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E-Commerce Driving Retail Sales: 5 Solid Stocks to Buy

Ritujay Ghosh
·5 mins read

E-commerce has been saving the retail sector, which has been battered by the pandemic. Ever since the coronavirus outbreak, e-commerce sales have almost doubled year over year.

Per the U.S. Census Bureau of the Department of Commerce, the country’s retail sales grew almost a third sequentially in Q2. This mirrors the growing dependence on e-commerce for all kinds of necessities.

E-commerce Sales Hit Record High

Online shopping, which till sometime ago enjoyed a negligible percentage of total U.S. retail sales, has seen a sudden surge over the past few months. In second-quarter 2020, retail e-commerce sales in the country grew 31.8% from the previous quarter, or 44.5% year over year, per the U.S. Census Bureau of the Department of Commerce.

This strong e-commerce growth wasn’t enough to offset losses from brick-and-mortar store closures, as total retail sales dropped 3.9% from the prior quarter. That said, ecommerce picked up nearly 5% in the total retail market sequentially, according to the Commerce Department.

E-commerce accounted for 16.1% of all U.S. retail sales in the second quarter versus 11.8% in the first quarter. All major retailers with a strong online presence like Amazon.com, Inc. AMZN, Walmart, Inc. WMT and Target Corporation TGT benefited from the rapid shift to e-commerce during the pandemic. In fact, Amazon, Target and Walmart reported massive bumps in e-commerce sales in the last quarter.

E-commerce to Continue

According to e-marketer ecommerce will make up 14.5% of U.S. retail sales this year, up from 11.0% in 2019.

As more states start to lift coronavirus restrictions, consumers are likely to return to shopping at physical stores but a significant portion of online shopping may be here to stay. Ecommerce sales are expected to surpass $1 trillion and represent 18.1% of total retail sales in the United States by 2024.

Our Choices

The domestic economy has started reopening but the government is still struggling to contain the spread of the pandemic.  As people continue to rely on online delivery, especially grocery and household staples, it might be prudent to invest in the following four e-commerce stocks.

JD.com, Inc. JD through its website www.jd.com and mobile applications offers a selection of authentic products.  It offers computers, mobile handsets and other digital products to home appliances, automobile accessories, clothing and shoes, and luxury goods.

The company’s expected earnings growth rate for the current year is 45.2%. The Zacks Consensus Estimate for current-year earnings has improved 20.8% over the past 30 days. JD.com sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation has evolved from just being a pure brick & mortar retailer to an omni-channel entity. The company has been investing in technologies, improving websites and mobile apps, and modernizing the supply chain to keep pace with the changing retail landscape and better compete with pure e-commerce players.

The company’s expected earnings growth rate for next year is 11.9%. The Zacks Consensus Estimate for current-year earnings has improved 44.2% over the past 30 days.  Target sports a Zacks Rank #1.

Best Buy Co., Inc. BBY is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, heath, security, appliances and related services. 

The company’s expected earnings growth rate for next year is 17.3%. The Zacks Consensus Estimate for current-year earnings has improved 26.5% over the past 30 days. Best Buy has a Zacks Rank #1.

Shopify Inc. SHOP provides a multi-tenant, cloud-based, multi-channel commerce platform for small and medium-sized businesses. Shopify’s platform enables merchants to manage products and inventory, process orders and payments, ship orders, build customer relationships and leverage analytics while reporting from one integrated back office.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 84.1% over the past 30 days. Shopify carries a Zacks Rank #2.

The Kroger Co. KR operates supermarkets, multi-department stores, marketplace stores and price impact warehouse stores. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce. The multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys.

The company’s expected earnings growth rate for the current year is 29.1%. The Zacks Consensus Estimate for current-year earnings has improved 0.4% over the past 60 days. Kroger has a Zacks Rank #2.

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Target Corporation (TGT) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Walmart Inc. (WMT) : Free Stock Analysis Report
 
Best Buy Co., Inc. (BBY) : Free Stock Analysis Report
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
JD.com, Inc. (JD) : Free Stock Analysis Report
 
Shopify Inc. (SHOP) : Free Stock Analysis Report
 
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