3 Best Ecommerce Stocks to Buy in September
It’s no secret that 2022 has been a tough year for e-commerce stocks.
After a boom during the pandemic, consumer shopping habits are returning to physical channels and services like travel and restaurants, meaning the rapid growth many of these businesses experienced in 2020 and 2021 has come to a halt. .
However, e-commerce still appears to be a good long-term bet. U.S. online sales only make up about 15% of total retail sales according to the Census Bureau, which means there’s still plenty of market share up for grabs for e-commerce businesses, and the category should return to steady growth once the current headwinds subside. With that in mind, here are the top three ecommerce stocks to buy right now.
E-commerce is a global phenomenon and MercadoLibre (MELI 5.25%) offers a great way to get exposure outside of the United States
Since its IPO in 2007, the stock has returned over 5,000% as it has consistently experienced strong growth and expanded from its core e-commerce market into adjacent businesses much like Amazon has. The company entered digital payments with Mercado Pago, which is arguably its biggest business. It has also dabbled in shipping through Mercado Envios, lending with Mercado Credito, and even asset management through Mercado Fondo, showing that it is more than just an online retailer.
What’s also impressive about the company is that it hasn’t experienced the kind of downturn that most US e-commerce companies have experienced this year. Second-quarter revenue jumped 57% on a currency-neutral basis to $2.6 billion, with strong growth in retail and payments. Gross merchandise volume, or the total dollar value of merchandise sold on the platform, increased 26% to $8.6 billion, while total payment volume through Mercado Pago jumped 84% to $30.2 billion. Profitability is also accelerating, with operating profit reaching $250 million in the quarter, a margin of 9.6%.
MercadoLibre has a proven track record of fending off competition from Amazon, and its network of payment, logistics, and e-commerce businesses reinforce each other and give it a competitive advantage.
The stock is still down more than 50% from its peak during the pandemic, so it has plenty of leeway if it continues to deliver those levels of growth.
2. GXO Logistics
Investors typically think of online retailers when they think of e-commerce, but there are other ways to gain exposure to the category, including logistics companies like GXO Logistics (GXO 2.77%). from XPO logistics GXO isn’t exclusively focused on e-commerce last year, but online order fulfillment and returns for e-commerce and omnichannel retailers has been a significant growth driver for the company and today represents most of its activity.
As a stand-alone company, GXO has achieved impressive growth in a largely mature industry, especially at a time when so many companies are experiencing macroeconomic headwinds. Second-quarter organic revenue grew 20% to $2.2 billion, and the company posted adjusted results earnings before interest, taxes, depreciation and amortization (EBITDA) of $176 million, up 17% year-over-year.
GXO is the largest pure-play contract logistics company in the world, and it expects to continue to generate strong growth both organically and through acquisitions as it enters a fragmented industry. The company has advantages in automation and technology, including innovations such as collaborative robots that help its customers save money and ship goods more efficiently.
The company appears well positioned to benefit from both the secular growth of e-commerce and its own competitive advantages in logistics.
Like a number of e-commerce actions, Farfetch (FTCH 6.04%) has been beaten this year with the stock down 85% from its peak during the pandemic. Looking at its recent results, it’s easy to see why the luxury online fashion company‘s shares have plunged.
In the second quarter, gross merchandise volume increased only 1.3%, or 7.6% in constant currency, to $1.02 billion, while revenue increased 10.7%, or 20.7% in constant currency, to $579.3 million. Ultimately, its adjusted EBITDA loss worsened to $24.2 million.
Farfetch faces a number of headwinds, including the loss of sales in Russia following its withdrawal from this market, lockdowns in China, a strong US dollar, high inflation in much of the world and difficult comparisons with the early stages of the pandemic. .
Despite these headwinds, Farfetch’s competitive strengths remain intact as the company offers a wide assortment of luxury brands on its website. It has also received investments from Ali Baba and mother Cartier Richemont, who helped him in China and other parts of the world. Through Farfetch Platform Solutions, the company also has a software suite to help luxury brands manage their own e-commerce businesses, making it something like Shopify for the luxury sector.
While its recent numbers appear weak, they should improve as e-commerce headwinds fade and the Chinese market reopens from COVID-induced lockdowns. If the company can return to its pre-pandemic growth trajectory, the current stock price discount will not last long.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Jeremy Bowman holds positions at Alibaba Group Holding Ltd., Amazon, GXO Logistics, Inc., MercadoLibre, Shopify and XPO Logistics. The Motley Fool holds positions and recommends Amazon, Farfetch Limited, MercadoLibre and Shopify. The Motley Fool recommends GXO Logistics, Inc. and XPO Logistics and recommends the following options: January 2023 Long Calls at $1,140 on Shopify and January 2023 Short Calls at $1,160 on Shopify. The Motley Fool has a disclosure policy.