3 Best Ecommerce Stocks to Buy Right Now

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Some investors are understandably cautious about e-commerce stocks right now, given that many tech stocks have seen significant declines over the past year. But canceling the stock purchase due to short-term difficulties will certainly leave investors disappointed once the market inevitably rebounds.

So for inventors who understand that the current market volatility won’t last forever and are looking for the best e-commerce stocks that have even more room for growth, this is worth considering. MercadoLibre (MELI -1.89%), Shopify (STORE -1.77%)and Amazon (AMZN 1.20%).

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1. MercadoLibre

MercadoLibre is the largest player in the e-commerce market in Latin America. What is his size? Well, consider that the company’s sales in 2021 were nearly twice the combined sales of its next two top competitors.

Latin America has around 300 million online shoppers, and the region’s e-commerce market is expected to grow from $104 billion this year to around $160 billion by 2025. MercadoLibre’s commercial sales grew by 23% to $1.4 billion in the second quarter (end June 30), representing more than half of the company’s $2.6 billion in revenue during that period. Total quarterly revenue soared 53%, proving that MercadoLibre has more to offer than just a booming e-commerce business.

The company’s payment service, Mercado Pago, has 38 million unique users and helps the company tap into the fintech space. Sales for the service more than doubled in the second quarter, topping $1 billion for the first time ever.

The company’s valuation also makes it very attractive at the moment. MercadoLibre’s price-to-sales ratio of 4.6 is well below the 16.5 it sported just over a year ago, and in line with the current price-to-sales ratio of 4.3 for the entire Internet service industry.

MercadoLibre has a clear lead in the Latin American e-commerce market, and with the company’s current growth, it’s unlikely to give up the leadership position anytime soon. With its stock price having suffered a significant discount over the past year, the company’s stock looks like a great buying opportunity.

2.Shopify

Small and medium-sized businesses learned first-hand during the height of the pandemic that having an online presence isn’t just nice to have — it’s now fundamental to nearly every business. This is where Shopify comes in. The company’s platform helps businesses of all sizes set up and manage their online stores, allowing them to add additional services as they grow.

Like many e-commerce stocks, some of the company’s growth slowed as in-person shopping resumed. But anyone who thinks e-commerce is dry is missing the big picture.

In the second quarter of this year, only 14% of all US retail sales were made online, leaving plenty of room for this market to grow. Last year, Shopify’s total revenue hit $4.6 billion, a 57% year-over-year increase — and that’s only scratching the surface of what the Shopify’s management considers a total addressable market of $153 billion.

Most recently, in the second quarter (ending June 30), Shopify’s sales increased 16% to $1.3 billion, and its gross merchandise volume increased 11% year-over-year to 46.9. billions of dollars.

I’m not going to sugarcoat the fact that Shopify’s stock price has fallen dramatically over the past year, but there’s still plenty of time for this rising e-commerce star to shine again once the market broadly rebounds. And that drop now means that the stock’s current price-to-sales ratio of 7.2 is more than seven times lower than it was over a year ago.

3. Amazon

Amazon has its hands in many types of businesses these days, but the company’s e-commerce business is still the biggest in terms of revenue.

In the second quarter (ended June 30), Amazon’s online sales in North America were $74.4 billion, a 10% increase from the year-ago quarter. Like Shopify, the pandemic e-commerce crisis is over, but there are still plenty of opportunities for the business.

Consider that Amazon currently has around 163.5 million registered users of its Prime membership service. These customers are lucrative, spending more than double what non-Prime members spend each year.

This is great news for Amazon and its investors, especially considering that the Prime service continues to grow and could reach around 176 million members by 2025.

The company’s recent quarterly results showed that even in the face of significant economic headwinds, the company remains resilient. Total revenue rose 7% in the second quarter to $121 billion, beating Wall Street‘s average estimate of $119 billion.

The company also released a revenue forecast of between $125 billion and $130 billion for the third quarter, representing 15% growth in the middle of the forecast.

Most investors probably already know that Amazon shares aren’t exactly cheap. The company’s current price-to-earnings ratio is around 47 right now, compared to 30 for the broader tech sector, but it’s still cheaper compared to the stock’s price-to-sales multiple of 57 a year ago. more than a year.

When looking for a solid e-commerce game, it’s hard not bet on Amazon. The Prime membership ecosystem has millions locked in, and the company’s latest financial results prove that its e-commerce business isn’t done growing yet.

E-commerce is alive and well

While e-commerce sales have stabilized from their pandemic highs, that’s no reason to ignore this market. The height of the pandemic was a unique time in the short history of e-commerce, and the market is far from done growing.

Recent research from Morgan Stanley shows that the e-commerce market “has plenty of room for growth” and is expected to grow from $3.3 trillion currently to $5.4 trillion by 2026.

The companies listed above are already well positioned to profit from the expansion of this market in the years to come. Savvy investors can look beyond the current market volatility by focusing on the future and the potential of these three promising e-commerce stocks.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. chris snower has no position in the stocks mentioned. The Motley Fool holds positions and recommends Amazon, MercadoLibre and Shopify. The Motley Fool recommends the following options: $1140 January 2023 Long Calls on Shopify and $1160 January 2023 Short Calls on Shopify. The Motley Fool has a disclosure policy.

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