3 Best Ecommerce Stocks to Buy in January
According to the US International Trade Administration, global e-commerce sales accounted for 18% of global retail sales in 2020. This figure is expected to rise to 22% of global retail sales by 2024, demonstrating that — slowly but surely – – e – Commerce is becoming the primary means for consumers to order goods in the modern era.
E-commerce is widely adopted in the United States for the most part, but the real growth in e-commerce is coming from international regions. Many regions of the world barely depend on e-commerce for their retail needs, but as these regions begin to rapidly adopt online retail, these three companies could reap major benefits.
Sea Limited (NYSE: SE) seeks to become a global e-commerce company. Its e-commerce business — Shopee — started in Singapore in 2015, but has since expanded across the world. Shopee is now a dominant e-commerce player throughout Southeast Asia and Latin America, and even has ties in India and Europe. With such a wide reach, Shopee has become the most downloaded shopping app in the world in 2021.
This dominance has unsurprisingly led to incredible growth for the company. Revenue from its e-commerce segment reached $1.5 billion in the third quarter of 2021, which was up 134% year-over-year. Total revenue was also up 122% year-over-year, helped by its two other strong businesses which are growing at triple digits. Many companies growing in revenue at triple-digit rates are micro-cap companies, but Sea Limited is a large, well-established company – its market capitalization is $103 billion – which makes its growth all the more impressive.
Not only is Sea Limited a leading e-commerce company, but it also owns one of the world’s most popular video games and a resilient fintech business. The company consistently records strong revenue growth across all areas of its business, but is only valued at 12 times its sales – the lowest valuation Sea has seen in over a year . Despite the drastic drop in stock over the past few months, Sea Limited is succeeding on all fronts of its business, making it one of my best ideas to buy today and hold for decades.
pinterest (NYSE: PINS) stock was also crashed as Sea Limited. Since hitting an all-time high in early 2021, the company’s shares have fallen more than 60%. This has led Pinterest to potentially become a value game: Pinterest’s forward price-to-earnings ratio is 24. This valuation is almost equal to Metaplatforms‘ valuation of 23 times forward earnings, although Pinterest has greater growth potential.
For Pinterest, the growth story is in its average revenue per user (ARPU). The company’s platform is widely adopted in the United States and internationally, but Pinterest is only just beginning to grow as an e-commerce platform. It has struggled with monetization in the past, but it recently took steps to make it easy for consumers to buy the items they see on the platform. The company has made it easier for sellers to tag items in images. So when Pinterest users see a product they like, it only takes a few clicks to buy it.
The opportunity for Pinterest to grow its ARPU is huge. In Q3, Pinterest’s overall ARPU was just $1.41, which pales in comparison to Meta’s overall ARPU of $10. Considering the two companies are currently selling at roughly the same price, Pinterest’s growth opportunity in the online e-commerce market is immense, and I think this social media stock holds more promise than any of peers.
coupang (NYSE: CPNG) might be the most undervalued international e-commerce stock today. It is valued at less than 2 times sales, lower than Sea Limited, Ali Baba, and even Amazon. Despite this rock bottom price, the Korean e-commerce giant is enjoying impressive strength. The company has 16.8 million active customers, which represent almost a third of Korea’s population. Despite this strong leadership in the country, its active customers still grew by 20% year-over-year in the third quarter, marking the 15th consecutive quarter that Coupang has increased its number of active customers so much.
What makes Coupang truly special and unrepeatable is his strong footprint in Korea. About 70% of Korean citizens live within 11 km of a logistics hub, allowing Coupang to offer same-day, next-day, or dawn delivery for almost all orders on its platform. This major investment in infrastructure that Coupang made over several years would be incredibly difficult and costly for any competitor to replicate, and it has allowed Coupang to develop an extremely strong brand and customer satisfaction.
The company is looking to expand into Japan, but that could take a long time to materialize. After all, the company should reinvest in infrastructure like it did in Korea yet again. However, if it manages to rebuild its impressive logistics infrastructure, the company could experience the same success as in South Korea. These two regions alone would allow Coupang to grow steadily over the next five years, and it is even eyeing other countries like Singapore and Taiwan. Even if you only look at Japan and South Korea, the future looks bright for Coupang.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.