Looking For E-Commerce Stocks To Buy Right Now? 3 Names To Know
The year 2020 has been a banner year for many e-commerce stocks. That’s because, for many consumers, the coronavirus pandemic quickly turned e-commerce from a convenience into a necessity. Many consumers have ramped up their online shopping for the first time this year. With Christmas sales happening right now, investors are looking for top e-commerce stocks to buy in anticipation of strong sales this holiday season.
It is no surprise that e-commerce stocks are doing great in the stock market right now. With people staying at home, the industry has seen a tremendous increase in active buyers. The added convenience of online shopping presents an alternative that most consumers are likely to depend on even after the pandemic is over. In light of this, the e-commerce industry has been steadily increasing its market share of retail for the majority of 2020. That is likely why most of the best e-commerce stocks to watch continue to see new highs.
Sure, consumers and business owners, today are familiar with household names like Amazon (AMZN Stock Report) and Walmart (WMT Stock Report) respectively. These companies have made the most of the current situation. People are limiting their outdoor shopping to avoid catching the novel coronavirus. Since retail locations and shopping malls are operating in a minimal capacity amid the surging coronavirus infections, you can expect consumers to make most of their purchases online this holiday season. Therefore, these top e-commerce stocks are weathering the worst of this pandemic very well indeed. With all that in mind, are these the best e-commerce stocks to buy this festive season?
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Top E-Commerce Stocks To Watch Right Now: FarFetch
Luxury e-marketplace Farfetch Limited (FTCH Stock Report) is one e-commerce stock worth taking a closer look at. The London-based company specializes in selling high-end, expensive clothes on the internet. FarFetch is emerging as the leading pioneer in this niche of e-commerce. It’s a great opportunity for FarFetch because the high-end luxury market has a relatively low e-commerce penetration. But that’s all changing. The pandemic has served as an impetus for the luxury segment to shift online. It’s easy to forget that Farfetch was facing a cash crunch earlier this year. The company has since gotten over that challenge. It performed superbly in the third quarter, in which revenue jumped 71% from a year ago.
The company clearly didn’t have a great start like other e-commerce stocks earlier this year. The thing is, consumers have been depending on e-commerce companies to get the essentials and other non-luxury items online. But the pandemic has dragged on longer than we have expected. It seems the traditionally conservative upscale shopping is not immune to e-commerce, after all. And Farfetch is benefiting from it.
Sure, the company has yet to be profitable. Yet, the third-quarter gross profit margin rose to 47.8%, an increase from 45.1% last year. As of the end of September, Farfetch had $757 million in cash, comfortably exceeding its $469 million in debt. What’s more, the company entered into a deal in November which will see Alibaba Group (BABA Stock Report) and Swiss group Richemont investing $300 million each in Farfetch, and $250 million each in a China joint venture with Farfetch. With such growth opportunities ahead, would FTCH stock be worthy of your attention right now?
Top E-Commerce Stocks To Watch Right Now: Jumia Technologies
Jumia Technologies (JMIA Stock Report) has been at the center of attention for all the right reasons. The company harnesses the power of technology to improve everyday life in Africa. More than 110,000 local African companies did business with Jumia in 2019. The company is essentially taking African economics online and enabling its sellers to reach more customers. Jumia’s shares have nearly tripled since early November. The stock is now trading near its all-time high.
From its third-quarter fiscal report, the company reported a gross profit of $28.14 million, which is a 22% increase compared to a year earlier. The company’s JumiaPay total payment volume increased by 50% year-over-year at $58.21 million. Jumia has over 1.2 billion consumers and 17 million SMEs all across Africa. It also boasts over 1 billion visits to its virtual marketplace in 2019 alone. Impressively, the company also has over 40 million products, restaurants, and other services listed on its platform.
The company recently opened its African logistics network to third parties in order to help add volume. This move will also help negotiate better pricing on shipping and control costs. Jumia also currently benefits from a reluctance of industry giants like Amazon and Alibaba to expand into the continent. With such promising growth, could JMIA stock be a top tech stock to buy for the years to come?
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Top E-Commerce Stocks To Watch Right Now: Shopify Inc.
Last on the list is the e-commerce giant Shopify (SHOP Stock Report). Shopify is a multinational e-commerce company that is based out of Ontario, Canada. The all-inclusive commerce platform is responsible for powering more than 1 million businesses globally. The platform makes it simple for the everyday person to start, run, and build an online business. Impressively, Shopify has contributed to $319 billion in economic activity worldwide between 2016 to 2019. Year-to-date, SHOP stock is up 213%, closing at $1,277.08 per share on Tuesday, a level near its all-time high.
Shopify is currently the most valuable company in Canada, representing a valuation of $155.69 billion. In October, the company reported its third-quarter fiscal results, and they were solid. Shopify reported total revenue of $767.4 million, representing a 96% increase year-over-year. Shopify also posted an impressive gross merchandise volume (GMV) of $30.9 billion, a whopping 109% increase compared to a year earlier. It’s obvious that Shopify has been one of the fortunate companies that have been able to benefit from the lockdowns and stay at home measures due to the pandemic.
In December, the company announced that its Black Friday and Cyber Monday weekend resulted in record-breaking sales of $5.1 billion. This number is up 76% compared to 2019’s Black Friday/Cyber Monday weekend. Shopify’s President, Harley Finklestein stated, “The accelerated shift to digital commerce triggered by COVID-19 is continuing, as more consumers shop online and entrepreneurs step up to meet demand.” Shopify continues to be in a good position whether we’re in a pandemic or not. With that in mind, is now the best time to add SHOP stock to your portfolio?
