10 Best E-Commerce Stocks To Buy According to Analysts

Published on April 25, 2024 at 6:07 pm by Sheryar Siddiq in Hedge Funds, News

In this article, we discuss the 10 best e-commerce stocks to buy according to analysts.

E-commerce had been steadily on the rise for a while, but with the onset of the COVID-19 pandemic and subsequent lockdowns worldwide, consumer adoption skyrocketed: year-over-year growth of e-commerce as a percentage of total retail sales surged by 1.6 times in China, 3.3 times in the United States, and 4.5 times in the United Kingdom. In the United States, e-commerce sales penetration more than doubled to 35% in 2020 compared to the previous year, a rate of growth typically seen over a decade. With global internet accessibility and usage continuing to rise, with over five billion users worldwide, the number of online shoppers is steadily growing. Amazon.com Inc (NASDAQ:AMZN) tops the global chart for online retail websites in terms of traffic. The e-commerce behemoth, renowned for its diverse offerings including e-retail, computing services, consumer electronics, and digital content, recorded 6.1 billion direct visits to its .com website in December 2023. On the other hand, in terms of gross merchandise value (GMV), Alibaba Group Holding Limited (NYSE:BABA), Asia’s largest online commerce provider, takes the lead.

Despite the resurgence of brick-and-mortar shopping, e-commerce is projected to represent 41% of global retail sales by 2027, a significant surge from its 18% share in 2017, according to research conducted by the Boston Consulting Group. Based on a global survey conducted in the second quarter of 2023, the study delves into e-commerce trends from the onset of the pandemic to the previous year. The survey included responses from 410 retail and 415 consumer packaged goods (CPG) companies worldwide, with revenues ranging from $50 million to over $10 billion. The respondents from both industries were categorized as “winners” (businesses experiencing post-pandemic growth exceeding 30% per annum and anticipating similar or higher growth by 2027) or “laggards” (organizations reporting post-Covid growth of 10% or less per annum and expressing uncertainty about their future e-commerce expansion). Among the surveyed companies, winners accounted for 27% of retailers and 20% of CPG companies, while laggards comprised 21% of retailers and 25% of CPG businesses.

In addition, according to speculations by e-commerce company Shopify Inc. (NYSE:SHOP), global e-commerce sales are projected to reach $6.3 trillion worldwide in 2024, marking a 9.4% annual increase—the second-highest growth rate between 2021 and 2027. This trend indicates a continued rise in online sales, with projections showing even further expansion. By 2025, global e-commerce sales are forecasted to reach $6.9 trillion, followed by an additional $600 billion increase in 2026 to $7.5 trillion, and eventually surpassing $8 trillion by 2027. A significant trend propelling this expansion in the e-commerce landscape is the increasing prevalence of mobile device usage. Recent data indicates that the number of online shoppers worldwide grew by 8.3% in 2022, reaching 4.11 billion individuals, with nearly 60% of online spending attributed to mobile devices. Mobile commerce sales are expected to continue growing, with total sales from mobile devices projected to reach $2.5 trillion in 2024, up from $2.2 trillion in 2023.

Although consumers are returning to physical stores, e-commerce sales are expected to surpass the $6 trillion mark this year, with 20.1% of all retail sales occurring digitally. In addition, data from Emarketer indicates that excluding China, the global e-commerce share will be 12.4%. In light of this, the robust performance of stocks such as Amazon.com Inc (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), and MercadoLibre, Inc. (NASDAQ:MELI) can serve as a compelling incentive for investors exploring opportunities in the online retail sector. These companies are frequently viewed as among the best e-commerce stocks to invest in currently.

10 Best E-commerce Stocks To Buy According to Analysts

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Our Methodology

To make our list of the best e-commerce stocks to buy according to analysts, we used a stock screener to list down a number of e-commerce stocks, ranking the firms by their average analyst share price target upside.

For these stocks, we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

10. Target Corporation (NYSE:TGT)

Average Analyst Share Price Upside: 10.53%

Average Analyst Share Price Target: $183.62

Target Corporation (NYSE:TGT), an American retail corporation headquartered in Minneapolis, Minnesota, operates a chain of discount department stores and hypermarkets. The majority of its e-commerce net sales are generated within the United States. Target.com, the company’s online platform, offers a diverse range of products spanning various categories, including Hobby & Leisure, Fashion, and Electronics.

On March 13, Target Corporation (NYSE:TGT) announced a quarterly dividend of $1.10, payable by June 10 to the shareholders of record on May 15. As of April 14, the stock has a dividend yield of 2.67%.

As of the end of December 2023, 58 out of the 933 hedge funds tracked by Insider Monkey had invested in the company. The largest shareholder of Target Corporation (NYSE:TGT) is Ric Dillon’s Diamond Hill Capital through its $401 million investment.

Much like Amazon.com Inc (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), and MercadoLibre, Inc. (NASDAQ:MELI), Target Corporation (NYSE:TGT) ranks as one of the best e-commerce stocks to buy.

9. Visa Inc. (NYSE:V)

Average Analyst Share Price Upside: 11.85%

Average Analyst Share Price Target: $308.67

Visa Inc. (NYSE:V) is a financial services firm that provides debit cards, credit cards, and associated services. Visa (NYSE:V) distinguishes itself in the e-commerce realm with its robust global payment network, which underpins secure and swift online transactions.

On January 27, investment advisory firm Barclays reiterated an Overweight rating on Visa Inc. (NYSE:V) stock and elevated the price target to $319 from $304.

For their fourth quarter of 2023 shareholdings, 162 out of the 933 hedge funds tracked by Insider Monkey had bought and owned Visa Inc. (NYSE:V)’s shares. Chris Hohn’s TCI Fund Management owned the biggest stake that was worth $4.3 billion.

8. Amazon.com Inc. (NASDAQ:AMZN)

Average Analyst Share Price Upside: 12.82%

Average Analyst Share Price Target: $210.00

Amazon.com, Inc. (NASDAQ:AMZN), a prominent American multinational technology company, encompasses a diverse range of business interests, including e-commerce, cloud computing through Amazon Web Services (AWS), online advertising, digital streaming, and artificial intelligence. The company’s e-commerce platform offers a wide array of products, including gourmet food, groceries, apparel, baby products, consumer electronics, beauty products, and more.

Insider Monkey’s database, which monitors 933 elite hedge funds, reveals a positive sentiment towards Amazon.com, Inc. (NASDAQ:AMZN) in Q4. The number of hedge funds with investments in the stock rose to 293, up from 286 in the previous quarter.

Alphyn Capital Management stated the following regarding Amazon.com, Inc. (NASDAQ:AMZN) in its first quarter 2024 investor letter:

“My previous analysis (Q4 2022 letter) highlighted the significant growth in Amazon.com, Inc.’s (NASDAQ:AMZN) fulfillment expenses since 2015, masking the true earnings potential of its retail business. Though initially costly, the recent restructuring into regional fulfillment centers has yielded lower fulfillment costs and faster shipping times, leading to increased purchase frequency, especially among Prime members.

Following the regionalization effort, over the last couple of years, Amazon prioritized cost control and reduced capital expenditures. At a high level, the North American segment’s operating income swung from a $240 million loss in 2022 to a healthy $6.4 billion profit (6% margin) in 2023. Combined with continued strength in AWS and advertising, Amazon’s free cash flow (as reported, excluding equipment finance leases and principal repayments) surged from negative $13 billion to positive $36 billion.

Amazon stands out for pioneering the public market strategy of prioritizing long-term growth through sustained low margins and reinvestment, with the ability to later “turn on the taps” for profit. While many public tech companies have tried to replicate this approach, Amazon’s scale and execution capabilities make it one of the few that have successfully pulled it off.”

7. Etsy, Inc. (NASDAQ:ETSY)

Average Analyst Share Price Upside: 14.05%

Average Analyst Share Price Target: $76.47

Etsy, Inc. (NASDAQ:ETSY), headquartered in Brooklyn, New York, operates two-sided online marketplaces connecting millions of creative buyers and sellers worldwide. Its primary marketplace, Etsy, focuses on unique and creative goods, and the company also oversees Reverb, Depop, and Elo7. Etsy, Inc. (NASDAQ:ETSY)’s marketplaces have approximately 8.8 million active sellers and over 97 million active buyers.

According to the Insider Monkey Database, 36 out of the 933 tracked hedge funds held stakes in Etsy Inc (NASDAQ:ETSY) as of the end of the fourth quarter. Bares Capital Management remained the most significant stockholder with stakes worth $330.71 million.

6. Shopify Inc. (NYSE:SHOP)

Average Analyst Share Price Upside: 17.01%

Average Analyst Share Price Target: $82.84

Shopify Inc. (NYSE:SHOP) stands as a pivotal provider of internet infrastructure for commerce, equipping businesses with tools to launch, expand, promote, and manage retail operations across various magnitudes. With its platform and services utilized by millions of businesses spanning 175 countries, Shopify plays an instrumental role in supporting a diverse spectrum of enterprises.

In its analysis of 933 hedge fund holdings for Q4 2023, Insider Monkey unearthed 68 investments in the firm. Notably, the largest investor in Shopify Inc. (NYSE:SHOP) among these is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital, holding 20.9 million shares valued at $1.6 billion.

Rowan Street Capital stated the following regarding Shopify Inc. (NYSE:SHOP) in its 2023 annual investor letter:

“Shopify Inc. (NYSE:SHOP) is an all-in-one e-commerce platform that empowers businesses of all sizes to build, manage, and grow their online stores. Founded in 2006, Shopify now holds a commanding >10% market share in US e-commerce.

The value of Shopify lies in its simplicity for merchants to easily start and scale their business, so much so that merchants fall in love with their solutions and never want to leave, no matter how big they get. They understand that as they grow and confront new challenges, Shopify will solve their problems so they can take their business to the next level. That is the power of Shopify’s flywheel.

We have owned Shopify’s stock since 2022. Our average cost basis is $60. Following our purchase, the stock hit a low of $26 in October 2022. Just 15 months following those lows, Shopify stock is now trading at $80 (a 200% rebound) as investors celebrated the decision to sell its capital intensive logistics business, which was largely expected to cost billions of dollars to build out — a move that enables Shopify to retain its original, asset-light business model. Additionally, while many tech companies struggled in the face of macroeconomic challenges, Shopify defied expectations by maintaining robust revenue growth in 2023. Revenue increased by 25% year-over-year in the most recent quarter, with gross profit growing by a healthy 36%. We are now sitting on a +35% unrealized gain on our position after owning the stock for almost 2 years. Not a bad return, but what a wild ride it has been. Just another example that volatility is the price of admission in this business.”

Shopify Inc. (NYSE:SHOP) joins the ranks of Amazon.com Inc (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), and MercadoLibre, Inc. (NASDAQ:MELI) as one of the best e-commerce stocks to buy according to analysts.

5. Sea Limited (NYSE:SE)

Average Analyst Share Price Upside: 20.83%

Average Analyst Share Price Target: $64.38

Sea Limited (NYSE:SE), headquartered in Singapore, is a prominent consumer internet company in Southeast Asia and Taiwan, operating three core businesses: Shopee (an e-commerce platform), Garena (a global games developer and publisher), and SeaMoney (a digital payments and financial services provider).

On February 1, Citi upgraded Sea Limited (NYSE:SE) to Buy from Neutral and increased the price target on the shares to $50 from $44, anticipating potential improvements in losses for its Shopee e-commerce unit. The investment firm cited uncertainty in the Southeast Asia e-commerce landscape, highlighting potential impacts from TikTok shopping and its integration into the Toko app.

According to Insider Monkey’s fourth-quarter database, 51 hedge funds were long Sea Limited (NYSE:SE), compared to 55 funds in the earlier quarter. Chase Coleman’s Tiger Global Management is the largest stakeholder of the company, with 14.3 million shares worth $580 million.

Artisan Developing World Fund stated the following regarding Sea Limited (NYSE:SE) in its fourth quarter 2023 investor letter:

“Bottom contributors to performance for the quarter included Southeast Asian e-commerce leader Sea Limited (NYSE:SE). Sea was negatively impacted by rising investment spend, and TikTok’s announcement of a partnership with Tokopedia which resulted in the relaunch of TikTok Shop in Indonesia.”

4. Mercadolibre, Inc. (NASDAQ:MELI)

Average Analyst Share Price Upside: 30.10%

Average Analyst Share Price Target: $1935.45

MercadoLibre, Inc. (NASDAQ:MELI) is a prominent e-commerce technology company based in Latin America, with its headquarters situated in Buenos Aires, Argentina. Established in 1999, the company operates primarily through its key platforms, MercadoLibre.com and MercadoPago.com. MercadoLibre, Inc. (NASDAQ:MELI) provides a diverse array of solutions tailored for individuals and businesses engaged in online buying, selling, advertising, and payment transactions.

Insider Monkey’s examination of 933 hedge fund portfolios revealed that 81 funds held stakes in MercadoLibre, Inc. (NASDAQ:MELI). The largest shareholder of MercadoLibre, Inc. (NASDAQ:MELI) was Generation Investment Management, led by David Blood and Al Gore, which possesses a $673 million stake in the company.

Lakehouse Global Growth Fund stated the following regarding MercadoLibre, Inc. (NASDAQ:MELI) in its fourth quarter 2023 investor letter:

“The Funds second largest holding, Buenos Aires-based e-commerce leader MercadoLibre, Inc. (NASDAQ:MELI) delivered another standout result in November that came in well ahead of analysts’ expectations. Net revenue grew 40% year-on-year in U.S. dollar terms to $3.76 billion while operating income grew 131% to $685 million, providing a very impressive balance of growth and profitability. The marketplace business grew across all major regions and total gross merchandise volume (GMV) increased to $11.4 billion, up 32% year-on-year. The platform’s core metrics remained healthy with items sold accelerating for the fourth straight quarter to 357 million, unique buyers increasing 18% year-on-year to 50.3 million and items sold per buyer reaching an all-time high of 7.1.

As always, the company continues to invest in its logistics capabilities and is now able to deliver 80% of all items sold within 48 hours and 54% same or next day. In our view, building and owning a first-class logistics network is critical for the company’s success as it will ultimately help protect its market share and profits from competitors over the long-term. We also note that faster shipping accelerates sales growth, which in turn, fosters wider selection, better prices, and greater investment in logistics, all part of a virtuous cycle. Zooming out, as the largest ecommerce player in LATAM, we continue to believe MercadoLibre is in an ideal position to capitalise on the significant opportunities ahead and deliver many years of above average growth and margin expansion.”

3. Alibaba Group Holding Limited (NYSE:BABA)

Average Analyst Share Price Upside: 44.40%

Average Analyst Share Price Target: $104.49

Alibaba Group Holding Limited (NYSE:BABA) stands as a formidable force in the Chinese e-commerce realm, anchored by its flagship platform Alibaba.com, which ranks among the largest in the industry. Beyond its core e-commerce endeavors, Alibaba Group Holding Limited (NYSE:BABA) has diversified its investments across various sectors, including cloud computing, digital media, and entertainment.

In the fourth quarter of 2023, Alibaba Group Holding Limited (NYSE:BABA) attracted interest from 116 hedge funds, collectively holding positions valued at $3.587 billion. This marked an uptick from the previous quarter, where 110 funds held positions totaling $3.36 billion. Appaloosa Management LP emerged as the top shareholder in the company, boasting a position valued at $337.168 million.

2. JD.com, Inc. (NASDAQ:JD)

Average Analyst Share Price Upside: 47.51%

Average Analyst Share Price Target: $37.97

JD.com, Inc. (NASDAQ:JD), also known as Jingdong, and internationally as Joybuy, formerly 360buy, is a Chinese e-commerce powerhouse headquartered in Beijing. It specializes in the sale of electronics products and general merchandise, ranging from audio and video items to books.

On March 6, JD.com, Inc. (NASDAQ:JD) unveiled its earnings for the fourth quarter of 2023. The company reported a non-GAAP earnings per American depositary share of $0.75, surpassing market estimates by $0.12. Revenue experienced a robust 3.6% year-over-year increase, reaching $43.1 billion, exceeding estimates by $1.49 billion.

According to Insider Monkey’s fourth-quarter database, sentiment towards JD.com, Inc. (NASDAQ:JD) remained bullish, with 56 hedge funds expressing positive views, up from 53 funds in the previous quarter. Notably, Chase Coleman’s Tiger Global Management held a significant stake in the company, with 8.8 million shares valued at $254.35 million.

1. PDD Holdings Inc. (NASDAQ:PDD)

Average Analyst Share Price Upside: 54.91%

Average Analyst Share Price Target: $182.78

Based in Shanghai, China, PDD Holdings Inc. (NASDAQ:PDD) is a multinational commerce conglomerate with a diverse range of business ventures. The company boasts an extensive network encompassing sourcing, logistics, and fulfillment capabilities, primarily operating through its flagship mobile-only marketplace. This platform facilitates connections between millions of agricultural producers and consumers across China.

As of March 21, analysts at Citigroup reiterated their Buy rating on PDD Holdings Inc. (NASDAQ:PDD) and maintained a price target of $185.

As of Q4 2023 end, 71 out of the 933 hedge funds profiled by Insider Monkey had held a stake in the firm. PDD Holdings Inc. (NASDAQ:PDD)’s largest stakeholder among these is Lei Zhang’s Hillhouse Capital Management since it owns $1.4 billion worth of shares.

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