 2020 investor letter. Here’s what they said:

“One of our investment themes over the last several years has been the “humanization of pets,” which refers to the increasing amount of time and money that people are devoting to their animals. This theme has become even more evident during the pandemic, as many families and individuals have adopted pets while spending more time at home. Today, more than 85 million US households have pets. In 2015, roughly 7% of pet products in the U.S. were bought online. By 2019, that number had increased to 22%. Moreover, the pandemic has caused pet parents, new and experienced alike, to sign up for delivery of pet supplies in order to avoid trips to physical stores. 72% of pet owners made at least one online purchase for their pets in the past 12 months and 39% of those were subscription-based purchases.

Chewy (tkr: CHWY) is the largest pure-play pet “e-tailer” in the world, offering “the personalized service of a neighborhood pet store combined with the convenience and speed of e-commerce.” The company was founded in 2011 and was bought by PetSmart in 2017, for $3 billion. In June, 2019, Chewy went public. All of its sales are currently U.S.-based. The company has co-headquarters with one facility in Dania Beach, Florida and one in Boston, Massachusetts, and employs about 12,000 people. Chewy offers a selection of high-quality pet food, treats, supplies, and pet healthcare products.” (Click here to see the full text)

9. eBay Inc. (NASDAQ: EBAY)

Number of Hedge Fund Holders: 51

EBay Inc. (NASDAQ: EBAY) operates an online marketplace that connects buyers and sellers worldwide and includes its website and mobile applications. The company ranks 9th on our list of the best ecommerce stocks to invest in.

This June, eBay Inc. (NASDAQ: EBAY) announced the expansion of its Authenticity Guarantee service to now include handbags, while its deal with Adevinta was also closed, leaving the company the largest shareholder in Adevinta with a 44% stake and 33.3% voting shares, alongside two board seats. The stock was also on the rise last month after the CEO of eBay Inc. (NASDAQ: EBAY) mentioned interest in NFTs and cryptocurrency for payments. In the first quarter of 2021, eBay Inc. (NASDAQ: EBAY) had an EPS of $1.09, beating estimates by $0.02. Its revenue was $3.02 billion, up 27.34% year over year and beating estimates by $53.21 million, and it has a gross profit margin of 74.98%. EBay Inc. (NASDAQ: EBAY) has gained 40.28% in the past 6 months and 36.87% year to date.

By the end of the first quarter of 2021, 51 hedge funds held stakes in eBay Inc. (NASDAQ: EBAY) worth roughly $3.76 billion. This is compared to 53 hedge fund holders in the previous quarter with a total stake value of approximately $4.01 billion.

8. Etsy, Inc. (NASDAQ: ETSY)

Number of Hedge Fund Holders: 53

Etsy, Inc. (NASDAQ: ETSY) operates online marketplaces to connect buyers and sellers in the US, the UK, Canada, Germany, Australia, France, and India. The company’s platforms include Etsy.com and Reverb.com. It ranks 8th on our list of the best ecommerce stocks to invest in.

On June 28th, Etsy, Inc. (NASDAQ: ETSY) confirmed its acquisition of the marketplace Elo7 for about $217 million, while earlier this month the company had also confirmed another acquisition of Depop, a marketplace for fashion, brought in with $1.625 billion in cash. After receiving news of the Depop acquisition, Cathie Wood’s ARK Invest bought yet another 157,181 shares of the stock, doubling its previous stake. Atlantic Equities has also begun to cover Etsy, Inc. (NASDAQ: ETSY) with an Overweight rating and a price target of $200 with 20% upside potential, in light of the firm’s positive response to the stock’s performance.

In the first quarter of 2021, Etsy, Inc. (NASDAQ: ETSY) had an EPS of $1.07, beating estimates by $0.16. Its revenue was $550.65 million, up 141.45% year over year and beating estimates by $20.28 million. The company has a gross profit margin of 74.36% and the stock has gained 13.84% in the past 6 months and 17.7% year to date.

By the end of the first quarter of 2021, 53 hedge funds held stakes in Etsy, Inc. (NASDAQ: ETSY) worth roughly $1.64 billion. This is compared to 56 hedge fund in the previous quarter with a total stake value of approximately $1.96 billion. Like Amazon.com, Inc. (NASDAQ: AMZN), Walmart Inc. (NYSE: WMT), eBay Inc. (NASDAQ: EBAY), and Shopify Inc. (NYSE: SHOP), this is a good e-commerce stock to invest in.

Polen Capital, an investment management firm, mentioned Etsy, Inc. (NASDAQ: ETSY) in its first-quarter 2021 investor letter. Here’s what they said:

Etsy continued to be a top contributor in the Portfolio during the first quarter. Etsy experienced record levels of demand in 2020. Throughout the beginning of this year, the business has continued to see accelerated growth trends. The company’s recently announced fourth quarter results provided numerous data points that highlight Etsy’s success in both broadening and deepening the relationship it has with buyers and sellers on its platform. In fact, Etsy now stands as the fourth largest e commerce site in the U.S. Repeat buyers have grown nearly 100% year-over-year, despite mask sales, which grew rapidly at the onset of the pandemic, shrinking to less than 5% of sales.

We continue to believe Etsy remains in the early stages of growing out its platform.

We remain confident in its ability to compound its value for shareholders at an attractive rate going forward.”

7. Pinduoduo Inc. (NASDAQ: PDD)

Number of Hedge Fund Holders: 56

Pinduoduo Inc. (NASDAQ: PDD) is an e-commerce company operating a platform in China. The Pinduoduo mobile platform offers various products like apparel, shoes, bags, mother and childcare products, and others. The company ranks 7th on our list of the best ecommerce stocks to invest in.

This May, Pinduoduo Inc. (NASDAQ: PDD) reported that it was able to narrow its non-GAAP operating and net losses in the latest quarter’s earnings report. In the first quarter of 2021, Pinduoduo Inc. (NASDAQ: PDD) had an EPS of -$0.24, beating estimates by $-.14, while its revenue was $3.47 billion, up 278.06% year over year and beat estimates by $269.66 million. The company has a gross profit margin of 62.47% and the stock has gained 55.58% in the past year.

By the end of the first quarter of 2021, 56 hedge funds held stakes in Pinduoduo Inc. (NASDAQ: PDD) worth roughly $6.29 billion. This is compared to 54 hedge fund holders in the previous quarter with a total stake value of approximately $10.5 billion. Like Amazon.com, Inc. (NASDAQ: AMZN), Walmart Inc. (NYSE: WMT), eBay Inc. (NASDAQ: EBAY), and Shopify Inc. (NYSE: SHOP), this is a good e-commerce stock to invest in.

Tao Value, an investment management firm, mentioned Pinduoduo Inc. (NASDAQ: PDD) in its first-quarter 2021 investor letter. Here’s what they said:

“Pinduoduo reported a strong quarter, reporting MAU of 720 million, now surpassing Taobao. However, it was overshadowed by a bigger news on Colin Huang resigning from Board and completely disassociating himself from PDD’s management & operation. Huang explained in his letter to shareholders that he would start fundamental research initiatives in food science. Although not entirely shocked (as he already stepped down from CEO July 2020), I am surprised by the fast pace of such transition. I remain confident in the organization and the culture Huang built but will monitor it closely.”

6. Walmart Inc. (NYSE: WMT)

Number of Hedge Fund Holders: 58

Walmart Inc. (NYSE: WMT) is a retail giant operating in the US and internationally. The company operates e-commerce websites alongside supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and other businesses. It ranks 6th on our list of the best ecommerce stocks to invest in.

Despite not being a traditional e-commerce company, Walmart Inc.’s (NYSE: WMT) e-commerce strategy has resulted in a 37% increase in online sales in the first quarter of 2021, worth $17.2 billion, while e-commerce sales grew 79% in the previous fiscal year. This June, Walmart Inc. (NYSE: WMT) announced its launch of a more affordable brand of insulin, sold at $73 a vial, resulting in the stock receiving positive responses. Citigroup reiterated a Buy rating on Walmart Inc. (NYSE: WMT) as well, with an expectation of margin gains and sales growth in the near future. In the fiscal first quarter of 2022, Walmart Inc. (NYSE: WMT) had an EPS of $1.69, beating estimates by $0.48. Its revenue was $137.16 billion, up 2.61% year over year and beating estimates by $5.04 billion. Walmart Inc. (NYSE: WMT) has a gross profit margin of 25.1% and has gained 14.63% in the past year.

By the end of the first quarter of 2021, 58 hedge funds held stakes in Walmart Inc. (NYSE: WMT) worth roughly $5.88 billion. This is compared to 70 hedge fund holders in the previous quarter with a total stake value of approximately $6.19 billion.

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Disclosure: None. 12 Best Ecommerce Stocks to Invest In is originally published on Insider Monkey.

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