The global economy has been steadily transitioning online for decades, and that transition was facilitated in many ways by the pandemic. Statista estimates e-commerce revenue will top $1 trillion in 2023 and will continue to grow at a compound annual rate of 11.5% over the next five years, reaching $1.56 trillion by 2027. By that time, the number of global e-commerce users will reach an estimated 289.9 million. Several e-commerce stocks are well positioned to capitalize on this long-term growth trend.
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Here are eight top e-commerce stocks to buy, according to Bank of America:
|Stock||Implied upside over March 24 closing price|
|Alphabet Inc. (ticker: GOOG, GOOGL)||18.6%|
|Amazon.com Inc. (AMZN)||37.6%|
|Meta Platforms Inc. (META)||11.6%|
|Alibaba Group Holding Ltd. (BABA)||65.7%|
|PDD Holdings Inc. (PDD)||28.4%|
|JD.com Inc. (JD)||68.8%|
|MercadoLibre Inc. (MELI)||17.9%|
|Baidu Inc. (BIDU)||49.7%|
Most investors likely think of the Google and YouTube parent as a market leader in internet search and online advertising, but Alphabet is also making big strides in product search and e-commerce. The company also recently announced limited access to Google’s artificial intelligence chatbot Bard in the U.S. and the U.K. Analyst Justin Post says AI is one of many reasons for investors to love Alphabet, including its technology leadership, its high margins and its excess cash flow that can be used for share buybacks. Bank of America has a “buy” rating and $125 price target for GOOGL stock, which closed at $105.44 on March 24.
Amazon.com Inc. (AMZN)
Amazon is the unrivaled market leader in e-commerce and public cloud services. Amazon recently said it would lay off 9,000 additional employees after it announced about 18,000 layoffs in January. Post says the company’s Amazon Web Services layoffs likely reflect expectations for slowing cloud growth in 2023, but the layoffs could generate $1 billion in annualized savings for Amazon. Post says Amazon is still gaining retail market share and is well positioned to capitalize on secular growth trends in e-commerce, cloud computing, online advertising and connected devices. Bank of America has a “buy” rating and $135 price target for AMZN stock, which closed at $98.13 on March 24.
Meta Platforms Inc. (META)
Meta Platforms is a market leader in social media and online advertising and is the owner of Facebook, Instagram and other platforms. Meta has been investing in building up its e-commerce business in recent years, including launching Facebook and Instagram Shops in 2020. After a brutal 2022 performance, Meta shares are up 71.2% in 2023 through March 24, the best performance of any stock on this list. Even after the recent rally, Post says the stock still has room to run given potential earnings upside following recent layoffs. Bank of America has a “buy” rating and $230 price target for META stock, which closed at $206.01 on March 24.
Alibaba Group Holding Ltd. (BABA)
Alibaba is the leading e-commerce platform and enterprise cloud services provider in China. Regulatory crackdowns on U.S.-listed Chinese stocks by both U.S. and Chinese regulators have weighed on Alibaba shares in recent years. While regulatory risk remains, Alibaba’s stock currently trades at just 9.8 times forward earnings estimates, the most attractive valuation of any stock on this list. Analyst Eddie Leung says Alibaba will remain the Chinese e-commerce leader, and its massive size and first-mover advantage give it impressive economies of scale. Bank of America has a “buy” rating and $144 price target for BABA stock, which closed at $86.90 on March 24.
PDD Holdings Inc. (PDD)
PDD is the second-largest Chinese e-commerce platform by total number of buyers. Analyst Joyce Ju says PDD’s unique exposure to high-growth online shopping demand in China’s low-tier cities and its impressive team purchase model leveraging social networks make the stock an attractive play on Chinese e-commerce. Ju is bullish on PDD’s unique and innovative marketplace that has used online viral campaigns to challenge established e-commerce peers. Ju says PDD will likely outgrow competitors in coming quarters and projects 8% earnings-per-share growth in 2023. Bank of America has a “buy” rating and $95 price target for PDD stock, which closed at $73.96 on March 24.
JD.com Inc. (JD)
JD.com is a leading Chinese e-commerce and retail infrastructure service provider that specializes in online direct sales of electronics, merchandise and appliances. Regulatory crackdowns and COVID-19 lockdowns in China have slowed JD.com’s revenue growth significantly. The stock is down another 28.2% this year through March 24, the worst performance of any stock on this list. Ju says JD.com’s year-over-year comparisons will start to ease in the second quarter, and the company should be positioned for steady profit growth. JD shares also pay a 1.6% dividend. Bank of America has a “buy” rating and $68 price target for JD stock, which closed at $40.29 on March 24.
MercadoLibre Inc. (MELI)
MercadoLibre is Latin America’s largest online marketplace operator and is an e-commerce leader in markets such as Brazil, Argentina and Mexico. Analyst Robert Ford Aguilar says MercadoLibre is the top stock to own in Latin American e-commerce. Aguilar says Latin American e-commerce penetration is low and there is still a significant long-term growth opportunity. He says MercadoLibre’s market share is growing and the company has a near-term opportunity to accelerate gross merchandise volume growth in Brazil. Aguilar projects 24.6% revenue growth in 2023. Bank of America has a “buy” rating and $1,400 price target for MELI stock, which closed at $1,187.28 on March 24.
Baidu Inc. (BIDU)
Baidu is the leading Chinese internet search provider. The company also has several other businesses, such as its majority stake in streaming video platform iQiyi Inc. (IQ), and its AI and cloud businesses. Baidu launched a new shopping channel in late 2020 to leverage its search functions for online shopping. Analyst Miranda Zhuang says Baidu’s recently unveiled Ernie Bot AI chatbot creates new AI cloud opportunities, and she expects Baidu’s core advertising business to rebound in 2023. Bank of America has a “buy” rating and $234 price target for BIDU stock, which closed at $156.27 on March 24.
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8 Top E-Commerce Stocks to Buy originally appeared on usnews.com
Update 03/27/23: This story was published at an earlier date and has been updated with new information.