The e-commerce landscape is undergoing a major technological shift with the advancement of AI and same-day shipping. Identifying e-commerce stocks to outperform the market over the next decade requires careful consideration.
As traditional retail models continue to be disrupted, the growth trajectory of the e-commerce market remains substantial. According to Grand View Research, the global e-commerce market was last valued at $9.09 trillion. Experts project that it will grow at a nearly 15% CAGR from 2020-2027. This gives investors a compelling opportunity to capitalize on the sector’s enduring potential.
Here are the top e-commerce stocks to outperform the market over the next decade.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) is the undisputed leader in the e-commerce arena, thanks to the company’s more than 230 million Amazon Prime customers. The company’s relentless pursuit of innovation and fast delivery times is why its customers are so loyal.
Amazon’s focus on logistics efficiency through its vast network of fulfillment centers worldwide translates to speedy deliveries. This is crucial in today’s competitive landscape as retailers battle for customers and market share. Furthermore, its subscription service, Amazon Prime, offers free one-day shipping times and a recurring revenue model. While there has been regulatory scrutiny regarding antitrust concerns recently, their size and diversified business models position them to weather any storm.
In FY23, Amazon’s entire business saw a massive turnaround. The company’s operating income swung from negative to positive, delivering a record FCF of $36.8 billion. Additionally, they saw record fast delivery, shipping more than 7 billion units for same day or next day delivery. Undoubtedly, Amazon is one of the top e-commerce stocks that will outperform the market over the next decade.
Shopify (SHOP)
Shopify (NYSE:SHOP) presents a contrasting yet complementary approach to e-commerce. They are well known for their innovative platform that empowers entrepreneurs and businesses to manage their online stores.
Shopify’s user-friendly interface, extensive app integrations and robust marketing tools cater to a broad spectrum of needs. Their subscription-based model provides the company a recurring revenue stream, and its growing app marketplace is incredibly valuable. Furthermore, Shopify has many AI tools for entrepreneurs, including chatbots, virtual assistants and predictive analytics.
In FY23, Shopify initiated cost-cutting measures as the company focused on profitability. This was proven transformative, as the company’s FCF swelled to $905 million. GMV also increased 20% YOY to $235.9 billion, and management expects strong double-digit growth in the 2024 fiscal year. Shopify is at the helm of the e-commerce renaissance, and investors should not ignore the company’s long-term FCF potential.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is an under-the-radar e-commerce stock you may have never heard of before. Headquartered in Montevideo, Uruguay, MercadoLibre is currently the largest e-commerce company in Latin America.
Like Amazon’s e-commerce business, MercadoLibre’s online marketplace caters to a wide range of products. The company offers a diversified ecosystem beyond traditional e-commerce, encompassing payment processing, logistics and fintech services. Moreover, the company’s revenue and profitability have skyrocketed in the last two years, demonstrating its ability to drive profitable growth.
In the 2023 fiscal year, revenue increased 37% YOY to $14.47 billion. Net income more than doubled, with EPS up 104% to $19.46 per share. Furthermore, FCF swelled to a record $4.63 billion with operating margin up 280 bps. MercadoLibre is taking all the right steps to increase its market dominance in Latin America, making it one of the best e-commerce stocks to outperform the market in 2024.
On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
