Introduction:
The e-commerce landscape has been a rollercoaster in recent years. The pandemic witnessed a soaring surge in online shopping as homebound consumers turned to the digital realm for their essential needs. However, the economic downturn of 2022 subsequently eroded many of the gains made during this time, as reduced consumer spending prompted a sell-off. Yet, with inflation easing, the industry is rebounding, and numerous retail companies are back on a growth trajectory. The challenges faced have demonstrated the resilience and strength of many businesses, rendering them attractive long-term investments. As the e-commerce market is set to reach $3.6 trillion this year and is projected to expand to a staggering $5.6 trillion by 2027, now is an opportune moment to include an e-commerce company in your investment portfolio. Here, we present three top e-commerce stocks to consider in September.
1. Amazon (AMZN -0.61%)
Amazon, founded in 1994, has evolved into a colossal retail powerhouse. The company boasts dominant market shares in numerous countries, with an astounding 38% share of the U.S. e-commerce market. Its reign is unassailable, with Walmart, the second-largest player, holding a mere 6% market share.
While Amazon’s supremacy incurred operating losses of $10.6 billion from its e-commerce segments in fiscal 2022 due to macroeconomic headwinds, 2023 has seen a remarkable turnaround. In the first quarter, the company’s North American segment returned to profitability, followed by over $3 billion in operating income in the second quarter, a significant leap from the $627 million loss in the same period the previous year. This solid recovery is attributed to strategic restructuring efforts, including warehouse closures, discontinuation of unprofitable services like Amazon Care, and a series of layoffs. Amazon’s resilience in weathering challenges underscores its potential as an enticing investment this month.
2. Apple (AAPL 0.13%)
While not commonly associated with e-commerce, Apple holds a 4% market share in the sector, positioning it as the third-largest e-commerce company in the U.S. Although its product catalog is smaller than giants like Amazon and Walmart, Apple’s online retail presence underscores the potency of its offerings.
Apple commands leading market shares in various categories, including smartphones, tablets, smartwatches, and headphones. Over the past five years, its annual revenue has soared by 48%, accompanied by a 68% rise in operating income.
The tech giant is expanding its product lineup, with the recent introduction of its first virtual/augmented reality (VR/AR) headset in June. Apple’s history of success when venturing into new markets suggests that an investment in Apple may well be an investment in the future leader of the $31 billion VR/AR market.
Despite encountering economic challenges this year, resulting in a 4% decline in Apple’s stock since the beginning of August, its long-term growth trajectory, coupled with forays into emerging markets like VR/AR and artificial intelligence (AI), make it a compelling option for investment in September.
3. PayPal (PYPL 0.27%)
PayPal Holdings, despite significant setbacks in 2022, remains one of the foremost names in online payment processing, boasting a 40% market share as of July. As easing inflation and prolonged e-commerce growth come into play, PayPal stands to reap substantial rewards.
According to Statista, online retail sales constituted approximately 19% of global purchases in 2022, a significant increase from about 7% in 2015. In tandem, PayPal’s annual revenue surged by 242%, with operating income witnessing a growth of 218% during the same period.
PayPal has also expanded its in-store services, with its technology integrated into thousands of physical point-of-sale locations across 20 different merchants. The company’s improved performance is evident, with a 7% revenue increase in the second quarter, surpassing analysts’ expectations by $30 million.
Furthermore, with a price-to-earnings ratio of 18, PayPal presents itself as one of the most attractively valued stocks currently available. Wall Street appears to underestimate the potential of this payment giant, making September an auspicious time for investment.
Conclusion:
As the e-commerce market continues its upward trajectory, fueled by an easing inflationary environment, these three companies – Amazon, Apple, and PayPal – stand out as promising investment options. Their resilience, market dominance, and potential for future growth make them attractive prospects for investors seeking to capitalize on the resurgence of e-commerce.
