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Top 3 e-commerce stocks you can buy right now
The world rushed to make e-commerce a bigger part of total retail sales before the pandemic, and now it is growing at an inevitable pace.
Global retail sales fell 2.8% in 2020 to $23.6 trillion as consumers change their online shopping habits, according to eMarketer. E-commerce sales grew more than 25% last year to $4.2 trillion, or about 18% of total retail sales. With economies reopening to allow the traditional world to begin growing again in 2021 (eMarketer expects retail sales to reach $25 trillion globally this year), e-commerce has continued to grow at a slower double-digit pace.
Global online sales are expected to reach $4.9 trillion and will soon account for one-fifth of completed retail sales. There are a number of e-commerce names that will make up the majority of these sales and should be accounted for in any investor's portfolio.
It's no wonder Amazon is on the list of e-commerce books to buy. As the dominant site in the U.S., Amazon.com is expected to account for 41.4% of all online spending in the U.S. this year.
Its closest competitor is Walmart, but with a 7.2% market share in the e-commerce sector, it ranks second. eBay, with a 4.3% market share, and Apple with 3.8% are the closest. In fact, Amazon's market share is larger than that of the next nine competitors combined and is assumed to contribute more than half of the growth in U.S. e-commerce sales.
Equally important is Amazon Web Services (AWS), which serves as the backbone of the online presence of thousands of U.S. businesses. It also has a clear advantage in terms of cloud infrastructure market share, with a 32% share of global cloud infrastructure spending. AWS is set to be Amazon's No. 1 operating cash flow generator, and remains the most profitable and must-buy segment for any e-commerce investor.
Amazon's Chinese partner is Alibaba, and because the Chinese market is larger than the United States, its sales volume is also larger.
While Amazon Prime Day sales are expected to reach a record $11.2 billion worldwide over two shopping days, Alibaba recorded $84.5 billion in merchandise volume (total merchandise volume) during its two-day Prime Day shopping trip. It develops an event, an 11-day event. much in the past seven years and now has more sellers and retailers than Alibaba.
Despite Beijing's ongoing crackdown on tech companies, which has cut its sales this year, Alibaba continues to grow, despite its recent earnings report being seen as relatively weak. It recently announced a turnaround plan to drive sales growth that includes adding more VIP members (who tend to spend more than non-members), targeting older shoppers, while using artificial intelligence and automation to increase advertising effectiveness.
With its stock up 55% from its peak a year ago, Alibaba is a particularly attractive e-commerce stock to buy right now.
You can't avoid mentioning Alibaba without mentioning JD.com, despite having a different business model than its competitors. JD acts more like eBay than Amazon, as it is a platform for third-party sellers rather than selling products themselves, JD is actually a stronger force in the e-commerce world in China, as it is the largest online retailer in China. Retailers in general.
On Singles' Day this year, JD earned $54.6 billion in VGM across the entire sales event, up 28% from last year. It is also not subject to strict scrutiny by regulators such as Alibaba and insists it has established strict protocols in line with Beijing's mandate. He also said that restrictions being considered for companies, such as price controls, could be in its favor, as they would prevent JD.com's prices from falling due to competition.
JD.com also has one of the largest infrastructure networks to fulfill any e-commerce business in the world, with approximately 1300 warehouses offering a total area of approximately 23 million square meters. It claims to be the only e-commerce platform in the world to offer small and medium-sized warehouses, high-volume warehouses, cross-border delivery, cold chain, cold and cold storage, B2B logistics and community sourcing.
Analysts expect JD.com could grow its dividend at a compound annual rate of 24% and that the stock will trade at 5 times next year's earnings and 18 times normal cash flow. It's an e-commerce stock worth buying today.
Duprey, R. (2021, December 28). 3 Top E-Commerce Stocks to Buy Right Now. The Motley Fool. Retrieved December 29, 2021, from https://www.fool.com/investing/2021/12/28/3-top-e-commerce-stocks-to-buy-right-now/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article