E-commerce stocks have come to the top among companies that are actually taking advantage of the global health crisis. In addition, the consensus is growing that they will continue to perform as consumers permanently switch to online shopping.
Companies that provide e-tail platforms for both buyers and sellers to do business online have seen demand for their services increase in a very short time as governments around the world have imposed lockdowns to prevent the spread of COVID-19 curb.
While online sales have long been gaining market share as a percentage of total retail spending, the trend has accelerated as closings increased, forcing physical competitors to close, albeit temporarily, for some. Analysts now believe that higher demand is likely to persist even after the pandemic, especially in categories such as groceries.
Below we have shortlisted three e-commerce stocks, which some top analysts believe have even more benefits.
1. Amazon: Multiple Hidden Value Multipliers
Amazon.com (NASDAQ 🙂 was the most notable winner during the pandemic when consumers rushed online channels to buy everything from toilet paper to hand sanitizer. As a result of that higher demand, Wall Street has become increasingly optimistic about the outlook for Amazon stocks.
In a recent post, analyst Laura Martin of Needham assigned a buy score to the e-commerce giant, along with a price target of $ 3,200. That indicates a 20% upside potential from Friday's close of $ 2,675.01.
In the long run, Martin sees Amazon shares rise to $ 4,500 to $ 5,000 based on the & # 39; multiple hidden value multipliers & # 39; of the company, which according to her are market size, ecosystem and diversification of revenues.
"We estimate that adding media items such as video, twitch, music, etc. and messages to the [Amazon’s] Prime bundle lowers churn, keeps users in the AMZN ecosystem for 3 years, and lifetime value increases by $ 3,437 per user, "said her comment from CNBC.com.
JPMorgan analysts also included Amazon as one of the main trading ideas, saying that the pandemic accelerated the acceptance of online purchases in key categories such as groceries and household goods, adding that much of this behavior will post-crisis persist.
In a recent post, analysts at Barclays said that Amazon is still one of the smartest bets for investors, even after its robust performance so far in 2020, in which the stock has gained more than 40%. "Equities always feel a little crowded, but in the current environment, we prefer AMZN than just about anything," the note said.
2. Shopify: Undervalued EPS Power
Canadian e-commerce platform provider Shopify (NYSE 🙂 emerges as another winner during the pandemic. The Ottawa-based company, which makes tools that allow mainly small businesses to trade across multiple channels, has gained 121% this year, becoming the most valued company in Canada.
The stock closed at $ 881 on Friday.
According to RBC Capital analyst Mark Mahaney, SHOP still has more room to run. He has raised his price target from $ 825 to $ 1,000.
"Despite doubling the stock price, we believe that the market still undervalues ??three things about SHOP: the TAM [total addressable market] the Take Rate Potential and the Operating Margin potential … and thus its EPS capability "the analyst explains.
One of Shopify's strengths is that it provides small and medium businesses with a very effective and cost effective way to build a secure online store. The platform covers all of the company's hardware security, data backup and payment processing aspects, allowing merchants to focus purely on their core business.
In mid-April, the company's chief technology officer, Jean-Michel Lemieux, tweeted that Shopify handled "Black Friday-level traffic daily" to bring thousands of businesses online. The stock rose after the tweet and has gone up ever since.
3. Sea Limited: Emerging Markets Bet
If you want to look beyond North America to play this emerging market trade, Sea Limited (NYSE 🙂 a powerful candidate. Sea Ltd.'s Shopee platform is experiencing strong growth in Southeast Asia, a region with more than 500 million potential customers, where the economy is digitizing rapidly.
The company's two main operating divisions are Shopee, the popular online shopping platform in Southeast Asia and Taiwan, and the company's gaming division, Garena. Shopee users include small to medium sized enterprises (SMEs) and millennials. Sea also has a digital financial services arm, SeaMoney.
In the first quarter, Sea reported 58% year-over-year, while gross volume for items sold on its e-commerce platform increased by 74%. Active users per quarter grew to 402 million, up 48%, and paying subscribers grew 73% to 36 million.
On the wave of e-commerce in this pandemic, NYSE-listed shares of Sea Ltd. over 160% this year and they closed at $ 106.94 on Friday.
