3 Best Ecommerce Stocks To Buy Right Now
E-commerce was already eating the brick-and-mortar retail lunch until 2020, and the pandemic sealed the deal – online shopping and business transactions are now a staple. In fact, in many ways, the pandemic has helped save small mom-and-pop retail stores from Amazon (NASDAQ: AMZN) and big box stores. There are now a plethora of tools available to help businesses of all sizes harness the power of Internet selling to their service. Three of these platforms helping e-commerce to proliferate around the world are Wix.com (NASDAQ: WIX), Etsy (NASDAQ: ETSY), and Facebook (NASDAQ: FB). Here’s why all three seem like timely buys right now.
Wix: Demystifying and Democratizing Web Development
Electronic commerce is quickly becoming a multidimensional term. The industry has come a long way from simply placing orders for merchandise on websites. In the aftermath of the pandemic, common online capabilities include ordering food for delivery, viewing a professional service via chat or video, buying and consuming entertainment, and finding and discovering new products. Wix is ââa leading platform that helps unlock such capabilities for small businesses around the world.
Wix’s code-free website building business has had a busy 2021 so far. Earlier this year, it said it exceeded 200 million registered users, a figure that continues to grow steadily. However, Wix is âânow focusing on high-end features, its fastest growing segment, which it describes as âBusiness Solutionsâ. The revenue generated by this unit was only about a quarter of the company’s total, but sales grew 97% year-over-year in the first few months of the year.
A host of new features have been released to further strengthen this part of the Wix platform. The company acquired a small gift card and customer re-engagement company as well as a supplier marketplace and a dropshipping company to complement its online sales and order fulfillment offerings. A new point of sale (POS) system was also unveiled, giving Wix users the ability to accept payments in person. And a new mobile app helps restaurants create their own sites so customers can browse menus and place orders on the go.
It is far from being a pandemic stock. In fact, Wix expects its overall revenue to increase by around 30% this year, even as the effects of COVID-19 begin to ease in some markets, building on the rate of 30% growth it posted in 2020. As of this writing, Wix’s company value (market cap plus debt, less cash and cash equivalents) values ââthe software company at just $ 16 billion. It is still a promising tech company with huge long term potential from its hundreds of millions of small business users.
Etsy: a multi-site marketplace for crafts and resale
Etsy is another company that is helping democratize commerce for millions of people around the world. The once niche market has grown in popularity in recent years and is a prime location where more than 90.6 million shoppers (at the end of Q1 2021) will discover unique items and the people who create them.
Building on its success as a partner of small businesses and freelancers, Etsy acquired the music material resale site Reverb a few years ago. Plugging Reverb into the Etsy ecosystem unlocked a lot of profitability – the gross margin on services rendered by Reverb fell from 33% in the third quarter of 2019 to 53% in the first quarter of 2021. Etsy will look to reuse this model. with the recent $ 1.63. billion acquisition of the luxury clothing resale site Depop.
Depop is popular among the younger generation of buyers (their twenties, known as Gen Z), which could help raise Etsy’s profile even more in the years to come. And in the wake of the Depop agreement, the company also announced its entry into Latin America with the acquisition of “Etsy of Brazil”, Elo7. With now three subsidiary markets in the fold, Etsy is evolving into a “house of brands” focused on various specialist areas of the growing global e-commerce industry.
Like Wix, Etsy is also a small player here despite having tens of millions of buyers and traders. The company is valued at just under $ 23 billion in enterprise value at the time of writing. A fast growing and highly profitable business, Etsy stocks are a top buy right now.
Facebook: transforming 3.45 billion users into an electronic commerce powerhouse
Facebook is famous and controversial for monetizing its huge social media empire with advertising. This is not going to change anytime soon. However, as the business takes steps to become a more data-friendly business, ads are a key ingredient in e-commerce. Facebook has aspirations on this front and plans to turn its 3.45 billion monthly users (on Facebook, Instagram and WhatsApp in Q1 2021) into a platform fueling small business transactions.
Last year, the company launched Facebook Shops to help small businesses get discovered, and partnered with the digital commerce software giant. Shopify (NYSE: SHOP) on this front. Instagram has also become a leading app where consumers discover and share new and unique articles. And while WhatsApp isn’t exactly a great place to interact with businesses here in the United States, it certainly is for millions of people around the world. WhatsApp is thus creating new chat tools and shops for small businesses to manage customer relationships.
All of these primarily fuel Facebook’s advertising business, but the company has other plans underway to monetize its gargantuan global network. Digital payments have already been launched on WhatsApp in India and Brazil, and it can be assumed that they will not stop in these two countries. Facebook is also still working on its cryptocurrency project, Diem, which it hopes will fuel its digital payments aspirations if it receives regulatory approval.
With its billions of users and collection of e-commerce ventures, Facebook has $ 64.2 billion in cash and cash equivalents and zero debt. The social media titan may be a controversial player, but don’t underestimate his ability to advance the cause of small business as he begins to make waves in the digital world of small business. The shares are currently trading at a reasonable rate of 29 times, after 12 months of earnings per share, considering the pace at which Facebook continues to grow.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.