3 Top-Rated E-Commerce Stocks That Analysts Are Loving Now
E-commerce makes it easier for people to buy products. Instead of driving to a mall, consumers can browse on a website, buy what they want, and receive their orders within a few business days. This has paved the way for some amazing e-commerce stocks.
Many e-commerce companies have emerged from this trend, with some of them amassing trillion-dollar market caps. Stocks in this industry have a good reputation for rewarding long-term investors. If you want to get more exposure to the e-commerce industry, these top-rated stocks can be great starting points.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) has enjoyed a strong 70% year-to-date rally after multiple years of sideways trading. Shares have not reclaimed their November 2021 highs quite yet, but some analysts believe the stock can reach those levels soon.
Amazon is currently rated as a “Strong Buy” among 41 analysts. The average 12-month price target is $175.51. The average price target implies a 20% upside. The highest price target is $210.
Amazon increased its sales by 13% year-over-year in the third quarter. The company’s international segment delivered 16% year-over-year revenue growth. Amazon Web Services revenue jumped by 12% year-over-year. Operating income rose to $11.2 billion.
Most of the talk about Amazon stock revolves around its e-commerce store and AWS. However, the company’s advertising segment should get more attention. Ad revenue jumped by 26% year-over-year for the company. That growth rate outpaced many advertising companies. Amazon generated $12 billion in ad revenue in the third quarter.
Alphabet (GOOG,GOOGL)
While Amazon is gaining market share in the advertising industry, Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) remains the top advertising pick. Many businesses use Google and YouTube ads to target ideal customers and increase their total sales.
Businesses run ads to promote their e-commerce stores and grow their email lists so they can generate more consistent sales. As the demand for e-commerce grows, more business owners will give it a try and run Google Ads to reach more people.
Alphabet’s recent earnings indicate the ad recovery is taking shape. Revenue grew by 11% year-over-year in the third quarter. That’s a higher growth rate than the 6% year-over-year growth rate posted in Q3 2022. Ruth Porat, President and Chief Investment Officer at Alphabet, cited “meaningful growth in Search and YouTube, and momentum in Cloud” that contributed to the successful quarter.
Alphabet has rewarded investors with a 56% year-to-date gain and 173% appreciation over the past five years. Alphabet is rated as a “Strong Buy” and has an average price target of $153.52 among 33 analysts.
MercadoLibre (MELI)
MercadoLibre (NASDAQ:MELI) is an e-commerce company that doubles as a fintech company. The Argentinian company has profit margins approaching 10% and has rewarded long-term shareholders for many years.
Shares have gained 85% year-to-date and are up by 392% over the past five years. MercadoLibre can continue to climb higher as it recently reported 40% year-over-year revenue growth in the third quarter. Net income more than doubled in the quarter.
Rising total payment volume (TPV) and gross merchandise volume (GMV) supported the company’s robust revenue and earnings growth. TPV and GMV grew by 121.2% and 59.3% year-over-year respectively.
MercadoLibre isn’t for value investors as it currently has a 76 P/E ratio. The company’s forward P/E of 45 and a 0.80 PEG ratio make it look more enticing. The company must maintain current growth rates to justify future valuations. However, that is a test the company has historically passed with flying colors.
MercadoLibre is smaller than the trillion-dollar companies on this list, but it still has a sizable $77 billion market cap. MELI stock has an average price target of $1,672.63 among 21 analysts. If you are looking for worthwhile investments, start with these spectacular e-commerce stocks.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
