Due to COVID-19 pandemic-related restrictions, lower foot traffic at brick-and-mortar stores forced businesses at the beginning of the pandemic to shift their operations online and sell products through e-commerce platforms. Furthermore, providing a personalized shopping experience to keep pace with changing consumer tastes, multi-channel inventory management, the tracking of shipments, and contactless delivery services helped the U.S. e-commerce industry deliver 14% sales growth last year. The global B2C e-commerce market is expected to grow at a 9.7% CAGR to $7.65 trillion by 2028.
Although the easing of pandemic restrictions enabled brick-and-mortar sales to outgrow e-commerce sales in 2021, e-commerce companies’ efforts to make delivery services and return policies convenient should help them grow in the coming months.
Given this backdrop, Wall Street analysts are optimistic about the upside potential of e-commerce stocks Shopify Inc. (SHOP), Pinduoduo Inc. (PDD), Angi Inc. (ANGI), Overstock.com, Inc. (OSTK), and ContextLogic Inc. (WISH). They expect these stocks to rally by more than 50% in price in the near term.
Shopify Inc. (SHOP)
Based in Ottawa, Canada, SHOP provides a cloud-based, multi-channel commerce platform designed for small- and medium-sized businesses internationally. The company offers a platform that enables merchants to create an omnichannel experience to manage products and inventory, process orders and payments, ship orders, build customer relationships, leverage analytics and reporting, and access financing.
On Nov. 8, 2021, SHOP’s Shopify Plus platform selected Rebuy, a no-code omnichannel personalization platform for e-commerce brands on Shopify, to join the Certified App Partner program. Rebuy’s personalization, marketing, retention services, white-glove support, and a custom shopping cart should enable SHOP to help its merchants improve their shopping experience.
For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, SHOP’s revenues increased 41.1% year-over-year to $1.38 billion. Its revenue from merchant solutions came in at $1.03 billion for the first time in a quarter, up 47.3% from the prior-year period. The company’s gross profit was $692.66 million, representing a 37.3% increase from the prior-year period. The company had cash and cash equivalents of $2.50 billion as of December 31, 2021.
Analysts expect SHOP’s EPS to improve 6.9% year-over-year to $8.72 for its fiscal 2022, ending Dec. 31, 2022. It surpassed the consensus EPS estimates in three of the trailing four quarters. The $53.19 billion consensus revenue estimate for the same fiscal year represents an 18.7% rise from the prior-year period. The company’s EPS is expected to grow at a 38.2% rate per annum over the next five years.
SHOP’s revenue has grown at a 62.6% CAGR over the past three years. It has declined 40.2% in price over the past month to close yesterday’s trading session at $660.
Of 28 Wall Street analysts that have rated the stock, 13 have rated it a Buy, while 15 rated it Hold. Analysts expect the stock’s price to hit $1,061.08 in the near term, representing a 60.8% upside potential.
Pinduoduo Inc. (PDD)
Headquartered in Shanghai, China, PDD operates a mobile e-commerce platform called Pinduoduo that provides value-for-money merchandise and interactive shopping options. It offers a range of products, including apparel, shoes, childcare products, food and beverage, fresh produce, electronic appliances, furniture and household goods, cosmetics and other personal care items, sports and fitness items, and auto accessories.
On Nov. 26, 2021, PDD pledged to deepen its R&D and agricultural technology investment to raise productivity, improve efficiency, and promote long-term sustainable development. The investments have enabled the company to generate $3.3 billion in revenue in its fiscal 2021 third quarter, while its user base rose to 867.3 million in the trailing 12-month period.
For its fiscal 2021 third quarter, ended Sept. 30, 2021, PDD’s total revenue increased 51.3% year-over-year to $3.34 billion. The company’s gross profit came in at $2.32 billion, indicating a 36.5% year-over-year improvement. Its non-GAAP operating profit was $506.06 million for the quarter, compared to a $50.05 million loss in the prior-year period. PDD’s non-GAAP net income came in at $488.90 million, up 575.4% from the year-ago period. Its non-GAAP earnings per ADS increased 560.6% year-over-year to $0.34. As of Sept. 30, 2021, the company had $1.73 billion in cash and cash equivalents.
Analysts expect the company’s EPS to reach $1.36 for its fiscal year 2022, ending Dec.31, 2022, representing a 315.4% rise from the prior-year period. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The $20.13 billion consensus revenue estimate for the same fiscal year indicates a 30.6% year-over-year improvement.
PDD’s revenue has grown at a 121% CAGR over the past three years. The stock has declined 1.3% over the past month and ended yesterday’s trading session at $59.64.
Among six Wall Street analysts rating the stock, five have rated it a Buy, and one rated it Hold. PDD’s average price target of $93.67 represents a 57.1% upside potential.
Angi Inc. (ANGI)
ANGI focuses on creating a digital marketplace for home services, connecting homeowners across the globe with home service professionals internationally. The Indianapolis, Ind., company's brand portfolio provides homeowners with tools and resources for home repair, maintenance, and improvement projects.
On Jan. 31, 2022, ANGI announced that it is teaming up with Walmart Inc. (WMT), one of the largest multinational retail corporations and its first exclusive retailer. With renovation and remodeling of homes being a prime focus since the start of the pandemic, this retail integration should help ANGI offer more than 150 common home projects to WMT’s customers in the future and gain expanding market reach.
For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, ANGI’s revenue increased 15.7% year-over-year to $415.86 million. The company had $428.14 million in cash and equivalents as of Dec. 31, 2021.
Analysts expect ANGI’s revenue to improve 14.8% year-over-year to $1.94 billion for its fiscal year 2022, ending Dec. 31, 2022. It surpassed the consensus EPS estimates in three of the trailing four quarters. The company’s EPS is expected to grow at a 52.3% rate per annum over the next five years.
ANGI’s revenue has increased at a 14.2% CAGR over the past three years. The stock has declined 21.1% in price over the past month to close yesterday’s trading session at $6.49.
Six of nine Wall Street analysts rating the stock have rated it a Buy, while three rated it Hold. Analysts expect the stock’s price to hit $11.44 in the near term, representing a 76.3% upside potential.
Overstock.com, Inc. (OSTK)
OSTK in Salt Lake City, Utah, operates as an online retailer and technology company that offers a broad range of new home products at low prices. The company provides businesses advertising products or services on its website and focuses on developing and managing financial applications of blockchain technologies.
As of Sept. 30, 2021, the company had $512.19 million in cash and cash equivalents. Analysts expect the company’s EPS to reach $2.63 for its fiscal year 2022, ending Dec. 31, 2022, representing a 15.4% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $3.07 billion consensus revenue estimate for the same fiscal year indicates a 9.5% year-over-year improvement. The company’s EPS is expected to grow at a 45.1% rate per annum over the next five years.
OSTK’s revenue has grown at a 16.3% CAGR over the past three years. The stock has declined 14.2% over the past month and ended yesterday’s session at $42.15.
Of the four Wall Street analysts rating the stock, three have rated it a Buy, while one rated it Hold. The $105 average price target represents a 149.1% upside potential.
ContextLogic Inc. (WISH)
WISH operates as a mobile e-commerce company internationally. The San Francisco company operates a Wish platform that connects users to merchants. It also provides marketplace and logistics services to merchants.
On Feb. 2, 2022, WISH unveiled a new ‘invite-only’ merchant selection process, replacing the previous open merchant account sign-up process via merchant.wish.com. The move is part of a broader push to improve user trust by prioritizing and empowering merchants that provide a great service. This should enable WISH to sell quality products online and generate high demand in the coming months.
As of Sept. 30, 2021, the company had $1.07 billion in cash and cash equivalents. WISH’s EPS is expected to grow at a 56% rate per annum over the next five years. The company’s revenue has grown at a 32.2% CAGR over the past three years. The stock has declined 8.3% in price over the past month and ended yesterday’s trading session at $2.32.
Wall Street analysts expect the WISH’s price to hit $3.50 in the near term, representing a 50.9% upside potential.
SHOP shares were trading at $665.66 per share on Friday afternoon, up $5.66 (+0.86%). Year-to-date, SHOP has declined -51.67%, versus a -8.74% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
5 E-Commerce Stocks with More Than 50% Upside, According to Wall Street StockNews.com
