Before they announce their Q4 earnings, these three e-commerce stocks are worth investing in.
Amazon: Amazon is still on the rise and has a lot of potential.
Shopify: Shopify’s impressive Black Friday performance indicates a strong end-of-year result.
Walmart: Walmart’s grocery business makes it resilient to market fluctuations.
Consumer confidence is finally picking up after a long slump. The festive season and the Black Friday deals will boost the Q4 results of many e-commerce firms.
As the economic recovery continues, consumers will spend more and this will benefit the e-commerce sector. To capitalize on this positive momentum, you should look into the best e-commerce stocks to invest in.
Amazon (NASDAQ: AMZN) is one of the top e-commerce stocks to watch in 2024. The global behemoth has had a phenomenal year. Its e-commerce sales are not the only reason for its growth, but also its Amazon Web Services.
The festive season and the Black Friday sales will boost its revenue this quarter and push the stock higher when it releases its earnings in 2024. According to Reuters, the company raked in $38 billion in online sales in the US alone in the five days between Thanksgiving and Cyber Monday.
In the third quarter, it posted a 13% year-over-year rise in revenue to reach $143.1 billion, and a net income of $9.9 billion. The EPS was 94 cents per share. Its digital advertising revenue also grew 26% year over year, and AWS increased 12%.
The fourth quarter could be amazing for Amazon, and with more consumer spending, we could see the company wow the investors. Moreover, one of its key revenue sources, AWS, is getting stronger. The company is investing heavily in artificial intelligence and has put $4 billion in Anthropic to improve generative AI.
Investors should remember that Amazon is not just a single product, but a whole ecosystem that provides a variety of products and services, including streaming. When you look at the business as a whole, it is very appealing. AMZN stock is trading at $149 and is at an all-time high, but it has more room to grow. The stock is pricey, but it is worth investing in. It is up 76% year to date and has the potential to climb higher.
Shopify (NYSE: SHOP) is another e-commerce platform that deserves attention. It enables companies to create online stores and sell products. It earns revenue from monthly subscriptions, which ensures a steady income for the company. Many businesses depend on Shopify and are willing to pay the monthly fee as long as they are getting customers.
It had a record-breaking Black Friday, as its merchants generated $4.1 billion in sales. I think this is just the start for the company, and the festive season could be even better.
Shopify has wowed investors with its financial performance. It reported a 25% year-over-year increase in revenue to reach $1.7 billion and a 36% year-over-year growth in gross profit. SHOP stock has been on a roll and is trading at $76 today, up 115% year to date.
Its growth is unstoppable and it could reach $100 in no time, even though it is at a 52-week high. The business is not as high as it was in 2020 and 2021, but it still shows positive signs of progress. This could be partly due to the high consumer spending during the pandemic when we stayed at home a lot.
The company charges a fee from the purchase price for every transaction you make and if you use Shopify Payments, it will earn more. It has built a business model that benefits both Shopify and the merchants on its platform. The stock is pricey, but it is one of the best investments you can make right now. Shopify may not be the clear winner of the holiday shopping season yet, but it is very close to it.
Despite the challenges of high-interest rates and low consumer spending, Walmart (NYSE: WMT) has maintained strong year-over-year growth. In the third quarter, it posted a revenue of $160 billion, which is a 5.2% increase from the same period last year, and its e-commerce sales rose by 24% YOY. It is the world’s largest retailer for a reason and it offers a huge variety of products at affordable prices.
WMT stock is one of the best e-commerce stocks and it is trading at $152 and has gained 6% year to date. The company ventured into groceries a few years ago and this ensured a stable revenue even in times of high inflation. Walmart has an edge in this area because we will always need groceries, regardless of the market conditions.
It has improved its cash flow to $19 billion and this means investors can expect consistent dividends. The company has enough cash to invest in growth and also reward shareholders. The stock has a dividend yield of 1.49% and pays a quarterly dividend of $0.57.
It has increased its guidance for 2023 and now anticipates sales growth of 5% to 5.5%. This indicates that the management is confident about the company’s future and we can look forward to a higher profit margin.
At the time of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The views expressed in this article are those of the author, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who enjoys reading and writing about stocks. She believes in buying and holding for long-term returns. Her skills in words and numbers help her write clear stock analysis.